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Going Beyond Psychology to make Winning Trades and Nice Profits
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Going Beyond Psychology to make Winning Trades and Nice Profits

  #101 (permalink)
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rtrade View Post
"To whom are you directing your requests for help? Now, because
you do not know yourself you do not realize that every single
second of your day, of your life, you're asking for help and
the reason you do that is because there's a certain agitating
part of you that is dissatisfied, that's unhappy, and you want
relief from its persistent torment.

As a matter of a fact, you are always, and listen to the way I
put this now, you are always, even right now as your hearing
this talk, you're in the state of prayer, of request, of asking,
of seeking, of desperately wanting to go somewhere to take yourself
away from where you presently are.

That's cool man. I say stop asking and start doing.
Don't get me wrong...
I screw up a lot but I learn my lesson every time (or at least try!)
Keep punching.

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  #102 (permalink)
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monpere View Post
Understanding why you are taking the trade at this point should be irrelevant, you already know the reason, you spent 2500 hours figuring out the reason. I will tell you the reason why. 2 reasons, greed and fear.

The answer is, knowing the historical win percentage of your method, and trusting those stats. The result is the removal of the fear and greed, the removal of the bulk of the psychological entanglements with each and every single trade.

Monpere, Good comments. You are absolutely correct in your understanding and everything you says makes total sense.

Denise Shull in working with billion dollar hedge fund traders learned our human brain has difficulty in working with 'probability'. Your answer of 'knowing historical win percentage' is rejected by most brains according to the latest neuroscience studies. Her extensive research has confirmed this. Believe me, I too was a probability believer. Now I am inclined to agree she is right and onto something.

I met a trader at a seminar who tested the system, was convinced to 'follow the system' He accepted that most failed because of 'fear and greed' and did not take all the trades. He was disciplined. He took every trade. He trusted and had faith in the 'numbers'. 1000's of hours of study.

Then he said, "I lost my account, I lost my house, and I lost my wife. But I took every trade. I'm here to say that is not the answer." Now it was obviously a garbage system. Good money management will always safe us from those. But new traders do not know this yet.

Probability looks to be all we need accept. That's why many traders move to auto-trading. But then the auto trader has to decide on which system and market to trade. Usually what was great last quarter is junk the next. So back to analysis.

Attentiveness flowering into awareness brings me to a point where I can see an unwillingness to change and do something about it. A casual attitude to a trade that gets me in trouble. Like you say after 1000's of hours of analysis an auto style no-think trading occurs where you just click and manage. This is the sweet state and a valuable one for all aspects of our life.

Sweetness is our inner necessity. If that is not satisfied, nothing is. Trading sweetly is what I love. Awareness of my emotions as data to be analysed helps accomplish this.

Shivaya

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  #103 (permalink)
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Shivaya View Post
Monpere, Good comments. You are absolutely correct in your understanding and everything you says makes total sense.

Denise Shull in working with billion dollar hedge fund traders learned our human brain has difficulty in working with 'probability'. Your answer of 'knowing historical win percentage' is rejected by most brains according to the latest neuroscience studies. Her extensive research has confirmed this. Believe me, I too was a probability believer. Now I am inclined to agree she is right and onto something.

I met a trader at a seminar who tested the system, was convinced to 'follow the system' He accepted that most failed because of 'fear and greed' and did not take all the trades. He was disciplined. He took every trade. He trusted and had faith in the 'numbers'. 1000's of hours of study.

Then he said, "I lost my account, I lost my house, and I lost my wife. But I took every trade. I'm here to say that is not the answer." Now it was obviously a garbage system. Good money management will always safe us from those. But new traders do not know this yet.

Probability looks to be all we need accept. That's why many traders move to auto-trading. But then the auto trader has to decide on which system and market to trade. Usually what was great last quarter is junk the next. So back to analysis.

Attentiveness flowering into awareness brings me to a point where I can see an unwillingness to change and do something about it. A casual attitude to a trade that gets me in trouble. Like you say after 1000's of hours of analysis an auto style no-think trading occurs where you just click and manage. This is the sweet state and a valuable one for all aspects of our life.

Sweetness is our inner necessity. If that is not satisfied, nothing is. Trading sweetly is what I love. Awareness of my emotions as data to be analysed helps accomplish this.

Shivaya


True, if you have a bad system, taking every trade, or cherry picking them will not make it a good system. But, if you have a decent system, taking every trade will pretty much guarantee you to make money, just as much as cherry picking trades of a decent system, will most of the time kill it's performance, because you are no longer trading that system, you randomly picking setups from the system. If you find a mechanical system that backtests well, the sure fire way to kill it, is to try cherry pick it.

