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Trading psychology articles
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Trading psychology articles

 
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xplorer View Post
I think this is a good reason why people may have rules in trading such as 3-strike and out, meaning, whatever may be going on in my brain (and I may not be at all aware about it), if I have, say, 3 losing trades in a row, I will stop for the day (or variations thereof).

How many trades do you average per day and do you stop even when you are trading well? You could be taking excellent setups and following your plan but bad luck or some other factor is causing losses. Personally if I reach 4 trades for the day I start to get the feeling that Im over trading and will usually stop regardless if Im ahead or behind. So my idea is that I should be able to trade under the worst type of scenario ie. sick, tired, emotional, brain off, and Ive got approximately 4 trades in a day to get a result.

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Grantx View Post
How many trades do you average per day and do you stop even when you are trading well? You could be taking excellent setups and following your plan but bad luck or some other factor is causing losses. Personally if I reach 4 trades for the day I start to get the feeling that Im over trading and will usually stop regardless if Im ahead or behind. So my idea is that I should be able to trade under the worst type of scenario ie. sick, tired, emotional, brain off, and Ive got approximately 4 trades in a day to get a result.

Yes, my normal day ranges from 1 to 6 trades, I tend not to take more. Of course bad luck or simply days where certain setups don't materialise do happen, but once you start reading your market reasonably well you can tell. In fact, you don't care about losing days because you know exactly why you lost, which is different from being angry because you hit your daily limit and you don't know why (I've been there).

About trading under any phyisical and mental condition, the idea that one can is quite seductive, but I don't know if I could, especially being mindful of certain dangers such as the amygdala hijack, which I have experienced a few times.

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Posting this here as reference, from @rleplae's thread on Transcendental Meditation.

I have been increasingly interested in the role that the amygdala plays in trading. I think that sometimes its role can ve very subtle, i.e. the rational part of our brain thinks we are still in control but actually something triggered the fight-or-flight response and we don't acknowledge it, which can have a negative impact on the rest of the trading session.

I actually experienced this insidious loss of control on numerous occasions and the realization of what actually happened only hit me minutes, hours or even days later (I am referring to trading here, but not necessarily only to trading).

However, just this past week, I was able to realize this loss of control was happening as it was taking place during the trading session and, possibly for the very first time, I was able to rein it in.

Whether this was a direct result of meditation, I cannot say. But there may indeed be a link between meditation and self-awareness.


paps View Post
I don't have the book....I did look at YouTube my Google and found some good stuff by Dalio and meditation.

Wife always said why don't u do it or practice. When I meditated I was just starting out to trade....now when I have a better understanding of the mrkt I will get into meditation. Thanks to OP @ rleplae and @mattz

...for me i always believed ...but off late practice was not there....i think i will start. so thnx to this thread.
my best trades are trades which have 0 emotion.......and thats the state u really want to be in.....lets get there
here r some of the youtube vids.....but the space is big....u can follow up....since Dalio was mentioned






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xplorer View Post
Posting this here as reference, from @rleplae's thread on Transcendental Meditation.

I have been increasingly interested in the role that the amygdala plays in trading. I think that sometimes its role can ve very subtle, i.e. the rational part of our brain thinks we are still in control but actually something triggered the fight-or-flight response and we don't acknowledge it, which can have a negative impact on the rest of the trading session.

I actually experienced this insidious loss of control on numerous occasions and the realization of what actually happened only hit me minutes, hours or even days later (I am referring to trading here, but not necessarily only to trading).

However, just this past week, I was able to realize this loss of control was happening as it was taking place during the trading session and, possibly for the very first time, I was able to rein it in.

Whether this was a direct result of meditation, I cannot say. But there may indeed be a link between meditation and self-awareness.

I appreciate your post. I don't know much about TM, but in vipassana meditation, you feel the amygdala hijack very clearly through your bodily sensations going crazy.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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Anagami View Post
I appreciate your post. I don't know much about TM, but in vipassana meditation, you feel the amygdala hijack very clearly through your bodily sensations going crazy.

