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jpennybags

Making Changes...

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I was going to post this in "Trading Psychology" but it didn't seem to be a proper fit:

 

Ever get the notion that goes something like this: "if I were to change a few things here and there I could be killing this market".

 

If you've been doing something successfully for some length of time, why change it? I've also come to think that it can be far too easy to forget all the toil and struggle that brought success about, forgetting… "why we do what we do".

 

I recently tried to make some changes to the way that I trade. What brought all this about was the notion that: "I leave a lot of potential profits on the table every day". That is a true statement; can't be denied. But really… so what? After abandoning this project, I had myself so messed up it took a couple of weeks to get my good stuff back.

 

We all concoct, or gravitate to trading systems (methods) that are suited to our temperaments and personalities, and finding that place can be a struggle. It took me a couple of years of trying different methods before I came to that moment when I could say… "Yes, this is what I was looking for" (on second thought, possibly it took that long to understand what I was looking for). This latest excursion has brought about the realization of how fragile trading can be (for a discretionary trader). My methods work because it's the right fit for me. Think about how it's all intertwined: temperament, risk tolerance, competency, and the methods devised to act or counteract with all that. To make major changes, one needs to deconstruct the entire thing… including one's motivations, triggers, and habits… Yikes!

 

Now, I do believe that nothing is static; you are either waxing or waning. Allowing oneself to become complacent can be the death of a career… besides, complacency is boring. It may well be that I will have to be satisfied with taking 10 ticks several times a day, because it's working… only a select few can play professional sports… maybe I'm stuck in the minor leagues (it's not a bad life). Don't know… going to have to think about it some more.

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I was going to post this in "Trading Psychology" but it didn't seem to be a proper fit:

 

Ever get the notion that goes something like this: "if I were to change a few things here and there I could be killing this market".

 

If you've been doing something successfully for some length of time, why change it? I've also come to think that it can be far too easy to forget all the toil and struggle that brought success about, forgetting… "why we do what we do".

 

I recently tried to make some changes to the way that I trade. What brought all this about was the notion that: "I leave a lot of potential profits on the table every day". That is a true statement; can't be denied. But really… so what? After abandoning this project, I had myself so messed up it took a couple of weeks to get my good stuff back.

 

We all concoct, or gravitate to trading systems (methods) that are suited to our temperaments and personalities, and finding that place can be a struggle. It took me a couple of years of trying different methods before I came to that moment when I could say… "Yes, this is what I was looking for" (on second thought, possibly it took that long to understand what I was looking for). This latest excursion has brought about the realization of how fragile trading can be (for a discretionary trader). My methods work because it's the right fit for me. Think about how it's all intertwined: temperament, risk tolerance, competency, and the methods devised to act or counteract with all that. To make major changes, one needs to deconstruct the entire thing… including one's motivations, triggers, and habits… Yikes!

 

Now, I do believe that nothing is static; you are either waxing or waning. Allowing oneself to become complacent can be the death of a career… besides, complacency is boring. It may well be that I will have to be satisfied with taking 10 ticks several times a day, because it's working… only a select few can play professional sports… maybe I'm stuck in the minor leagues (it's not a bad life). Don't know… going to have to think about it some more.

 

We make money in the market when others lose. Most losing traders cannot keep losing forever; losing traders either stop trading, or they change the way they are trading to either a winning strategy or another losing strategy. A winning strategy could be simply finding what our threshold for pain is. When they do, possibly, we start losing and they start winning. If we trade expecting to find traders who will lose and they are not present, then we do not make money and may lose too. The challenge is to continue to profit from others' losses which will involve changing how we take money from the market. It is unknown how long a strategy will work but expect the above to be true. Fortunately, there is always an abundance of losing traders.

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We make money in the market when others lose.

 

I've heard that explanation many times, but it's not something that sits well with me (possibly that's a fault of my own).

 

I could imagine a market where most are successful, save those unfortunate few that sell the bottom or buy the top; they were just "wrong". Then there are those who go long or short too early that get stopped out; they were "right" and "wrong" at the same time (though, who hasn't been there). I would also suppose that there are those that throw themselves in front of the "momentum" freight train… for some ill conceived reason. Though, I can't believe that happens more than a few times per individual; unless one truly is an idiot. I suppose too that there may be a lot of idiots out there.