I disagree that many traders move to auto trading. Auto trading is by far the absolute minority in retail trading, because for one, it is not the psychological norm. Most people psychologically want to feel they have a hand in every trade decisions that they make, it is our nature. 2nd, not too many traders are programmers, and that is a huge barrier. 3rd most commercial auto traders are black boxes so a trader buying it has no idea what the system does. 4th auto trading is not well regarded in the retail trading community. As an example, look at all the threads on this forum, you will only need one hand to count the number of threads on mechanical or auto trading. When we see the numbers of 95% failure in retail trading, it is virtually 100% discretionary trading. Perhaps those numbers would change, if psychologically people where more inclined to trade mechanically, I don't know.

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  #104 (permalink)
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Silver Dragon View Post
monpere, I think you misunderstood the latter part of my post because it sounds like we are saying the same thing: eliminate greed and fear and trade on what you see and what you know. I was merely sharing a example of why a trader might place a trade. One was right decision and the second was the wrong decision. Personally mindfulness has helped me deal with greed and fear when it arises. Your answer to overcome greed and fear is to focus on stats. Same end goal, different ways of getting there.

Its apparent you are a very organized and analytical thinker vs myself which is very analytical / holistic thinker. We are two different brain types. To try to apply your method to me is like fitting a round peg in a square hole. I could do it but I would not be very good at it.

You might be interested in this: I do a lot of team building in my day job, and one of things you have to consider is brain types. Not everybody thinks the same therefore everyone learns differently. We use a test to determine brain types; check out HBDI on google, it is brain dominance analysis. Based on your postings you appear to be a blue/green thinker (Analytical / Organized) where I am blue/yellow (analytical / holistic). See attached graph for the 4 brain types.

SD

Interesting. In your professional opinion, which brain type do you think lends itself best to trading?

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  #105 (permalink)
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monpere View Post
Interesting. In your professional opinion, which brain type do you think lends itself best to trading?

From my experience some combination of blue/green/yellow would do best in trading. IMO, those who are dominant in blue/green would have the highest probability of success. This is because they have the ability to analyze and find a solution to the problem then set up rules and stick to them. People who are dominant red could do trading but run the risk of being emotionally drained when things dont go their way. They would fret over losing a hundred bucks, while someone who is dominant in blue would realize its part of trading.

Those who are dominant yellow only would have a difficult time as well. They tend to be disorganized and high level thinkers who jump around a lot. They love to change things; Yellows are easy to identify because they change thought / direction midstream.

It is interesting to note that based on your environment, your brain dominance can change over time. When I started my current job I was triple dominent blue/yellow/green with some red. 5 years later I am dominant in yellow/blue where my yellow is off the charts and my blue has increased while my red and green have decreased. Conclusion: You are a product of your environment.

SD

nosce te ipsum

You make your own opportunities in life.
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  #106 (permalink)
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6000 traders enter a competition! Who wins?

In this talking about trading business no one displays their track record in a way we can say 'That's a good trader'. In China doctors had to keep a sign outside their 'surgery' with the number of patients who had died. Just walk past and take yer pick. So, how about traders?

Traders just talk and write about the subject and the one thing we all want, 'trading profits' is never displayed by those prepared to teach or write about the subject. A level trading field is one problem, hindsight charts another, so I was fascinated to follow a recent competition where almost 6000 traders took part.

Each was given $20,000 virtual money and a platform to trade of for one month. The prize was $5,000 cash.

After 2 weeks over 2000 of the accounts are wiped out.
340 accounts have a return greater than 50%
4000 accounts are in the red drawdown
1300 accounts are in the black

The best trader has turned $20,000 into $300,000

It may only be in sim mode but a dozen traders have fantastic results and I get to see a genuine trading world that sure beats talking and writing about "How to Trade"

The top ten traders in this comp know a thing or two. Wonder who they are?

There needs to be more of these to really show traders how to trade. I have been amazed at the number of traders who go live real money account when they still have a lousy sim track record. I mean that is a no-brainer.

Show me a healthy sim101 account of 6 months with a good Profit Factor and E-Ratio and you might make the grade to be a trader.

In the good old days we had to learn to trade with real money.

During the war, most pilots were killed not in action, but in training! So the flight simulator was invented.

If you want to be a good trader sim, sim, sim until you have a fantastic free of fear method and then trade one lot till you make $2000 and then 2 lots etc. After some time you may even add a lot for every $5000 profits you have until you find your level.

Will let you know who wins at the end of July.

Shivaya

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  #107 (permalink)
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Shivaya View Post

Traders just talk and write about the subject and the one thing we all want, 'trading profits' is never displayed by those prepared to teach or write about the subject. A level trading field is one problem, hindsight charts another, so I was fascinated to follow a recent competition where almost 6000 traders took part.


