Discretion
The black swan in trading.. Although often sold otherwise, discretion can be a very powerful weapon in a traders arsenal. Master this and you will enter the market in a ‘flow state’, managing to seamlessly implement the TST killer Pattern Play and SMC strategy to the live markets without hesitation.
Discretion is one of the most, if not the most powerful tools you can have in your trading arsenal.
Discretion - ‘The freedom to decide what should be done in a particular situation.’
https://www.tradingview.com/x/oAwBWuGo/
The market will often perform moves like this,
You will see price action coming into your AOI and then it spike out of your technicals,
You’ll think… “Oh ok that setup can be written off now as invalid”
Then all of a sudden price action aggressively reverses in your intended direction and plays out like you forecasted.
https://www.tradingview.com/x/NbXtcgny/
To understand this movement this is a skill we call ‘market discretion’.
By mastering this you will be able to understand the market with a 6th sense.
Your discretion will tell you when to stay out of the market and when to actively trade. It’s your experience within the market truly shining through.
Remember the point I made within the last piece of written content?
I said that traders will often use patterns as ‘areas of opportunities’ not an area that should be respected to a tee. Our market discretion will teach us the most probable area that the trade can reverse from, aligning other methodology pulled from our pattern play and SMC strategy.
Lets give you an example,
Within the financial markets there are often plenty of high impact news events, for example FOMC speeches and NFP. When these occur you often see the market shake out buyers and sellers creating huge volatility and market moves.
But what you also see is that these events often line up with key technical analysis that will push the market in the right direction. ‘News creates volatility not direction’, you may have heard this before.
With market discretion you know that there is a high probability that even with the market volatility the trade setup you have been studying will still play out.
The news has simply caused the market to spike on release. Most traders lacking in discretion would blame the event and write the setup off. However, those with key experience within the market will know that these events will often play out in the planned direction and will still look to enter the market despite the volatility caused.
Your discretion will tell you that the market is either creating a new trend or shaking out buyers allowing you to enter the market seamlessly.
Now, you’re probably wondering how you can build up this skill?
If we were to say there was one straight answer to this question everyone who participates as a trader would be laying on a beach trading consistently day in day out. There is a reason why so many traders will fail to become successful…
The truth is, market discretion is a collection of skills. It's the ability to understand pair characteristics. Which is a skill obtained by backtesting and time spent within the markets.
You also need to witness these price movements first hand with live positions in the markets.
A trader that has gone through difficult market conditions will often come out a much stronger trader than those trading only impulsive cycles and easy technicals.
When the markets are choppy and difficult to trade this is when you will learn the most about yourself as a trader and therefore develop the most.
All of the above needs to happen in order to effectively develop the skill of discretion. Keep up all these processes and over a long period of time you will notice small 1% tweaks in your trading that you previously didn't notice.
When people sell you trading as a get rich quick scheme they are completely wrong, it is the skill of market discretion that makes this statement invalid garbage. You will not get rich trading overnight but when you get into the ‘flow state’ mastering discretion you will soon realise how effortless entering in and out of the market for profit can become.