Taking the Blinders Off the Trading Mind

[MightyMouse 12]

All good stuff JT, but can you explain who the panic buyers are. I thought most of the trading was done by institutions and HFT

 

Institutions and HFT panic too.

[zdo 20]

re "...if a psychologist has helped a trader..."

 

In first name alphabetical order… personally, I know traders who were helped

by Ari Kiev. (I think he’s a retired MD but not a shrink?)

by Brett Steenbarger (psychologist for sure, major portion of his practice dedicated to traders?)

by Denise Shull. (‘psychological’ researcher turned trader turned trading ‘sychologist’ ?)

by Doug Hirschhorn. (Athlete turned psychologist plus trading psychologist ?)

by Jake Bernstein (psychotherapist turned trader?).

by Kenneth Reid (psychotherapist and trader?)

by Mark Douglas (trader turned self educated psychotherapist?).

by Rande Howell. (advertising exec turned counselor, portion of his practice dedicated to traders?)

by Robin Dayne, for pete’s sake. (trader turned ‘coach’?)

I don’t know any traders who were helped by Ruth Roosevelt… but (see below) she no doubt has really helped a few …

by Van Tharpe. (psychologist turned trading psychologist?)

 

… and

I also know (for sure with most of them) that their ‘ultimate success rates’ are very low.

 

I put ? mark beside all the ‘bio’s’ Also, not all of the above are ‘psychologists’ btw. But, after all these attacks, we’re also not really talking about psychology anyway! :crap:

 

My peers, I’ve posted this multiple times now – the odds of a trader finding the ‘right’ ‘therapist’ for him are very very very low. It’s not the credentials or qualifications or ‘magic’ of the therapist that matters. It’s not the levels of commitment, readiness to change, etc. the therapand brings. Those things do factor in somewhat – but the pivot, the crux is on the MATCH btwn therapist and therapand… and the odds are low for good matches with ‘normals’ and even much lower for good matches btwn a therapist and a trader!

Just some of the limits –

95% of therapists bring unconscious biases that immediately disqualifies them from ever really helping traders.

Very few of the therapists who are free of those biases realize they are qualified.

Very few traders really will understand what they need to work on with a therapist.

Fewer will go through the discomforts and ‘risks’ necessary to get benefit.

 

I can understand the attacks on ‘psychologists’ herein.

But for me it’s not them. It’s the extremely low likelihood of finding an adequate match !

[gosu 10]

Maybe they need a "Chess Psychologist" to help overcome the "fear" of taking several small "losses" (pawns) to get the bigger "wins" (Queens etc)..

 

There is a reason why you don't see any "chess psychologists." They would starve.

[MightyMouse 12]

Today is a good example of using the Psy side to trade.

I have been salivating to get short above 1300 in ES

My thinking was that we would hack it up around 1300 and then bust above. Then we need to hold above that to convince most people that it is sustainable and will go to the next level. So last week it hung around 1305 to 1310.

But now it needs to get people to chase it and make people panic buy decisively above 1300

So this morning I was looking at the tape looking for exhaustion of buyers, (not big sellers pushing against)

If I saw big volumes at the double top this morning, I would have a completely different plan of action. When you get true exhaustion moves, You can expect the market to start working the fear side of the longs until you exhaust them.

Thats all the S&P floor traders do. They push and push until it wont go, then start pushing the other way.

Thanks

 

Jtrader500,

 

Why are you salivating to get short above 1300? I am not trading ES and wouldn't trade it on the time-frames you look at. But, it is in a decent up-move and it looks like it wants to go higher and higher. It looks weak but it can go up on weak volume for a really long time. It seems like weak shorts keep entering trying to call a top and they get their asses handed to them at slightly higher prices. Weak buyers are not really entering which is what you need to have the market go down below 1300. Just my opinion BTW.

