[SIUYA]

One thing that seems to have been missed (or maybe its me who has missed the point )

Having the right psychology (mindset - if you like) is an edge when it comes to trading.

This is always part of the debate about whether or not great traders can be taught....ala the Turtle trading bet.
End result is that given the same set of rules and opportunities, a group of traders will differentiate themselves between successful and unsuccessful traders due to the difference in their mindset and their ability to follow the rules.

[Rande Howell]

zdo
A friend and former client of mine, who now trades on a substantial scale with a 65% win rate and a 3:1 ration between profits and losses, wrote to me recently and said, "Most traders lose before they begin trading. They enter their day in a cloud of fear attempting to "not lose". This mindset sets them up for failure." Until he mastered his psychology, he did not put up these numbers -- so clearly the re-organization of the mindself of the trader can have a powerful impact upon his/her trading.
This guy also teaches trading methodology and recognizes that it is the mindset, the beliefs and perceptions, of the trader is what drives the methodology in trading. Both are essential to produce consistently successful results. Some learn the two together, and some learn after struggling for years how to integrate these two aspects of trading into a unified field.
It really does not matter to me what comes first or last. Sooner or later, traders have to face their psychologial demons courageously rather than avoid them. It is in this learning from the mirror of the self that trading essentially is that the trader learns what drives them to trade. Rather than a passion for trading, often it is a cover up their own sense of inadequacy, worth, or sense of mattering. These folks seek the Holy Grail "out there" and have not looked inwardly for the source of their strength. The market can be cruel to this mindset. Until this core material is reorganizated into high functioning beliefs, suffering will continue for the majority of traders.
To those that seem to breeze through and "get" trading without the introspection, good for you. You are the exception. Consider yourself blessed and go in peace. To the vast majority of traders who have the technical skills, but are lacking essential skills for peak performance trading, managing psychology is an essential aspect of becoming a successful trader.
When you consider that large numbers of people are entering trading as part of this economic downturn and the age bias downsizing in American businesses, more and more people will be entering trading ill-equipped. The very psychological skills that lead them to a modicum of success in their past career will turn on them and become enemy in trading. As long as fear is the dominant motivator of action, trading will suffer. No amount of technical skill decouples the perceptual map laid down by fear. It has to be faced and reorganized.
Rande Howell

[Tams]

> "Most traders lose before they begin trading.


how true.

[KeyToTheCastle]

[QUOTE=Rande Howell;102863]zdo
"Most traders lose before they begin trading. They enter their day in a cloud of fear attempting to "not lose". This mindset sets them up for failure."

Could not agree more with that statement!

However my experience was that I didn't start trading with a losing mind set. That losing mindset had to be formed from conditioning just as a winning mindset has to be formed by conditioning. Hell...who starts trading as a newbie and expects to lose...it seems so easy when you first look at the markets....my newbie thoughts went something like this :"I'll take a trade when this line crosses that line and the moon is full and I can't lose. After the close today I'm going to start looking at where I'll buy my 1st vacation property cause this looks so easy" So yes, I was doomed before I began but I certainly didn't realize that at the time.

So only after trading and losing my shirt did my mindset form into one of a losing trading because now the only experience I had as a trader was as a losing one. Soon everything I did in the markets came from the mindset and experience of a losing trader. I never felt at all comfortable while in a trade...whether I was taking heat or showing profit on a trade I was always anxious and unsure and was guaranteed of doing the wrong thing. Always with one eye on my rapidly dwindling account balance...always feeling the pressure. Everything I did set me up for further failure.I don't know of any psychological training that could have helped me get past that point. Yes after researching or reading about trading psychology I remember temporarily feeling better but as soon as I started to trade and lose again I would be back to my losing mindset.

Long story short, finally after recognizing and more importantly understanding my edge I began to adapt a mindset of a winning trader. I was becoming a little more comfortable in a trade. I began to truly accept the risk. I can say that once I came to that point of realizing , understanding, and trading my edge and observed it play it out over and over I was able to start using psychology to further advance my winning trader mindset. But it took the repetition and conditioning of seeing my edge play out, understanding why it played out the way that it did, to get me to the point of being able to start adapting a winning mindset, and take steps to advance that winning mindset.

Again, I speak from my personal experience. There are obviously many little nuances in defining what composes the essence of a losing mindset vs a winning mindset but it is definitely a transition , that at least for me, would not have even been able to begin occurring if I didn't find my edge and therefore the confidence to accept risk.

[KeyToTheCastle]

Originally Posted by SIUYA »

One thing that seems to have been missed (or maybe its me who has missed the point )

Having the right psychology (mindset - if you like) is an edge when it comes to trading.

