It’s All About Real-Time Contextual Decision Making

 

You've learnt the pattern or setup. Great. But that's not trading.

Now work on the real-time contextual decision making around that pattern or setup.

Look beyond the pattern itself to the wider context.

Where is the pattern occurring within the larger timeframe market structure? What structure will suggest avoiding this particular setup? What structure might suggest caution, or reduced position sizing? What structure might suggest increased odds and the potential to really press the trade for a larger gain?

Where is the pattern occurring within time? Are there news influences which suggest passing on the trade? Are their time-of-day / week / month factors which might suggest standing aside?

Consider the behaviour of price movement – the pace, the volatility, smooth vs choppy price action.

What conditions might suggest adjustments to the default plan? All-in vs scaling in? All-out vs scaling out? Closer stops vs wider stops? Closer targets vs extended targets?

Consider the real-time decision making once in a trade.

What signs might suggest a loss of edge? How will you react to this new information?

What signs might suggest greater potential than originally perceived? How will you react to this new information?

What conditions suggest a re-entry attempt should be taken, if stopped out of the position? And how many re-entry attempts are appropriate?

Trading is not about simplistic patterns. It's about real-time contextual decision making.

If you've been on the wrong path then it's time to make a change. It's time to do the real work.

Best of luck,

Lance Beggs

 


 

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YourTradingCoach - Admin

2 Comments to “It’s All About Real-Time Contextual Decision Making”

  1. Michael says:

    Brilliant post!

    If it was as easy as: Spot Pattern – Trade Pattern – Profit, then one could just write a code that does that automatically, and go home! 🙂

    Even traders that develop automated systems, actually especially these guys, are always supremely aware of the most convenient context within which to deploy a system.

    S. Tartakower, a famous Chess player, has a brilliant quote: “Tactics is what you do when there is something to do; strategy is what you do when there is nothing to do.”

    Lance, tell me if you agree: Pattern recognition and trading, is Tactics; assessing environment and context properly, is Strategy. Our edge is comprised of an interplay of both!

    M.

    • Lance Beggs says:

      Yeah I tend to agree with that. The way I view it, which I think is essentially the same as what you’ve said, is:

      The battlefield is the environment & higher timeframe market structure.
      The strategy is the general concept for profiting within this battlefield.
      The tactics are the plan we use to execute the strategy.

      Success at the strategic level relies upon accurate assessment of environment and context. And adopting a plan which “fits” the environment.

      Success at the tactical level relies upon accurate pattern recognition, decisive action and adaptability/flexibility. Trade entry/management decisions (risk on/off decisions) must “fit” the way that price moves within the environment.

      Edge is, as you said, comprised of an interplay of both.

      All in a constant state of change. And all in a constant state of uncertainty (fog of war).

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