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"Shaking off" losing trades not enough


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"Shaking off" losing trades not enough

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  #1 (permalink)
Market Wizard
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Got this in an email from TraderPsyches.com

==========================================

Everyone knows that the underlying idea of all trading is to figure out the odds of an event happening given a particular set of circumstances and then to "bet" on the side of the odds.

Or at least everyone thinks they know that.

I mean we can all recite WHAT to do but it is the actual doing it - or more precisely, living through the feelings that occur during the 20-30-40% of the time that the trade doesn't work where we run into almost certain trouble!

The key to this phenom (negative though it may be) is to include in your trading plan some very specific strategies and tactics for maintaining, bolstering, repairing and even leveraging what we call Psychological Capital.

And guess what ... "shake it off" just doesn't cut it. Oh it works once in awhile ... sort of. (It is funny how the dominant psychological thinking of 'mind over emotion' is as ineffective as it is yet everyone keeps using it ...but I digress ...).

If one of the top neuroeconomists and game theorists in the world says "it is not enough to know what should be done, one must also feel it" ... then maybe that alone is enough to rethink the relationship between feeling and thoughts and the omnipresent "shake it off".

Or put another way ... come up with a plan to anticipate, notice, name and "act" in accordance with the feelings that odds THAT ARE AGAINST you will bring! This is the plan that will keep your psych cap account filled... and give you the leverage to grow the numbers in your cash capital asset column.

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  #3 (permalink)
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Take all the pieces in trading and execute them exactly in the same way you're executing all your trading, but EXCLUDE money!

Can you see the biggest irony there is to trading?

It works much better when money is not involved!

So that's the key factor, and that's where all the problems are. And it's not that money means problem. It's about all the emotional value we've attributed to money.

Money = Life
Simply put, we can't survive without money!
When we lose money, we risk our survival.
When we risk our survival, we go into survival mode.
When we go into survival mode, we become primitive.
When we become primitive, we become stupid.
When we become stupid, we become that because of stress.
When we're stressed we're in fear mode.
When we're in fear mode, all our blood is concentrated to our muscles.
When all the blood is concentrated to our muscles, our brain is less oxygenated.
When our brain is less oxygenated, our perception gets (let me use a nice word here) subjective and very small.
When our perception is subjective and small, we see things the way we WISH them to be.

And because we're in survival mode, and our highest priority is the WISH to survive, well you do the math. We simply screw up, because even the sharpest trader is seeing/perceiving something else than what's really there.

And that in itself leads to even more survival mode, because the trader loses even more money, and even more money. It's called over trading. And if you've done it before, don't feel unique about it. It's very common.


What's the solution to all this?! You tell me, before I tell you!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #4 (permalink)
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....."You tell me, before I tell you! "

Come on guys!!!

Trading is an ART!. What I had in mind with my last line was to provoke you guys into painting your own pictures. That's the only way to learn. If we are to follow every successful line, post, author all we're going to do then is to copy the line, the post or the author. BUT, if we are letting ourselves to become inspired of all of the above in order to develop our own stile, system, thinking, etc. Then, we've already made it half way through!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #5 (permalink)
wny
 
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This is why I don't understand how people can want to learn to trade but not gamble in other areas...
Learning to deal with "tilt" by running a micro stakes poker bankroll or micro sports betting bank roll is so much cheaper than blowing out futures accounts.
You don't learn this stuff by going to see freud and talking or some new agey crap, you learn to deal with it by experiencing it several hundred times.

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  #6 (permalink)
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So much for the provocation guys!!!

It's easy, if money is the problem then pull the money out of the equation!



PS: There are several ways to do that. I'm a stubborn, and I want to provoke you again (with the risk of provoking only myself eventually, but...)!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #7 (permalink)
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It's been said that:

"If the truth was complicated, then everybody would understand it!"

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #8 (permalink)
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George's Avatar
 
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...so much for provoking the crowd!

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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  #9 (permalink)
Sweden
 
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George's Avatar
 
Posts: 401 since Jun 2009
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* Trade for ticks, instead of watching the PnL measured in $

* Use money you don't have! (meaning that, this is the way you ought to be feeling about your account, those money are not yours to retire on, they simply don't exist) That's the way to treat them!

* Set your daily/weekly goal in ticks/points/pips instead of money

* Start training your mind to think in terms of percent instead of money! (That will give you a very different perspective, and add more objectivity to the picture)

* Do whatever works for you in order to relax yourself before, during and after a trade (Being relaxed is the opposite of being in survival mode)

We all struggle to make tomorrow look like yesterday!
Get rid of your past and let the future unfold from the now.
Past performance is not indicative of future results.
/George
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May 4, 2010


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