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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas
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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas

  #51 (permalink)
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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas


aquarian1 View Post
Hi Ron,



I'm glad my post about parsing was helpful as a spring board to your thoughts and analogies.



Here is the quote

"Mark states that there is "no positive correlation" connecting learning a way to have winning trades and being a consistently profitable trader over a long period of time none."



If you asked some "consistently profitable traders" if they had no way to distinguish between winning trades and losing trades - what is your opinion on what they would say?



Do you feel they would say -

"I have not clue how to tell a winning trade, I just throw money at the market at any time. -usually while I'm practicing free shots and sucking back a few cold ones."?




IMHestO I think what Mark is saying is having an edge a high probability of something happening for example gap close, which I'm currently nuts-o about in ZF, 5 yr T notes, after 90% completing an 11 yr research project (11 yrs of data, and I say 90% because I have to calculate gap size yet and I have thought of a couple other small things to add in as well) which I posted in the Master research thread about 1.5 wk ago. OIR on ZF is over 90% something like 93% and gap close is 77%. Crazy high IMHO never seen it this high in NQ or ES. Have been longing for these kind of probabilities for a long time. And in ZF I have seen gap 'almost' fill missing by a tick or two and this is one of the other stats I'm adding in after I pull out the gap size and I suspect a slightly higher gap close which must be called 'almost gap close/gap close' I suppose.

So a high probability edge like stated above. But understanding that every second on the clock that ticks by with every trade that occurs is unlike and completely different from all the seconds that came before it. The traders are different. Or at the very least their ideas change the traders with the potential to interact change reasons change there are so many variables it's hard to conceive. Coffee gets spilt and George Soros' trader burns himself just when he was about to enter on ES so he doesn't. Point is, like Mr Douglas says, every moment in the market is unique. It's impossible to know the sequence of win losses of any market edge like the gap close on ZF I'm in love with...lol. I also want to see if I can pull out the longest streaks of gap fill and no gap fill over the 11 yrs of data and see how things happened.

The distribution of win losses for any edge is random. Mark has, or maybe I should say his wife/widow, has a seminar on video Mark did I have watched maybe about 10 times now and I pulled the audio off it and listen to it on the treadmill. I like to say it's Trading in the Zone come to life the way he presents the material. I recommend this I feel I have gained so much from it I'm a different person.

So we have to recognize our edge define the risk and enter .....over and over again and again...... Without thinking we know what's going to happen next because you can't it's impossible.

Can't wait to do ZN research this Friday.

Can't wait to trade these stats should be only a few weeks out now, if that.

Ron



Sent from my iPhone using Tapatalk

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)

Last edited by Blash; February 17th, 2016 at 10:25 AM.
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  #52 (permalink)
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xplorer View Post
For instance in the book Douglas tells the story of a guy who was an excellent analyst but a poor trader, citing the lack of psychological flexibility as one of the main obstacles. What we can infer from the anecdote is that analysts can be superb at identifying major support and resistance but they can't necessarily trade them. That was the point of that story, but I'm not yet 100% sure whether it also applies to the case in point.

Well I would say definitely that can be very true - one can be a great analyst and not necessarily be a good trader.
Good analysis (or something else for creating your edge) is a necessary but not sufficient condition.

I read a in book (perhaps George Angell - Sniper Trader?) a story of a guy who was a great bond analyst - could pick the high and low to the tick (or is it 1/32nd? - LOL) but never made and money.
George teamed him up with a great trader and together the two made big money.

other necessary skills could include:
  • money management
  • trade execution
  • emotional mindset
  • dynamic position sizing in the trade
  • price action reading
  • sensing the "tone" of the market
  • belief structure

Keep your mind in the future, in the now.
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  #53 (permalink)
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very exciting stuff Ron!

--you're a dangerous man with that tapatalk! LOL

I put thoughts in between to save tying...


Blash View Post
IMHestO

I think what Mark is saying is having an edge a high probability of something happening for example gap close,

which I'm currently nuts-o about in ZF, 5 yr T notes, after 90% completing an 11 yr research project (11 yrs of data, and I say 90% because I have to calculate gap size yet and I have thought of a couple other small things to add in as well) which I posted in the Master research thread about 1.5 wk ago.

OIR on ZF is over 90% something like 93% and gap close is 77%. Crazy high IMHO never seen it this high in NQ or ES.
OIR??


