Tradewinds

For a long time, I have noticed behaviors that I repeat. The problem is, that I recognize the bad behavior to late, after I have already made the mistake. If I were mindful of these behaviors that sabotage my trading, I could consciously and intentionally counteract them. Knowing that I have these behaviors is not enough. I need a way to "catch" these sabotaging thoughts and feelings in "real time" in order to override them. Just the other day I was doing great. I had a few winning trades all in a row. Then I went into a grandiose way of thinking. I thought about how good it would be if I went an entire trading day with 100% wins. That was the beginning of my downfall. After this fantastical way of thinking, I became very averse to taking a loss, and avoided getting out of a trade that I needed to bail on. I started hoping that the trade would come back, so that my 100% wins wouldn't be broken. After thinking about this problem, I decided on a way I can become mindful of my problem in real time, and deal with it. I have decided that the second I have a feeling of concern, or the thought, "Oh No! This trade isn't doing what I anticipated that it might do!" That is my trigger to immediately hit "FLATTEN" and get out of the trade. This will keep me from holding onto a loosing trade to long. So I have associated the thought and feeling of the trade going wrong with the word, "FLAT". Every once in a while I I think of this situation while I'm not trading. I don't know why. Maybe I have made it a high priority, and so it comes to mind every once in a while. Hopefully, as I continuously reinforce the connection between these thoughts and feelings with the action to flatten my trade, it will become totally automatic.

You seem upset MM. For some reason, it seems to bother you that I want to view the market a certain way. You state that if it makes me feel better, that I can think this way, but then you imply that I'm in fantasy land trying to drink out of a magical tick fountain. So on one hand you are acting like you don't mind if I think this way, and then you seem very disturbed that I want to think this way. Are you intentionally just trying to "mess" with me for some reason? Are you obsessed with the need to convince me of your way of thinking? Maybe you are overly sensitive, and are having difficulty with the whole issue of fear and trading. I'm just trying to understand the passion you seem to have.

I'm thinking about how this outlook would affect my ability to trade. I suppose if I viewed the market to be full of people I didn't like, and it made me feel good that I was taking their money, then it might put me into a colder, more calculating state of mind. And that in turn would override the fear. But this viewpoint wouldn't fix the fear problem, it would just cover it up, and then I would need to maintain the state of mind that I'm mercilessly taking other people's money. That seems like it would take a lot of negative energy to maintain. I would need to be a black hole of dark matter to keep that state of mind going. I don't think that will work for me personally. I'd rather view my trading as adding liquidity to the market, and being rewarded for providing a service. I'm just the "middle man" helping to bring buyers and sellers together. I kind of like that thought. I'll have to give that point of view a try.

Yes. That happens. It doesn't happen all the time, but that can be a piece to the puzzle. The Up Volume minus Down Volume of the NYSE 500, or the Up Volume / Down Volume often lags the price move on the es emini. So, in those situations, it's more of a confirmation that the trend has turned. But by the time Up Volume - Down Volume has turned, price may have already moved quite a bit. But, it's worth watching closely. Sometimes reversals chop sideways for quite while before turning. It is a little more involved and a little trickier than just watching Up Volume - Down Volume for the NYSE 500. There are other factors that affect the es emini.

So you are motivated by sympathy, concern, and goodwill towards fellow potential traders? I don't feel that when I read your posts. Something doesn't make any sense here. You seem bitter and angry.

I don't doubt that this is true. I spend a lot of time programing and analyzing. That is my personality. I'm not the "Type A", outgoing personality. I have become technically proficient, but I can't say that I'm good at trading. Even though it's difficult to admit this, I'm just being truthful. It's critical to face and observe the thoughts and feelings that we experience, in order to deal with them. Many people have not found the courage to face those inner beliefs that control their lives. I do NOT believe that I am forever locked into the mold that I've found myself in. There are plenty of people who would probably like to keep me locked into that mold, for whatever reason. That's an interesting subject; Why would anyone want to keep another person locked into a certain situation?