The best trader has turned $20,000 into $300,000

It may only be in sim mode but a dozen traders have fantastic results and I get to see a genuine trading world that sure beats talking and writing about "How to Trade"

The top ten traders in this comp know a thing or two. Wonder who they are?

You are certainly right that it would be nice to be able to tell who the real winning traders are and who they aren't on these forums - it would make listening to their opinions easier or it would make ignoring them easier. However, we all have to create our own success as has been observed many times before.

I wonder about the results from such a trading competition though - there is no incentive to mitigate risk. When you lose, you don't lose anything and if you win you get $5000 - it essentially encourages the riskiest trading strategies because that is what you're competing against. Now if you showed me 5 or 6 of these competitions and there were several traders who consistently placed in the top 20 or so, then I would want to know more. The winner of one competition is just as likely to be a lucky charlatan as a genuine success though. Otherwise you have what Nassim Taleb wrote about in his book "fooled by randomness".

In keeping with the theme of this thread - I do think that our own intuition plays a large role in ferreting out whether posters in this forum are worth listening to or not. One method I have learned is that if someone makes a sweeping statement that is "always" or "never" about trading methods - they are usually not worth listening to anymore. But even that rule has exceptions...

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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  #108 (permalink)
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Surly View Post
You are certainly right that it would be nice to be able to tell who the real winning traders are and who they aren't on these forums - it would make listening to their opinions easier or it would make ignoring them easier. However, we all have to create our own success as has been observed many times before.

I wonder about the results from such a trading competition though - there is no incentive to mitigate risk. When you lose, you don't lose anything and if you win you get $5000 - it essentially encourages the riskiest trading strategies because that is what you're competing against. Now if you showed me 5 or 6 of these competitions and there were several traders who consistently placed in the top 20 or so, then I would want to know more. The winner of one competition is just as likely to be a lucky charlatan as a genuine success though. Otherwise you have what Nassim Taleb wrote about in his book "fooled by randomness".

In keeping with the theme of this thread - I do think that our own intuition plays a large role in ferreting out whether posters in this forum are worth listening to or not. One method I have learned is that if someone makes a sweeping statement that is "always" or "never" about trading methods - they are usually not worth listening to anymore. But even that rule has exceptions...

I don't think it matters if a poster is a profitable trader, or not, or even if he/she has never even traded 1 contract in his life. It matters that the concept that the poster is talking about is sound, and resonates with you as the reader. There has been some discussions on probability theory on this forum, for example, that have helped my money management, yet those discussions could have come directly from a college professor who has never traded the markets. Also, just because a poster is profitable does not mean that their system will make you profitable. So then, their profitability has little value on the discussion. If someone introduces a method that is not profitable for them because they cannot tolerate the risk involved, maybe someone who is less risk averse, might succeed with that system. Or, someone can take 3 ideas from 3 non profitable traders, combine them and turn it into a rock solid system for them.

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  #109 (permalink)
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monpere View Post
I don't think it matters if a poster is a profitable trader, or not, or even if he/she has never even traded 1 contract in his life. It matters that the concept that the poster is talking about is sound, and resonates with you as the reader. There has been some discussions on probability theory on this forum, for example, that have helped my money management, yet those discussions could have come directly from a college professor who has never traded the markets. Also, just because a poster is profitable does not mean that their system will make you profitable. So then, their profitability has little value on the discussion. If someone introduces a method that is not profitable for them because they cannot tolerate the risk involved, maybe someone who is less risk averse, might succeed with that system. Or, someone can take 3 ideas from 3 non profitable traders, combine them and turn it into a rock solid system for them.

monpere - I totally agree. I certainly think my post gives impression I think otherwise but I just wanted to make a point that just because someone wins a contest, doesn't mean their advice will be good. Trading is so individualized that in the end, you have to work it out for yourself and the ideas that lead you to profitability may potentially come from anywhere as you suggest. Thanks for allowing me to clarify my statement.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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  #110 (permalink)
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Shivaya View Post
The top ten traders in this comp know a thing or two. Wonder who they are?

If these traders are ringers (professional traders) then they have no business in a sim trading contest...just my opinion.

I'm not a pro but I've been training for a professional trading contest and should be entering it soon.


Shivaya View Post
Show me a healthy sim101 account of 6 months with a good Profit Factor and E-Ratio and you might make the grade to be a trader.

What is this E-Ratio?


Shivaya View Post
Will let you know who wins at the end of July.
Shivaya

You don't mind, what is this sim trading contest? Who sponsors it? Is it held every month? Who can participate?

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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