The 3Cs to Trade Like a Master
So what are the 3Cs to Trade like a Master? The first C is clarity, where you pre-plan your trade before you enter. You should know clearly what the trade setup should look like, where to trail your stop loss and take your profit. You basically must be able to visualize the trade from start to end and the different route of price flow it could take before placing it. In essence, clarity comes from the strategy component which includes the crib sheet with entry, stop loss and target rules.
The second C is courage to stand through your drawdowns which could go through for days, weeks and months. And how do you enforce this courage? It is through knowing the statistics of your trading system, that is how long does the drawdown last for, how many consecutive losing trades are there, how often does the system win and how much does it win each time.
The last ‘C’ is a conviction in your trading system and this is derived from the concept and objective of a strategy. The concept should be one which stands through time.eg. Price does not move in a linear fashion and it moves in cycles. The objective refers to what price move you want to capture from that particular strategy. The objective should match up with the concept and this would form a strong basis for your conviction in your trading system.
Practice the 3 Cs and in due time, you will Trade like a Master.