System Revisited 10/25-10/29

(Apologies for the scarcity of posts this week, my original goal of one per day seems to be much more difficult than I first imagined. In the future, I think I'll shoot for a bit more spontaneity and less artifice than the previous bunch, for the sake of freshness if anything.)

One thing I've noticed about the list of rules that make up my system is that a large number of them start with "Don't"s or "Never"s. Seems like many of the rules I've accumulated over the years were intended to suppress impulsiveness and inspire guilt upon their violation. This is no flaw in itself; as noted in a comment below, the less visible function behind using a system is preventing one from trading when no proven opportunity exists. But having an almost Puritanical impetus behind a system's creation may be counter-productive in the long run -- in fact, it may even backfire if elements of the system attempt to address psychological deficiencies, as opposed to just defining trade entries. If the majority of one's system exists to restrain one's actions and impulses, he may in fact make the issues even worse by trying to avoid them altogether -- a lesson recovering agoraphobiacs can teach us.

Somewhat coincidentally, I've also just picked up Mark Douglas's Trading in the Zone which I would highly recommend to all traders. In developing a trading system, I've primarily treated both strategic and psychological issues empirically, dealing with problems on an symptomatic basis using trial-and-error experimentation. In contrast, Douglas's book goes directly into analyzing our mental attitudes and emotional structures that lurk behind the more apparent obstacles to successful trading, a top-down assessment of how we develop and/or undermine our perceptions of the market over time. It's inspired me to dig deep and not only re-evaluate each of the rules that I've set down for myself, but also to see if I can somehow tie together all those negative reinforcements I've collected like scabs over the years and search for a positive reworking/rewording of their intentions.