Thanks Anagami,

I have checked Vipassana and I will likely take it up in the future.

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xplorer View Post
Thanks Anagami,

I have checked Vipassana and I will likely take it up in the future.

The retreats are free, it's definitely worth going.

For the record, I am not a vipassana groupie, but the practice does have value.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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A Blind Spot May Cause Repeated Trading Mistakes

Yesterday I was chatting to a fellow FIO trader about blind spots and then I found this article which I thought might be worthwhile posting.

From

https://www.tradingacademy.com/lessons/article/cautious-blind-spots-trading-vision/


Blind spots are areas, biases and beliefs that we are unaware of; and they occur in many forms. There are several types, from ones that affect your vision to those that affect relationships and even trading habits.

[...]

Other blind spots are a defense mechanism which prevents the recognition of the way you really feel about someone or something; because if you were to actually identify these feelings they would be too painful to acknowledge. They also may be parts of your personality that are hidden in your unconscious. They could be irritating habits like being arrogant or stingy, or they may be deeper desires or fears that are too threatening to admit because they would diminish the view you have of yourself and thereby diminish your self-esteem.

[...]

The above are just a few of the many “blind spots” that affect your ability to resonate with reality; that is, to think about, consider and see things as they are. With this in mind, there is another type of blind spot that I would like to point out. This is the “bias blind spot.” It is a cognitive bias that acknowledges the force of biases as judgement from others while failing to see the effect of biases in your own judgement. Consequently, this type of bias blind spot also extends to trading in that often traders may be unaware of that they tend to perceive others as biased, which is not necessarily a problem until we note the fact that this same individual perceives themselves as being accurate and un-biased. This type of blind spot can severely disrupt your trading because it deters you from accurately identifying your issues; those things that are either causing you to violate rules or to fail to keep trading commitments. And, on another note, people who are high in bias blind spots are more likely to ignore the advice of experts and are less likely to benefit from training geared to reduce their commission of other biases. Does this sound familiar? That is, do the instructors and instructions seem to continue to elude you and you can’t seem to “get it” or to “turn-the-corner?”

So, what are some of the ways that you can become aware of and alleviate your blind spots?
  1. Through appreciative inquiry and a gentle mindfulness of what you are doing and why you are doing it; ask yourself as calmly and kindly as you can:
    • What am I afraid of in my trading?
    • What is the one thing about my trading that I least want to accept?
    • If I knew what my three greatest issues were, what would they be?
  2. After deriving answers from honest contemplation, let it soak in for a while. Then, use trusted close friends and fellow traders to give you valuable feedback to help you “see” what here-to-fore has been out of your awareness.
  3. Be thankful and open to truthful, honest and sometimes “painful but growth oriented feedback” without judgement; just begin to observe yourself more closely fortified with this new information. It will not be a quick process but it will lead to, if embraced fully and openly, a more authentic and grounded self that is better able to resonate with reality while in the trade process.

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Beliefs Vs. 'The Truth'

This is not an article per se, rather it's a reflection on some passages from Trading in the Zone by Mark Douglas.

The paragraph in question is called "Beliefs Vs. The Truth" (part of Chapter 9 - "The Nature of Beliefs"), and deals with how our own beliefs influence our actions and how that, in turn, has the potential to affect the results in our daily lives.

The premise here is that we filter the world through our upbringing belief system, even though in itself, the physical environment has no filter of its own.

For instance, people born in the Western world (by Western I mean Europe and North America) tend to look at the world differently than somebody that was born in Asia or the Middle-East. Because I was born in Europe my upbringing has conditioned the way I see certain things. In Europe, for example, in would not occur to most people to eat insects as part of their diet. But if I were born in certain parts of Asia it would be completely normal. This is just a simple example to outline how just the fact that one is brought up with a certain set of beliefs often affects their view of the world.


Quoting 
"If beliefs limit our awareness of the information being generated by the physical environment, so that what we perceive is consistent with whatever we believe, then how do we know what the truth is?"