Thank you for pointing out these distinctions. Those subtle differences are important. I guess it's not so subtle a difference between fear and vigilance, as far as the emotional state goes. Are we talking about small matters of degree here, or a radically different viewpoint? I read a book that made a distinction between vigilance and "hyper vigilance". Hyper vigilance being a chronic and destructive state of being, where the person never returns back to a normal state; always being "on edge" and looking for danger.

That is interesting. Thanks for sharing your real world experience. You can put your website address in your user profile info.

I agree with what you are saying about people going to these schools not becoming golf pros, win F1 races, or paint masterpieces. I suppose that a few people might go to a Tiger Woods school just for the experience, and to improve their golfing, not expecting to go pro. I doubt someone going through a trading course is doing it just so that they can loose money trading as a hobby for the fun of it. So I guess the question is; what is the point of having training for golf, F1 racing, painting or trading if the vast majority of the students will fail? It seems that it is just a money making opportunity for the business owner at the expense of the students. It could be a way of finding talent, and giving people the opportunity, knowing that only a small percentage will succeed.

Price moves very fast at the outer limits. There are times when price moves slowly, and in a range, but when price moves to a new level, or returns to a previous level, or is peaking or bottoming, it can move very fast. And the places where the price moves very fast, are the best opportunities for profit and entry. So the speed of the price move during the best opportunities for entry and exit, limit the ability of the trader to take advantage of those "sweet spots". Price can move so fast, that the window of opportunity that a trader has to react is very limited. This is one way that the market maintains an advantage over the trader. If the window of opportunity is extremely short, then the trader has no time to react. It puts the trader at a disadvantage. When studying historical price data, the outer price levels that you see on the chart are very deceiving. Just because that bar on the chart shows that the price went to a certain level, doesn't mean that you would have enough time to react and enter an order at that price. This is something that I did not understand for a long time. Either you need to "take the bet", and anticipate a certain price level being hit, or settle for a less than optimum fill price. If you settle for a less than optimum fill price, then the trend must continue, otherwise you are in a bad situation right from the start.

I would compare potential gain to effort. Scanning has both benefits and detriments. I would ask the questions, "How much effort and resource needs to be employed to get a certain amount of gain? And could you have used that time and effort doing something else?" If you have very good scanning capabilities, good criteria, and can act fast enough, there could be large pay offs. It's probably a matter of personal preference also. I have absolutely no interest in scanning for stocks to trade. There is plenty of opportunity and price movement in many financial instruments that I don't need to go looking for. For me personally, at this stage in my trading journey, it seems like scanning is just not worth the effort. Of course, the decision to scan or not to scan probably has a lot to do with each person's individual interest and what level of trading they are at, personally or professionally.

Thanks for that advice. This is the same perspective that I have. Action needs to happen very quickly, and decisively. It's a precision maneuver. But I think that most trading needs to be a precision execution, unless we are talking about long term value investing. When I state, precision execution, I'm not saying that the perfect entry and exit needs to happen, but the decision making needs to be definitive and based upon pre-determined rules that are known to be good.

There is good fear and bad fear. Good fear would be if you were afraid to feed a family of hungry bears, who might eventually look at the flesh on your bones as a good meal. Bad fear would be if a person couldn't leave their house because they had a phobia of the outside world. I describe these two opposing and extreme examples as a way to compare and contrast, and give perspective to the understanding of fear. Please don't misunderstand me, I'm not discounting your good advice to keep incompetent and untrained people to go off blindly trading. I don't think the intent is to lead incompetent and untrained traders into mindless danger. Because trading has such a high attrition rate, and has the potential to do a lot of damage, it's a good thing to warn and/or discourage people from getting into something they are not prepared for. So, having a concern for naive and unwary traders, and the desire to protect them from themselves, is an honorable thing to do. But again, I don't think the intent here is to lead innocent, unsuspecting people to their trading destruction. Besides, if a person dealt with their fear, and then decided not to trade, but they were better equipped to deal with fear in all the aspects of their life, then what's the down side? I don't see a lot of downside potential in taking a look at what Rande has to offer.

