A smart and inquisitive student wrote me today to ask why I sometimes seem to bend my own rules for indicator-based, discretionary trade setups. In response I wrote:
I think it's important to make sure you understand, not just hear me, when I say that the rules are guidelines. The charts are just 2D representations of a bunch of 1s and 0s flying around through internet lines -- millions of trades all combining to make the current price, every second of the day.
With all these bits and bytes flying around, we try to draw something on the charts to represent the world of currency trading. We call this drawing a "chart". And then we dream up systems to show us when to trade. And then, we start getting stuck on what the drawing says, rather than what our instinct is telling us based on past patterns.
When you study and follow one system, over and over again, for thousands of trades, you start to see something that isn't quite perfect from an aesthetic perspective. But it makes sense to you because it "looks good enough," or the market is going through a rough approximation of a pattern that you look for.
When I bend the rules on my charts in the rules or updates, it's because I am seeing something that is not fully or adequately represented by the 2D drawings of the 1s and 0s -- the charts -- that I can still "see". It comes with experience. It's bending the rules, of course, but a person earns the right to bend the rules when he or she is following something for years.