Have been longing for these kind of probabilities for a long time. And in ZF I have seen gap 'almost' fill missing by a tick or two and this is one of the other stats I'm adding in after I pull out the gap size and I suspect a slightly higher gap close which must be called 'almost gap close/gap close' I suppose.

So a high probability edge like stated above.

But understanding that every second on the clock that ticks by with every trade that occurs is unlike and completely different from all the seconds that came before it.

The traders are different.

Or at the very least their ideas change the traders with the potential to interact change reasons change there are so many variables it's hard to conceive.

Coffee gets spilt and George Soros' trader burns himself just when he was about to enter on ES so he doesn't.

Point is, like Mr Douglas says, every moment in the market is unique. It's impossible to know the sequence of win losses of any market edge like the gap close on ZF I'm in love with...lol. I also want to see if I can pull out the longest streaks of gap fill and no gap fill over the 11 yrs of data and see how things happened.

The distribution of win losses for any edge is random.
I wonder about this - I'm working on the hypothesis that there exists order underlying superficial chaos

Mark has, or maybe I should say his wife/widow, has a seminar on video Mark did I have watched maybe about 10 times now and I pulled the audio off it and listen to it on the treadmill. I like to say it's Trading in the Zone come to life the way he presents the material. I recommend this I feel I have gained so much from it I'm a different person.
It very clear you have benefited greatly from Mark work - writing and video

So we have to recognize our edge define the risk and enter .....over and over again and again...... Without thinking we know what's going to happen next because you can't it's impossible.
I'll take the other side here and split hairs between impossible for some and just very difficult for others.

Can't wait to do ZN research this Friday.

Can't wait to trade these stats should be only a few weeks out now, if that.

Ron


Sent from my iPhone using Tapatalk


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  #54 (permalink)
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"If you think something is impossible, don't bother the person doing it'
:-)

-- favorite quote of a young college woman

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  #55 (permalink)
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aquarian1 View Post
very exciting stuff Ron!



--you're a dangerous man with that tapatalk! LOL



I put thoughts in between to save tying...


OIR =Open in Range

From RTH (regular trading hours) to RTH so for example yesterday's RTH range, sticking with ZF as an example, RTH is based off the pit open in NY for 5 yr T-Notes futures and for me is 7:20am Chicago time. To pit close at 2:00pm CT. So if the open of today is within yesterday's range YH>=O>=YL then it is OIR.

Have to make pork chops right now and vegetables but a market edge is the same as the coin flip but both over a large sample size have a probability.....coin flip being 50/50 but you can't say you will get in the next 10 flips all heads it's impossible to predict but you can guess but that's all it is is a guess and you might be right and you might be right twice in a row or three times and then you will start to think you know what is going to happen next so (slightly moving over, slowly, back into trading territory) you will be loose(er) with your risk because it doesn't really matter, does it, because you start to believe you know what is going to happen next and you also hesitate because you "know" you can get
A better price if you do.

Sorry More later....

Ron


Sent from my iPhone using Tapatalk

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #56 (permalink)
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aquarian1 View Post
I read a in book (perhaps George Angell - Sniper Trader?) a story of a guy who was a great bond analyst - could pick the high and low to the tick (or is it 1/32nd? - LOL) but never made and money.
George teamed him up with a great trader and together the two made big money.

Funny you should say that... just yesterday I was thinking "what if there was a team made up by people with different skillsets, one great at charting, one great with Order Flow, one great with pulling the trigger, and so forth"... someone did something similar by the sound of it...

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  #57 (permalink)
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xplorer View Post
Funny you should say that... just yesterday I was thinking "what if there was a team made up by people with different skillsets, one great at charting, one great with Order Flow, one great with pulling the trigger, and so forth"... someone did something similar by the sound of it...

Your idea is much better, I think.

----
Here's one from the great WD Gann

Never take advice form someone else unless you're sure he knows more than you. Always do your work and study and then trust your own judgement. The only exception to this is to have a partnership where one man decides on when to buy (the entry) and the other on when to sell.

(so analysis and trading )

-Of course Gann was in the days before computers, algos and work sharing and was referring to trading on tips

Keep your mind in the future, in the now.
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  #58 (permalink)
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aquarian1 View Post
Your idea is much better, I think.

----
Here's one from the great WD Gann

Never take advice form someone else unless you're sure he knows more than you. Always do your work and study and then trust your own judgement. The only exception to this is to have a partnership where one man decides on when to buy (the entry) and the other on when to sell.