[jtrader500 10]

Jtrader500,

 

Why are you salivating to get short above 1300? I am not trading ES and wouldn't trade it on the time-frames you look at. But, it is in a decent up-move and it looks like it wants to go higher and higher. It looks weak but it can go up on weak volume for a really long time. It seems like weak shorts keep entering trying to call a top and they get their asses handed to them at slightly higher prices. Weak buyers are not really entering which is what you need to have the market go down below 1300. Just my opinion BTW.

 

My strategies vary according to market conditions. Last week I started building a short position and then daytrade around it to keep my core swing shorts flat as the market moves up. Right now i'm short 1800 shares of SPY as a core.

1300 is a big psy barrier. Money managers have piled into risk too fast in Jan.

What I look for after a big runup is over the past month or so, how many times the market sold off pretty hard in the morning and grinded higher to the close. Now it is pretty much the best trade to rely on. I have seen this action so many times that I know we are close to the, what I call the "trap". I dont know when it will happen (after apples earnings) but its close. Then you should see people buying the early morning selloff, only to get slammed at the end of the day. That will be the trap. Usually a 200-300 dow loss.

Plus all the sentiment indicators are to bullish.

We, at a minimum, will go back below 1300, and how we act then will determine my moves.

My trade style has always been to only short sell. I never trade long.

From the Oct lows to Dec on that up move, I daytrade shorted almost everyday and made money. I had 2 losing days on about 400 trades.

But that strategy is very stressful on my mind, because it is a progressive system that requires me to stay focused on vol for extended intense periods.

As we move to upper extremes in moves, I switch to swing, so I can capitalize on the big money best risk rewards.

thanks

[jtrader500 10]

I think I missed and important point on the last post.

When the market has had a run like it has, and looks very strong, The timing is alot more critical, but the risks are lower than if you wait for confirmation that the tide is turned.

 

Some money managers for example measure the deviation of price from the 200 day MA.

others, wait for price to cross to the downside of the MA

If I am going to trade one way or the other, It will be the one that I can quantify my risk as tight as possible. And if I am wrong, I will be wrong within minutes of the trade and can exit instantly.

I like to think of it this way. Which way will I be able to limit the length of stress in a trade.

If I trade in the high anxiety zone, close to the edge, I am taking advantage of others emotions and limiting my risk.

If I wait for confirmation of weakness, "we all know that prices like to test highs multiple times" I will have to sit through a lot longer heat and hope it doesnt break to the next level.

My drawback is that I may have to jump in and out 3 or 4 times. But I eliminate ever having a big loss. The only time I take a bigger loss, is when I give it to them. And that problem falls on me, not my strategy.

Thanks

[MightyMouse 12]

My strategies vary according to market conditions. Last week I started building a short position and then daytrade around it to keep my core swing shorts flat as the market moves up. Right now i'm short 1800 shares of SPY as a core.

1300 is a big psy barrier. Money managers have piled into risk too fast in Jan.

What I look for after a big runup is over the past month or so, how many times the market sold off pretty hard in the morning and grinded higher to the close. Now it is pretty much the best trade to rely on. I have seen this action so many times that I know we are close to the, what I call the "trap". I dont know when it will happen (after apples earnings) but its close. Then you should see people buying the early morning selloff, only to get slammed at the end of the day. That will be the trap. Usually a 200-300 dow loss.

Plus all the sentiment indicators are to bullish.

We, at a minimum, will go back below 1300, and how we act then will determine my moves.

My trade style has always been to only short sell. I never trade long.

From the Oct lows to Dec on that up move, I daytrade shorted almost everyday and made money. I had 2 losing days on about 400 trades.

But that strategy is very stressful on my mind, because it is a progressive system that requires me to stay focused on vol for extended intense periods.

As we move to upper extremes in moves, I switch to swing, so I can capitalize on the big money best risk rewards.

thanks

 

You have been short since Oct and you have had only 2 losing days? Did I read this correctly? That is amazing. However, it seems like you are trading in the same direction as 95% of the traders. How have you managed to lose only 2 days? Is your "core" position underwater?