That's a good point, and made me think of some other possibilities. Actually, this would be taking the "product" way past the indicator, black box, or system concept; more towards an employee/franchise sort of business relationship. The seller of a system could pay the trainee a percentage out of the trading profits during their training period. If the "buyer" of the system made money trading the system, then the outlay of money they buyer made would be showing results, and paying a return. And the buyer of the system would see the potential of their investment. If the buyer of the system was paying out money at the very beginning, then it would increase the odds that they are a serious candidate, and motivated to succeed.

That's the ultimate question. I would compare finding your edge, to finding the combination on a combination lock. Let's say that you had a combination lock, but you didn't know what the combination was. You could start trying combinations at random. Then after trying 10 or 20 combinations, you realize, that you have forgotten all the combinations that you tried, so you would need to start all over again. Then you realize that you might be trying the same combinations over and over and over again. So you start writing them down. Then you realize that if you don't do this in a systematic way, that you could go through thousands of possible combinations, and be missing possibilities that you didn't even know existed. The point I'm making is this. You need a "system" that allows you to evaluate what is good information and what isn't good information. You need a systematic and objective view of all the tons of information "out there" about trading. You could read and study trading for a lifetime, and never find an edge, unless you have a way of processing information and deciding what is good information and what isn't. I'm talking about two things here: How you are going to sort through all the information, and how your trading platform is going to sort through the data. The most serious traders that I have encountered, have a way to test their trading theories. So I would suggest getting a trading platform that has a way of backtesting a strategy. If you are not a programer, then you are automatically at a disadvantage. If you are not a programmer, then you would need a platform that has backtesting capabilities that are user friendly. There is lots of very good information about trading that is free. And some people give very detailed explanations about how they trade. But you could study a person's trading strategy for days or weeks, and then feel that it just wasn't for you. I don't know any way around that problem. It's a time commitment. Try to get exposure to a lot of different view points, because you never know where some critical information might come from. It's like putting a puzzle together, but you must create the puzzle as you are putting it together. There are people who are willing to give you their puzzle, but you must decide whether it's for you or not. Or whether they know what they are talking about. Who knows, I may not have a clue about what I'm talking about. :rofl:

You are right. Good technical trading potential will go unrealized if a trader can't trade without fear. Not everyone has the potential for technical ability or achieves that level of understanding. I guess everyone could potentially develop fear of something. In fact, a person who was incapable of fear, might be considered abnormal or even defective somehow. Fear happens. It can be a challenge, but I'd like to hope that people can overcome their fear, because unless that is a possibility, then we are all just at the mercy of random events with no control over our lives.

Good point. I read about an extremely poor man whose wife won the lottery. He died soon after of a heart attack. I don't know the exact reason, but it would seem that the stress of the whole situation killed him. I thought about this for a while, and imagined what it would be like to have been in his situation. Instead of seeing all that money as being a ticket out of his hardship, he may have seen it as a very strange world that he was fearful of. I felt like I could actually relate that that mentality. So that may be part of my problem. It's seems very strange, but it's possible. I could be stuck in a "poverty mentality", and actually be afraid of success. It's seems kind of strange that a person would intentionally sabotage their own success, but the reality is, that it happens. Maybe we really do need genetically engineered human beings. :rofl: It seems that the program running in our heads needs to be debugged.

Originally Posted by Rande Howell View Post When he looked at his ratio of winners to losers, he smiled. It was good. It was very good. ... The problem was that he was not entering enough trades to make a comfortable living. The situation that is being described with the trader, is that; even if you gave this trader "Steve" good advice about trading strategy, he still would not be able to effectively execute it. You asked "why" the trader "Steve" doesn't adjust his trading strategy. The point is, that trader "Steve" has probably already adjusted his trading strategy a million times, and still can't execute the trade. The issue is, that the trader enters the order at the outside boundary, because of the fear of draw down. He is trying to be "safe", but ends up sabotaging the entry.

I don't understand what you mean by the "ego driven lies told to you by others." I'm trying to understand what you mean, but I'm not "getting it". But even if I don't understand, what is the solution? I think you are trying to tell me to not worry about being able to pick the perfect entry and exit points. And not to believe everything people tell me. But it seems like there is something more to your message.