 

Then there is the 80/20 rule: 20% of the people in an organization cause 80% of the problems… 80% of the costs incurred for any project will be expended in that 20% which involves start up and completion… 20% of a task group does 80% of the work… and on and on. It's odd how the 80/20 rule plays out. Ha!!!… 20% of what I'm talking about at any given time is 80% bullshit (that could be reversed for some folks).

 

Pareto principle - Wikipedia, the free encyclopedia

 

I wonder what the actual percentage of all trades that occur during the day in any market are successful. 80% or 20%? Could it be that 20% of traders take 80% of the successful trades?

 

I would rather prefer to think that every market participant facilitates the other in either success or failure. Someone must lose for me to win… I don't think so, but I'll take the money just the same… it makes no difference to me.

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your first post is interesting as there are many ways to move forward (as standing still is a poor option and I assume this is what you mean by making a change - otherwise your self destructive changes are just insane)

 

1) trade more instruments

2) trade larger size

3) trade more often (usually a bad choice)

4) trade more patterns or ideas (probably a bad choice IF as you state it messes up whats working, and I have a sneaky suspicion you would naturally trade at similar levels and hence you revert back to 1 and 2)

5) Invest in others who do something different but they do it well

6) Invest in completely unrelated businesses

7) Be satisfied you trade well and get a different hobby to move forward.

 

 

 

Re the zero sum game - well yes in a closed environment it is all a zero sum game, but in the realm of the size of world markets, the 5%/95% ratio of retail winners, loooosers is irrelevant. Larger players are benchmarking and so we can ignore all this IMHO.

Do you know about the Quincunx / Galton Board ? Maybe we are fated to naturally split things and hence the question is how do we give our selves the best opportunity of being an outlier, and if what you are doing works at present with that in mind - why change in the hope of joining the norm.

Luv Friday ramblings.

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7) Be satisfied you trade well and get a different hobby to move forward.

 

That is the conclusion that I came up with too (for now).

 

I spent a large part of my professional career working under contract, and I've been with many different companies during that time. Thriving businesses are always in flux. It's been my observation (however limited) that those companies that are adept at implementing change are far more likely to succeed than those who struggle with change.

 

Major changes in how a company does business can be painful. I recall a company that went full bore with the implementation of SAP. This was a large company that literally ground to a halt over the span of a few days. They didn't roll out the changes a little at a time, and they paid the price for it. It was ugly...

 

I suppose I'm guilty of a poor management decision in not making a proper assessment of the task at hand. Poor management decisions... arrogance or ignorance? I think I probably had a little of both things working.

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small changes - incremental changes are key

You often hear of the huge change, but these are only successes that only come after disasters and rock bottom IMHO. Huge changes for the sake of it are usually a disaster waiting to happen. (think corporate types who want to implement huge changes when incremental ones might work)

 

I have found from my own experience and friends that its amazing how many large companies have really crappy processes in side them, and often I think this is a direct result of undirected and non-holistic change (either it was a huge change or organic small growth over many years, but it was undirected). Key I think for individuals or small companies is get the small things right -- right from the start.....change is then easier.

 

Have a good weekend - I have a lovely highly regarded restaurant to attend Sat night - 7 courses ---- lets hope they get the small things right!

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As I had come to the conclusion that it would be best not to mess with the "money machine"... at least for now... I decided to ruminate on the matter... let it soak.

 

Whenever I come across a problem that vexes me, I usually will do some study in another area... related but off topic... gain another perspective. Even if it doesn't bring about a solution, at least you've stored away some knowledge for another time and place... a good thing.

 

I came across a book about psychology: "Thinking Fast and Slow" by Daniel Kahneman (posted a book review). A fascinating read that will cause you to consider how you make decisions, create biases, and how often your thinking can become skewed by priming and simple suggestion. How mood and the simple act of smiling or frowning effects your performance. And there's more...

 

It's a lengthy read at over 500 pages, but well worth the time.

 

Edit: If someone else has read the book and would like to bounce around some trading related thoughts... PM me.

Edited by jpennybags

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related book that I am currently reading and enjoying.

 

Seeing What Others Don't: The Remarkable Ways We Gain Insights: Gary Klein: 9781610392518: Amazon.com: Books

Gary Klein

 

it also relates a lot to what others talk about in trading regards - how to see things, how to break through and where insights come from.

Of particular interest is that 'insights' and 'aha' moments are not always either gradual, or flashes of brilliance. Nor are they necessarily following a fixed path of gaining insight....but what they do do is change the fundamental beliefs or anchors - they often get turned upside down.