[jtrader500 10]

You have been short since Oct and you have had only 2 losing days? Did I read this correctly? That is amazing. However, it seems like you are trading in the same direction as 95% of the traders. How have you managed to lose only 2 days? Is your "core" position underwater?

 

Sorry, I should have been more clear.

After I cover my swing shorts after a good downtrend. My patience wants me to trade. So I switch to daytrading and try to be flat by the close each day. So that big runnup, I was shorting every day for smaller moves. As we get overextended like now, I switch to building a short over a week or two and daytrading around it. Like this morning, I was already swing short and when I saw this nice solid high volume run off the open, I just took a shot for 600 shares more of SPY on the quick double top. I got lucky and didnt have to try multiple times like normal. Once it went in my favor and picked up momentum, I set my rule to exit that 600 sometime after 3 legs down and volume about 30k on a 2min chart. I covered that after the retest, a point off the lows. Volume cycles dont change much b/n fear and greed on different days. Trading this way gives you a way to put order in the chaos.

I already know when I will cover my core position right now. It will be when I see a selling climax, and get vol prints of about 70k to 80k on a 2 min chart. (general rule only)

For example, on a typical day in normal trade, a 8k to 10k vol print on a 15sec chart is a good wakeup call to trade the test.

When you know the vol cycles good, then levels, shakeouts, fibs, macd, etc stuff are just obstacles till it gets there. It also allows you to filter your normal trade signals and skip the bad ones.

Another example is that I already have a plan laid out to be short during the next 500-900 point dow drop and what the orderflow and spread characteristics should look like. I wont know it until its down about -300, but at that point, I have to play game.

Thanks

[MightyMouse 12]

Sorry, I should have been more clear.

After I cover my swing shorts after a good downtrend. My patience wants me to trade. So I switch to daytrading and try to be flat by the close each day. So that big runnup, I was shorting every day for smaller moves. As we get overextended like now, I switch to building a short over a week or two and daytrading around it. Like this morning, I was already swing short and when I saw this nice solid high volume run off the open, I just took a shot for 600 shares more of SPY on the quick double top. I got lucky and didnt have to try multiple times like normal. Once it went in my favor and picked up momentum, I set my rule to exit that 600 sometime after 3 legs down and volume about 30k on a 2min chart. I covered that after the retest, a point off the lows. Volume cycles dont change much b/n fear and greed on different days. Trading this way gives you a way to put order in the chaos.

I already know when I will cover my core position right now. It will be when I see a selling climax, and get vol prints of about 70k to 80k on a 2 min chart. (general rule only)

For example, on a typical day in normal trade, a 8k to 10k vol print on a 15sec chart is a good wakeup call to trade the test.

When you know the vol cycles good, then levels, shakeouts, fibs, macd, etc stuff are just obstacles till it gets there. It also allows you to filter your normal trade signals and skip the bad ones.

Another example is that I already have a plan laid out to be short during the next 500-900 point dow drop and what the orderflow and spread characteristics should look like. I wont know it until its down about -300, but at that point, I have to play game.

Thanks

 

 

Well I wish you luck. If my assessment ends up being right. I assure you it is purely a guess.

[jtrader500 10]

Uh oh,,,,,,, You need to clarify the apparent contradiction here. So far i'm still open minded but i gotta tell you my bullshit meter just spluttered into life.

Now,i know it is possible to be on the wrong side of the market and make money.Many of us offset say,long swing positions with counter trend intraday trades.But to only be willing to trade the short side when the market is in an uptrend is to make life harder.After ''19 years'' i would expect you to have made life easier.

Good idea to hold off on that book for now.

 

Thats the energy that I like to hear!

You are not saying that I cant make money because I am a master at my side of the market are you. LOL

This brings me to a very important rule that you should write on your monitor in big letters.

IF THE MARKET REALLY WANTS TO GO UP, IT NEEDS TO GO DOWN FIRST

I can explain why later, but guess what, it has to do with the psy of the big money.

Is't it funny how everthing ends up going back to that.