Interesting. I always associated "rational" as an emotionless state. As a way to become "cold", "hard", and unfeeling. Thinking that cold, hard and unfeeling is some superior way of dealing with life.

I am starting to explore that possibility myself. After making stupid mistakes when I had all the information I needed to make the correct decision, I've realized that it's not my indicators, or my strategy that is at fault. It's my failure to execute properly. And that failure to execute properly is 100% my state of mind. In the past I could have blamed it on lack of knowledge or understanding, but when I see everything perfectly, in time to make the decision, and still do the wrong thing, then it can't be my trade set up. It's got to be me. Actually, getting to the point, where I can read the market extremely well, is quite an accomplishment in itself. I haven't been at this level of accomplishment very long. I'm just achieving that now. But in the process of acquiring the technical skills, I have not honed my state of mind.

This is a great example. It helps to understand typical problems that happen in trading. The interesting thing in the story, is that the trader is so good at picking the exact reversal point, that he placed the order, to the penny, at the exact reversal point. If anyone finds themselves doing that, then they have an exceptional ability to see a reversal happening. This technical side of this issue is related to a post I made here: http://www.traderslaboratory.com/forums/f229/fill-issues-scalping-9558.html I have the same problem as the trader in the story. I admit my problem, feeling that some traders might see me as damaged goods who should just give up, quietly go away, and live the rest of my life never realizing my potential, and really never being fulfilled in life. Actually, it's good to express those feelings. I'm not sure what it does, but I think it's positive. I think that my fear of loss in trading is very much related to my fear of what other people think of me. I could try to cover that up, but then it might drive the problem even deeper.

The complexity of your system is totally dependent upon how many inputs you want in your system. And how many inputs you add to your system, determines how complete the "puzzle" is, and how complete your understanding of the market is. If you leave something out, then you are missing a piece to the puzzle. If you look at price levels, but don't pay attention to the news, then you have a simpler system. That simpler system might be inferior, depending upon when you choose to trade. If you use a system that does not look at the news, then you are better off trading when there is no news, or no high impact news. Do you want a simpler system that limits you, but is easier to manage, and easier to begin trading with? Or do you want a more complex system that might give you more opportunity, but is more difficult to trade? You could have a lot of inputs to your system and make it very complex, but if the inputs don't really have a consistent and proven impact on price, then the complexity is exponentially bad. So you could have: complexity from a lot of bad inputs complexity with a lot of good inputs simplicity from a bad input or simplicity from one very good input It's all relative. Complexity or simplicity are almost immaterial until you look at the net effect, determine how good your inputs are, and figure out what you are able to handle. You must start by making sure you have good inputs to your system. And you must start with a foundation of simplicity, but reliability, and build from there.

What moves price? Volume? Big players? Yes, but that's just superficial. Volume happens because decisions were made. Big players enter because decisions were made. What were those decisions based on? The QQQ tracks the Nasdaq 100. What affects the Nasdaq 100? Do the QQQ's track the NQ emini? What affects the NQ emini? What are the inputs to the NQ emini? If you chart the QQQ and the NQ, they are practically identical. The NQ is an index. It MUST do what the Nasdaq 100 does. So whatever those 100 stocks do, AS A GROUP, that is what the NQ MUST DO. It's an index, it must be indexed to the Nasdaq 100. What are the inputs to the the NQ?

If that was guaranteed failure, then would doing the exact opposite be guaranteed success? The point I'm trying to make, is that traders must fight the impulse to act in ways that seem right when you find out that those impulses and strategies are wrong. Seriously, consider what would happen if you did the exact opposite of what you thought would make money. The point is, to think in different ways. Insanity is doing the same thing over and over again and expecting different results. If trading in a way that seems "right" always looses you money, then maybe we all need to be very, very wrong. :rofl: If you find a system that will loose money 100% of the time, guaranteed, please let me know what it is, so I can do the exact opposite. I'll give you 80% of the profits, and just take 20% for trading the system.