So when it comes to making changes sometimes i guess a lot depends on if you are on a path of false beliefs or not....or if you need a massive upset of the status quo. If things a re working small changes are best, if they are not large may be just what the doctor ordered.

How often is it said that once the correct insight is gained by a person everything else seems to fall into place.....flow is easier, or we simply choose to do other things reaslising from the insight that what we want out of the market is not what we require.

...............Saturday musings as the sun shines, and summer flies annoy.

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I've recently read a book authored by the same person mentioned (Gary Klein): "The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work".

 

If you are a successful trader, I would venture that you already understand the concepts presented in the book. As a discretionary trader how much of your day is guided by intuition? I'd say (speaking for myself) a lot... maybe 85%. Sure, I watch technical levels, and monitor the pace of trading. I have my trend lines and indicators, but these things just provide parameters to work within. When it comes to actually pulling the trigger on a trade it's "experience enabled" intuition that guides me.

 

Anyway, I found it to be interesting reading and trading related.

 

From Amazon:

At times in our careers, we've all been aware of a "gut feeling" guiding our decisions. Too often, we dismiss these feelings as "hunches" and therefore untrustworthy. But renowned researcher Gary Klein reveals that, in fact, 90 percent of the critical decisions we make is based on our intuition. In his new book, THE POWER OF INTUITION, Klein shows that intuition, far from being an innate "sixth sense," is a learnable--and essential--skill.

 

Based on interviews with senior executives who make important judgments swiftly, as well as firefighters, emergency medical staff, soldiers, and others who often face decisions with immediate life-and-death implications, Klein demonstrates that the expertise to recognize patterns and other cues that enable us--intuitively--to make the right decisions--is a natural extension of experience.

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Meditation? Cripes... what's next?

 

I have always been skeptical about "meditation". I suppose it's all the baggage that goes along with the word "meditation" that has made me dismissive of the practice... "feckless" is the word that first comes to mind. That said...

 

I just finished a book written by Dan Harris... a news anchor and journalist. The book is his account of how he came to the practice of meditation. It's a thoughtful and humorous read... enjoyed it: http://www.amazon.com/10-Happier-Self-Help-Actually-Works-A-ebook/dp/B00FJ376CS

 

Needless to say... it struck a chord with me (I wouldn't be posting about it otherwise). Still skeptical, but I intend to make an honest effort to explore the subject and experiment.

 

Any one else been down this path?

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I was going to post this in "Trading Psychology" but it didn't seem to be a proper fit:

 

Ever get the notion that goes something like this: "if I were to change a few things here and there I could be killing this market".

 

If you've been doing something successfully for some length of time, why change it? I've also come to think that it can be far too easy to forget all the toil and struggle that brought success about, forgetting… "why we do what we do".

 

I recently tried to make some changes to the way that I trade. What brought all this about was the notion that: "I leave a lot of potential profits on the table every day". That is a true statement; can't be denied. But really… so what? After abandoning this project, I had myself so messed up it took a couple of weeks to get my good stuff back.

 

We all concoct, or gravitate to trading systems (methods) that are suited to our temperaments and personalities, and finding that place can be a struggle. It took me a couple of years of trying different methods before I came to that moment when I could say… "Yes, this is what I was looking for" (on second thought, possibly it took that long to understand what I was looking for). This latest excursion has brought about the realization of how fragile trading can be (for a discretionary trader). My methods work because it's the right fit for me. Think about how it's all intertwined: temperament, risk tolerance, competency, and the methods devised to act or counteract with all that. To make major changes, one needs to deconstruct the entire thing… including one's motivations, triggers, and habits… Yikes!

 

Now, I do believe that nothing is static; you are either waxing or waning. Allowing oneself to become complacent can be the death of a career… besides, complacency is boring. It may well be that I will have to be satisfied with taking 10 ticks several times a day, because it's working… only a select few can play professional sports… maybe I'm stuck in the minor leagues (it's not a bad life). Don't know… going to have to think about it some more.

 

Comfort zone,huh? I find myself stuck to routines too because they work. I feel that maybe if I change then it won't work out or will not work out as good as it is right now. But then on second thoughts,I think maybe I am leaving something that could work even better out there. I think the best way to start changing is doing it gradually and not suddenly. That way we won't notice that we are changing until we look back and notice. If it is a good change,then we are happy we started it. If not,we could retrace our steps or try another direction altogether.

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