 

Examples: wave theory=psy Fibs=psy macd divergence=psy

A MACD divergence is basically prices making a bottom and grinding up some and then making a faster move to the second test. I will be gauging the people trading while others are looking at a blue line saying "should I jump in". They are using statistics and I am reading people. I wonder who will be more consistent.

Thanks

[jtrader500 10]

Well I wish you luck. If my assessment ends up being right. I assure you it is purely a guess.

 

There is no such thing as luck.

I will put it in simple statistical terms

 

If you are playing red and black on the roulette table and I told you that you could pull 99% of your money off right before the wheel stopped if you were wrong. You would do that wouldn't you.

I wait till the odds are in my favor and I take a shot at a top as close as possible. If i'm wrong, I get write out and try it again higher. By the end of the day, I will catch it, unless I give up. And once I start the sequence, I dont give up.

Thanks

[MightyMouse 12]

There is no such thing as luck.

I will put it in simple statistical terms

 

If you are playing red and black on the roulette table and I told you that you could pull 99% of your money off right before the wheel stopped if you were wrong. You would do that wouldn't you.

I wait till the odds are in my favor and I take a shot at a top as close as possible. If i'm wrong, I get write out and try it again higher. By the end of the day, I will catch it, unless I give up. And once I start the sequence, I dont give up.

Thanks

 

You are very lucky to have any money. So, there is luck and you have it. Not sure what odds book you play from, but with a rising market since Oct. I would say you have been playing against the odds and if you have survived, you are very lucky.

[jtrader500 10]

Ok, so tell me how you trade an all day up- market gaps up and goes all day ends on/near the high,if you only trade short? Because for me,the ideal is to already be long from the prev day low/swing low-=. In this way i find the market does the heavy lifting for me.And on this type of day the market doesn't ''need to go down first''

 

At least your listening. You have a chance

Her is an example of my most stressful day and still made money

Remember when they approved the EFSF in europe. I was looking to short that news.

At 2am the ES was up 16 points. I started picking double and triple tops when the DAX opened and I thought we had the final top. It would come down a little and then grind higher and take out that level. I got out and waited to see if the next level would be it.

I did this about 6 times until finally at 3pm, we got an 11 point break and I netted ony $400.

That was a stupid day on my part. But, unless the market stays at its high and doesnt pull in at all, I wont get hurt too much.

There are lot of other filters that I use, but these are little posts.

The 2 days that I lost money, were because the market wore me down and I gave up for the day. The market isnt my enemy, I am

 

I am trying to give only advise that is very important. Like me only trading from the short side. I know its not the norm, but if you picked one market and started trading in only one direction. And you knew that direction and market better that most. They cant beat you over time.

The only people that can take my money, are people that know the short side better than me. All the black boxes, fund managers, hedgers, they all show up in the volume. And there, they cant hide.

 

Look at everyone around you and do the opposite.

[jtrader500 10]

I challenged Rande/psychology not because i have an entrenched view,but because i believe that many things in life need to be challenged and questioned constantly-like politics for instance.And also there are often two opposite sides to the same statement.

Thus:

 

Making 10 points in 5 minutes can be lucky if your target is measured in time rather than mathmatically

 

Being short in a flash crash of 100 points- lucky.

 

Clicking buy accidently and it goes that way - lucky.

 

But consistently making money is not lucky.

 

So your statement is true and not true.

 

 

It was a 400 point dow up day, and it pulled back 100 points in the last hour.

I could care less how much money or how long it takes. All I care about is that when I get in and it goes my way, I watch the volume. If it breaks hard and fast like this morning, I know the odds of a retracement of some, are high. The slower the grind lower, the more I like it.

Here is a little tip, if you care to take it

When your in consolidation after a good runnup, and I short a second test and it ranges too long. I will get out because the psy of other traders are taking easy low stress short positions. Now, the pattern has not changed but my strategy has to change. Now there is a higher odds that we will at least stop run those shorts out before we go down. Now I can take advantage of the uneducated shorts and the giddy longs. This is where "the market goes up if it wants to go down"

Time changes my rules just like price and vol.