(so analysis and trading )

-Of course Gann was in the days before computers, algos and work sharing and was referring to trading on tips

Great quote, thanks for sharing it.

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  #59 (permalink)
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For right now all I have time for unfortunately is something short and I think the best is this video from Mark Douglas... This is part of the content I have watched many many times easily over 10. I feel we human need repetition to help the information really sink in and because part of us. There is a wonderful yet short story I love from something very dear to me that goes like this...


Quoting 
A young woman asked a very prominent wise teacher why he always repeats himself. He responded, "I do. What do I say?" she answered back, "I don't know."



Ron


aquarian1 View Post
very exciting stuff Ron!

--you're a dangerous man with that tapatalk! LOL

I put thoughts in between to save tying...


Blash View Post
OIR =Open in Range

From RTH (regular trading hours) to RTH so for example yesterday's RTH range, sticking with ZF as an example, RTH is based off the pit open in NY for 5 yr T-Notes futures and for me is 7:20am Chicago time. To pit close at 2:00pm CT. So if the open of today is within yesterday's range YH>=O>=YL then it is OIR.

Have to make pork chops right now and vegetables but a market edge is the same as the coin flip but both over a large sample size have a probability.....coin flip being 50/50 but you can't say you will get in the next 10 flips all heads it's impossible to predict but you can guess but that's all it is is a guess and you might be right and you might be right twice in a row or three times and then you will start to think you know what is going to happen next so (slightly moving over, slowly, back into trading territory) you will be loose(er) with your risk because it doesn't really matter, does it, because you start to believe you know what is going to happen next and you also hesitate because you "know" you can get
A better price if you do.

Sorry More later....

Ron


Sent from my iPhone using Tapatalk


aquarian1 View Post
Could this be the answer aquarian1 is looking for? I.e. is the difference all in the live execution?

Hi Xplorer

Thank you for the thread.

Actually I really wasn't (initially) making a point when asking if Mark was a consistently profitable trader.

It is not that I ever had any question about live execution or not. Really that is all in Ron's posts that he somehow felt I did not understand Mark statement. Of course I did but I'm happy to be a springboard for analogies.

I think that Mark had pushed a learning point to far.

IF he has stated something like" Being a consistently profitable trader requires more than knowing how to spot a wining trade. Several other skills are necessary as well."
- then that's fine.

However, to state that consistently profitable traders have no more ability to spot winning trades than consistently losing traders, would require a survey of consistently profitable traders. That is some research of many traders.

Ron has stated that Mark has no bibliography, and read no other books. On what then does he use as has the basis for such a bold claim? (Note he is not saying that "he thinks there is no correlation", he says there IS NO correlation. That requires statistical data.)


xplorer View Post
Hi aquarian1

Ron is correct in that there is no bibliography in Trading in the Zone. From my recollection Douglas did that on purpose as a way not to rely on other people's work but to find his own answers by simply asking questions.

I understand what you are saying. If we are to assume that there is no correlation between the ability to spot winning trades and trading profitably on a consitent basis one would need to survey many traders. If this was the test, I'd say probably Mark Douglas met it because in the book he mentions his trade coaching career spanning over 18 years (at the time of writing that book). I think that could be translated into having to deal with many many traders.

However I'd take a step back and first ask the question: when Douglas talks about no relationship as above, does that mean a difference between live trades and sim trades, or was that just my interpretation? Could he be referring to something else?

For instance in the book Douglas tells the story of a guy who was an excellent analyst but a poor trader, citing the lack of psychological flexibility as one of the main obstacles. What we can infer from the anecdote is that analysts can be superb at identifying major support and resistance but they can't necessarily trade them. That was the point of that story, but I'm not yet 100% sure whether it also applies to the case in point.


It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #60 (permalink)
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Hi Ron

Thanks for the video!

I'll look forward to watching it!

I wrote something in reply to the "gambler's fallacy" (though I never posted it), which I called the statistician's fallacy.

If I can dig it up I'll post it!
(or perhaps PM it - to not stir up a hornets nest!)

I would imagine most days are OIR

both RTH to RTH
and ETH to RTH

in the futures, market.

I read about using percentage close (going along with gap) perhaps of use to you?
applesauce to the pork
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

chops!

Keep your mind in the future, in the now.
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