I'm not sure whether this fits into the category of "Trader Psychology" but, honestly, I couldn't find another place to put it.
I feel like I've hit a dry patch in my research efforts. So, here's my question: what are your best sources of trading ideas - that is, where do you get inspiration for new trading strategies? The market is the number one place, but I'm wondering if anyone else has any preferred books, magazines, websites, etc.
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Early on, I got most of my new ideas from other traders. Some experienced, some newbies. Some simply mentioning an instrument they liked and showing me a chart or two. This could often spawn a new perspective for me or help me choose an instrument or time frame which better suited my personality. Reading other trader's blogs, journals, charts, and information on why they took the trades they did all helped me create my trading plan. There are plenty of all of those things here.
I will share my chart for today, in hopes it could potentially help you with a new thought/idea:
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Keep searching, and then once you have something which 'fits you', stick with it.
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I would suggest you avoid searching for new strategies or methodologies.
Instead, you should likely be focusing on discipline, risk, trade management, psychology, crowd behavior, and in short -- yourself. Mastering these is where majority of traders fail. You can have the best system in the world, and still fail miserably if you cannot master these traits.
In the "Highly recommended books" thread you will find many good recommendations for books on these subjects.
So my general advice is not to go looking for methodology books, or blogs or websites that claim to teach methodologies.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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I agree the psychology factors are the most important aspect in making a consistently profitable trader, but before you have a chance to put the "psychology" to the test, you have to have a system of some sort. You need to know what instrument, time frame, and basic rules you will be using to develop your edge. Once you create a system using this edge, building confidence in it thru statistics, journal, back-testing, and SIM trading, then you are ready to put the psychology factors to the test.
Yes, you need to have an idea on what common pitfalls traders run up against, which primarily come from fear in my opinion. Fear is from lack of confidence. Lack of confidence is in failing to do all of the above and more. You need to know what other issues WILL come up when you start trading live. Things such as greed, the physiology of what takes place when you are under stress, how you will filter information during these times, why you will continue to make the same mistakes over and over, etc.
So, I think the two will go hand in hand, but to say that you need to master yourself before you start developing a system, well.. I don't think it is possible. The only way to truly master the psychological issues which come up are to hit them head on, and work your way thru them, while they are occuring. Before you can put them to the test, you must have a method, which comes from reading, learning, listening, playing, trial and error, etc.
From a quote from my thread from almost 3 years ago, I still believe:
"I believe I have to have my own unique and specific system for it to work for me for any period of time. I cannot take someone else's method and make it work for me consistently.
The mind game, discipline, and money management are keys to me making money. The indicators help me visualize price action, and help make me alert, in various ways, but none of these will guarantee me a consistently profitable system.
You can SIM trade until you are blue in the face, but this will only get you so far. I believe pain is a great teacher, and until you experience the pain of losing real money, you're only half way there."
@ThatManFromTexas : At some point in your trading career, you listened to someone, maybe many someones, and let them influence you in some way, maybe even in a very small way, possibly even subconsciously. It would be impossible to truly disregard 99.9% of what they are saying, once you have heard or read it.
Of course, everyone is different, and this is just my opinion, which cannot be 100% disregarded if you read it.
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Agree. Don't put the cart before the horse - develop a consistent approach that is profitable in SIM then go live and begin the difficult work on the gap between your results in SIM vs your results trading live. This "gap" is probably 99% psychological as Mike continually (and correctly) preaches. Also - be wary of the tricks you will play with yourself that make your SIM trading results seem better than they are - you have to be very disciplined to ensure your results in SIM are real and correspond to appropriate trade frequency and sizing based on how much risk capital you have.
As for new trade ideas - once you begin to understand how the markets work you're really only going to take 3 kinds of trades: 1. with trend continuation trades, 2. breakout trades, and 3. reversal trades. All trades are essentially permutations of these 3 types. If you've mastered one in all its permutations, move on to the next... If you haven't mastered all the permutations, keep working on identifying and mastering them.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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