 

To determine if a breakout is likely to fail or not. Look at the speed and consistency up the upticks. If I am short and the market slowly goes to the breakout point, I get out stress free because the energy tells me its probable.

It is knowing the basic market rules that give you a consistent edge.

I have to go to sleep now, take care

[BearBullTrading 10]

... I got lucky ...(10.11pm)

 

...There is no such thing as luck...(10.38pm)

 

 

"Luck" is such a fickle thing.....Only 27 mins to change your mind....::doh:

[bobcollett 10]

Hi mitsubishi

Heres some info to take your mind off psychologists

A solar flare measuring M9 (big) , travelling at 2200km/s, will hit the earth today,at

14:18 GMT

ANY SATALITE IN ITS PATH COULD BE DISRUPTED.

Trading thoughts............

Be out of the market at 2:15 p.m.

Or Have a secure stop in position.

Watch for selling volume before the time and go short.

Watch for buying volume after the event and go long

regards

bobc

PS I believe solar flares are unlucky and will not trade after lunch.

[johnw 10]

............................................f. I'm still listening because i know of another trader on another forum who trades exclusively on the short side.......

 

gm mistsubishi,

 

If a European traded short coffee only, would that make him a Short White?

[johnw 10]

Gm john,

Is this another test? Well,as you know,i'm a big fan of shades of grey,how does grey grab ya?

I know a few black guys that were born in London.That makes them european but not white.As far as i know they don't trade coffee.One used to trade cocaine (white) and a couple traded weed (green) and cannabis (brown)

 

 

Good for you mitsubishi, you passed that test with flying colors.

Keep your BS meter fully charged at the moment, I have a feeling it will serve you well

if not already.

[jtrader500 10]

"Luck" is such a fickle thing.....Only 27 mins to change your mind....::doh:

 

Maan, you are good. You got me good on that one!

Put the handcuffs on me, you just put me in my place. It made you feel good didn't it

I guess before I speak, I should review all my words and make sure that you can get 100% black and white answers like people want in trading.

 

Just kidding! It's just human nature to pop back. Good job

remember that I am ADHD and I type while I am thinking, Alot of times I talk in circles and change subjects to something diff.

All kidding aside, Pay attention, you will appreciate it later.

Thanks

[RealDemo 10]

I guess before I speak, I should review all my words and make sure that you can get 100% black and white answers like people want in trading.

 

No don't do that, I prefer you all obscure and mystical like.......

[zdo 20]

....How do/did you work around these issues?

 

Good question.

 

but re "main symptoms of ADHD" be careful of oversimplification here. There are seven types of attention disorder and only a couple of them really feature those symptoms.

 

mitsubishi, Can't remember his name right now but did you know there is a trading psychologist who at one point consistently asserted that MOST traders are 'attention' disordered ?

[jtrader500 10]

Every one of your weaknesses can be turned into a strength as long as you recognize the problem and take each one head on until “your strategy is in line with your weakness”.

 

ADHD: Bad parts of adhd is that your mind is everywere and focus is spuratic. The benefit (at least for me) is that if I am really interested in something, I have extreme focus and can take in a lot of information and process it into feelings instead of just numbers. So to keep satisfied, I watch the screens, listen to the S&P squawk pit and listen to all the interviews on CNBC. I get the volumes just right, the lights down low and get into a nice zone flow. If I stay up late or have some other things to do and cant get feeling right, I recognize my state of mind and trade really small just to satisfy my wanting to trade. If you cant “identify” your state of mind and look at yourself as a third party. You wont be able to control your actions and impulses. Talk to youself while trading, one of you say your rules for that setup,(which should always be,”if breaks this, im out”) the other, talk about whats not agreeing with your plan.

