Wisdom is not easy to quantify, much like consciousness. It's one of those strange things that simply exists and exemplifies itself in our thoughts and actions, but doesn't announce its arrival. You can observe conditions leading up to it, such as pain, lessons learned, etc, but there are no guarantees that one will "wisen up" from past mistakes.
As I peruse some of my old blog posts, I am truly amazed at how I could have intellectually spelled out so many truths and best practices (or even "wisdom"), and yet failed to implement those things in my daily practice. Or worse yet, actually fall victim to things like revenge trading, oversizing, trading outside of my edge zones, etc. Sort of like the financial advisor with terrible personal finances, or the doctor who can't seem to nudge his own BMI down to a healthy level.
Aligning one's subconscious with one's front-end intellect/mind is no easy task, as I've discovered. One could develop the greatest systematic trading system in the world, or develop the greatest swing-trading skills in the world, and still fail to execute properly as the ego and subconscious (perhaps the same thing?) sabotage one's ability to execute on those strategies/skills. Allowing "life" to also spill in to one's trading also seems pretty typical, stunting the progress of many promising traders.
One of the main challenges of trading, in my view, is to put into practice what you have worked so hard to uncover. In other words, Doing what you Know. I have "known" for a while now that smaller position sizing was a golden key to success, and yet I've pushed myself with bigger size, only to see great runs end in predictable defeat. The one thing that has occasionally helped me overcome my natural human limitations is to do the work in after-market hours to reflect upon the outcomes of my trading adventures and the factors that led to my ultimate demise on certain trades or accounts, and then to put into place hard rules with proper reasoning to prevent repeating those mistakes. The part in bold (proper reasoning) is especially important to someone like me, who cannot stick to rules unless I thoroughly understand their reasoning and truly believe in them.
An example is that of the reasoning behind a hard stop, one of the most daunting things for traders to respect. We've heard that a stop should be placed at the point at which one's thesis is no longer valid, but that wasn't quite enough for me. I went one step further to refine the definition of a hard stop to be the level at which one's thesis is not only no longer valid, but where it's likely that the market could run well past your stop. The imagery of this type of trade is what would convince me that it's best to call it quits on a position and reset for the next trade.
I could go on and on about other nuances, like how one might approach the next trade in the context of having to make up for a drawdown (solutions might be taking a mental break or sizing down), but that would be going on a bit of a tangent. The main point here is that aligning one's knowledge of what should be done with what one actually ends up doing does take quite a bit of work and reasoning for those of us who are not naturally disciplined, but I feel this is even more powerful than blind discipline. Blind discipline might allow you to arrive at an "acceptable" set of results or situation that leaves little room for improvement or optimization, and are left with a constant nagging sense of what "could be". Discipline derived from deep reasoning should, in theory, allow one to both exercise creative freedom and stick to what one has determined to be best practices.
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