Even the concept of 'truth' can be a tricky subject. How do we define when something is true?


Without delving too deeply into neuropsychology or the philosophical realm, Douglas goes on to describe how we use our own beliefs to simplify our view of the world:
Quoting 
"our beliefs will always represent a limited version of what is possible from the environment's perspective, making our beliefs a statement about reality, but not necessarily a definitive statement of reality."

In other words, Douglas is borrowing (wittingly or not) from a tenet central to Neuro-Linguistic Programming: "the map is not the territory".

If I need to travel from A to B and I don't know how to get there I can use a map, but a map is just a simplified representation of the world, a map does not have all the richness I can experience with my 5 senses.


Why is this important? Because it underlines how we, as human beings, model and simplify the external environment through various belief systems to make sense of the world but, in the process, sometimes the model does not conform to 'reality' (again, what is reality? Ray Dalio describes it here briefly in his video): something may get lost in translation.

Douglas, very effectively, says that if our beliefs were always accurately describing the outside world, it would follow that our expectations would always be fulfilled.

This is an extremely powerful concept. Why do we get angry, sad, frustrated, etc.? Most of the time it's because our expectations have not been met.


Quoting 
"If we are not experiencing satisfaction, then we must be operating out of beliefs that don't work very well relative to the environmental conditions".

He goes on to conclude
Quoting 
"What is the truth? The answer is, whatever works"

meaning, if our model of the world is compatible with the feedback we are getting through our actions, then our beliefs of what is true (or real) are aligned with the external environment. If there is a mismatch between what we are attempting to accomplish in any given moment and our beliefs then we need to adjust our view of the world.


Simple, but very profound.


Last edited by xplorer; March 10th, 2019 at 06:56 AM.
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xplorer View Post
The paragraph in question is called "Beliefs Vs. The Truth"....

The premise here is that we filter the world through our upbringing belief system, even though in itself, the physical environment has no filter of its own.
...

He goes on to conclude meaning, if our model of the world is compatible with the feedback we are getting through our actions, then our beliefs of what is true (or real) are aligned with the external environment. If there is a mismatch between what we are attempting to accomplish in any given moment and our beliefs then we need to adjust our view of the world.


Simple, but very profound.

Aside from seeing examples of this time and again in my own trading, and in my life, ( ) we see over and over people who come onto this forum and pronounce The Truth, often is opposition to people who get it all wrong, according to them. (Not only do I do it too, I'm doing it now. It is very hard/impossible to get out of this paradigm, since we're always in it.)

So The Truth as I (usually) see it is that everyone has a truth, and finding out what another's "Truth" is, to them, is part of the fun of working together with other people. Not finding it out is part of the disagreements and mutual misunderstandings of the world. Of course, not all of the "Truths" can be right, which complicates things somewhat....

I basically just assume my Truth is the right one, as does everyone else most of the time.

Sometimes I remember that it's not necessarily so.

Good post. Very important topic.

Bob.

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bobwest View Post
I basically just assume my Truth is the right one, as does everyone else most of the time.

Sometimes I remember that it's not necessarily so.

Thanks Bob, and this is the core of the intent of that post: just as another example, I found myself thinking often about the Israeli-Palestinian conflict. No doubt Israelis have very strong beliefs about why it is right they have the position that they have, but I'm adamant Palestinians have just as much conviction in their own beliefs.

Each party believes they are the good guy and they are fighting the bad guy. Taking this to an extreme level, you could say that terrorists that blow themselves up killing innocent people in the process do so in the belief that they are not monsters but are doing the right thing.

A 2-hour Tony Robbins video talks about this and tells the tale of a Jewish-American and a Pakistani-American who, on the tragic day of 9/11, meet on stage having opposing views and explain this terrible event through their own eyes. By the end of the video (thanks also to Robbins techniques), they have joined forces and want to spend their time educating diverse communities about understanding each other.

That is a truly inspiring story.


Last edited by xplorer; March 10th, 2019 at 10:16 AM.
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