 

Impatience: I look at all my R/R’s in a probability setting of where we are located between the bigger picture swing highs and lows of vol and price. Some people use standard deviation stuff, sentiment cycles or whatever. The sizes of my positions are scaled in cycles that match the R/R (just roughly, not calculated. I’m not a freak). This way, you can continue to trade in “coin toss” times. When I am very eager to short a level, I recognize that others are probably eager too. So I put a small pilot position on and then I can really lock my feelings into the trade. Most of the time, this scenario, prices will decline until it looks like im smart. Then it will slowly grind back up for another test or breakout, and that’s where I put on more. The main rule here is that its probably not the final test UNLESS it looks like a 100% likelyhood it will bust thru to the upside. That’s when the pilot position allows you to lock into the feeling of the orderflow.

 

Emotions: I feel that my high emotions is my biggest edge. So while taking in multiple sources in imformation, I don’t have to think logically about numbers. They go straight to my feelings and as long as I can realize that my feelings are a “trading tool” I can then separate my actions. Without that separation, your emotions will kill you over time. That’s why I want traders to understand that if they learn to do this, Their trading will be a lot more stress free. You have heard people talk about “being in the zone”. This is what they are talking about, I think.

I hope I am explaining this in a way that people can learn to use it.

[Rande Howell 10]

ADD and ADHD is a massively over dx'ed condition. The distraction factor is actually co-morbid with anxiety and is often misdx'ed. When I was managing populations of youth and adolesence, very few of the clients actually were organically based ADHD, though they were dx'ed. Most were anxiety where distraction was the common factor. Most school systems and mental health organizations jump on the diagnostic criterion of ADHD, particularly with boys, because it is easy.

 

If you take a form of speed and it slows your sensation of time down, you can be sure you are dealing with organic ADHD. If you take a form of speed and it accelerates your sense of time, you are most likely looking at anxiety and distraction as a way of dealing with the stressor.

 

All grown up, it shows up in trading still misunderstood. This is common. See it everyday.

 

Rande Howell

[jtrader500 10]

Good information

I just call what I have adhd, but never really studied it formally.

I just know that I go thru various cycles of getting interested in a particular weak area of my life and then I will be so focused on it until I figure out every nook and cranny and make sense of it. It is relentless. Sometimes I dont realize that I didnt eat breakfast or lunch till 4pm.

Then I reach a point where all of a sudden, where I could care less what the market is doing. Those are the times that I find little projects to unwind.

Like right now, Tonite, my new trading desk came in and I have to set up the monitors and try to create an environment with plants and other calming things to relax with.

Thanks for the advice

[Rande Howell 10]

Rande,serious question,Do you deal with ''habituation'' on either or both sides of the client/professional experience?

 

I'm not really sure of what your asking, but I'll take a stab. The short answer is yes. Habituation is what the brain learns to survive. I spent a number of years working with high risk youth and adult populations where medical management was an essential element of their treatment and where dx and treatment were DSM IV centered. I don't like that orientation, but that was my job. And I saw a lot of distraction treated with adderal that was better treated with an SSRI (hence anxiety) and some form of talk theapy.

 

The building of pattern, or habituation, is simply the way the brain responds to its mandate to adapt to environmental pressures. Whether it's an impulsive high risk kid or a personality disordered incarcerated adult really isn't the issue once you get past the constraints of modern medically centered treatement of mental health. What matters is the recognition of emotionally based reactive pattern governing the perception of a person. This is what opens and closes their sense of possibility in the world and how they act to challenges in their environment.

 

Trading is simply an environment that presents challenge to the habituated patterns of response and perception. And it is jarring for most traders because the old patterns of habituation don't work due to the shorter time frames in trading. It is the adaptation to early formative environment that you see played out when a trader engages the uncertainty found in trading. This is pattern or habit. And the old way most often needs to change for higher functioning. The change is usually about the brain's organization around the emotion of fear. Most stay stuck here. This is habit or pattern, and if you're work with change, you are working to change the habits of perception -- particularly around the engagement of uncertainty.

 

Rande Howell