Don't Override Your System - Do This Instead
By Dave Mabe
In yesterday's post, I described a common scenario for traders.
Your system/automation got you into a trade - exactly as designed - but now you think you need to override it.
Something doesn't seem right.
Better safe than sorry, you think, so you bail on the trade and wait for the next signal that feels better.
You believe you can outsmart the system.
If you're doing this, you're missing one of the most valuable ways to grow your trading.
The reason is that you're in the perfect position to uncover an insight about your system.
And you're ignoring it and punting.
The next time this happens to you, don't close the trade or try to outsmart your system.
Do this instead...
Delve into WHY you want to override the system.
What is it about this trade right now that makes you want to change your strategy?
Is it something about the chart? Take a screenshot.
Is it something about the distance to the stop? Record those thoughts in detail.
The more info, the better.
Then, after the close, look at these notes and screenshots closely.
Are you capturing this dynamic in your backtest?
Do you have a column in your backtesting column library that describes the situation?
If not, brainstorm a column to add to your backtest that does capture it.
If you already have one, use it to determine how many times the override situation has occurred before.
This is a very clear path to confidence.
Very often you'll find your system worked better than you thought - and overriding the trade would be giving up P&L.
Sometimes, though, your instincts are correct - and overriding would improve your P&L.
That's the topic for tomorrow.
-Dave
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