This is always part of the debate about whether or not great traders can be taught....ala the Turtle trading bet.
End result is that given the same set of rules and opportunities, a group of traders will differentiate themselves between successful and unsuccessful traders due to the difference in their mindset and their ability to follow the rules.

Very true indeed sir...but at least after being taught an edge all the turtles had an opportunity to become successful whereas if they didn't have that guidance pointing them to a viable edge they would have been doomed before they began.

I also wonder if the turtles who were successful had a deeper understanding of their edge then the turtles who weren't successful.

[FXGirl]

Zdo, you said: "FxGirl mentioned beginners might be served well to ‘subscribe’ to someone else's edge at first. I disagree! Wearing someone else’s pants is antithetical to ever making an edge truly your own. Trading someone else’s edge is a big mistake for all but a very few beginners/strugglers! In all performance work, ‘talent’, ‘tricks’, ‘cheatsheets’ at the beginning do help – but in the long run are extremely overrated. Just ask Derek Jeeter, Tom Brady, Tiger Woods, Stu Ungar, Phil Ivey, Bernard Barach, or Michael Marcus, etc etc."

Wow, Zdo, that’s an interesting list of examples! When you talk about some one like Tiger Woods, or Mozart for that matter, I think we are looking an innate quality, something they were born with, that gives them the ability to perform at a level far beyond others. So, I’m not really sure what to take from their experience that can be generalized to traders other than the right coaching and long hours of practice develops the skills through which talent is projected. I think that with those two elements, the right coaching and long hours of practice, most of us can make a very respectable income trading without having to rise to the prominence of someone like Tiger – even though being a star might be fun.

It amazes me how many experienced traders give beginners the advice that they have to reinvent the wheel. As traders, we all start using someone else’s edge, even if it is just EMA or MACD (this was once someone’s edge, just like candlestick charts were). The lucky ones of us get some further guidance and a mentor shows us how to organize the information the market is giving us into to something meaningful.

If you start with trading someone else’s edge, at first you don’t really understand why it works. If you stick with it, you’ll learn what the market is telling you through the lens of the system. After you spend more time in front of the charts, you’ll begin to see other patterns as well. Then you can incorporate them or develop them into your unique edge. While you are gaining the knowledge that allows you to develop your edge, trading someone else’s successful system gives you the advantage of making some money (that is the goal after all), and avoiding some of the psychological trauma of blowing through a number of accounts. And as far as trading psychology goes, it’s nice to avoid trauma – much less repair work to do.

Now if you want to use trading primarily as a challenging exercise in self-development, yes, please, reinvent the wheel.

Okay, I know I’m being snarky. Sorry. But there isn’t just one way to become successful.

[SIUYA]

Originally Posted by KeyToTheCastle »

I also wonder if the turtles who were successful had a deeper understanding of their edge then the turtles who weren't successful.

No - most of the original turtles probably initially did not understand the edge..... the edge in the turtle system - what is it? Is it the pyramiding, the loss taking (70% losers/30% winners), the running of the profits, the diversification, the combination of them all.
From my extensive reading, testing and trading this style - its pretty much about diversification of instruments. This is however always debated amongst many people.

But enough of that..... the thread is more about mindset, and on that note, here is a quote from the book by Curtis Faith - Trading Instincts pg 31. He was one of the few successful Turtles right from the get go....

"My intuition told me that the most important factors would be how well we displayed the spirit of our training, took advantage of the opportunities that arose, managed our risks and handled the trading on an emotional level. Most of the other turtles thought our goal was to make as much money as possible"
"It wasn't my intellect that made me take that trade.......The difference was intuition: I followed my instinct."

He followed the rules....so in this respect the rules came first.
But the point is the mindset to just follow the rules in itself is an edge
If you like its an "edge over other traders on the edge."

Given this, and that there are lots of entries, exits, strategies that have a positive edge (this again is debatable) that are readily available, why so many traders continually try to invent new ways of doing things - finding a new edge, surely the mental aspect of understanding the edge, why it works, and WHEN it works (as context is king) and then applying it is the extra edge.

(I think everyone can relate to the initial trading winning then loosing mindset Keys to the Castle described above.... kinda makes us all seem like hopeless gamblers)

Edit: while writing this FXGirl, submitted a similar point..... the wheel already exists, why reinvent it.
Additionally, just about every supposed trading edge is a variation of some sort, but they all have a few similar attributes.

[Rande Howell]

Certainly the naive mindset of a beginner dies a quick death. And certainly at pattern of failure can be set up based on that loss based on conditioning. And I think it goes beyond that. What I find in people in transition to trading is that stuff they covered up well before trading comes to haunt them in trading. It becomes a sharp knife to the psyche. One that was well avoided before trading. Beliefs are revealed as either workable in trading or alibies that blow up trading accounts.
Rande Howell