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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

  #31 (permalink)
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Do 95% traders really fail?

"Cornell University and Michigan State University conducted a study of restaurants in three local markets over a 10-year period. They concluded the following: After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were gone; and after five years 60% closed. At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed. Those are far different numbers than a 90% failure rate after the first year quoted by many. Another academic research study concluded that 81.4% of all small business failures result from forces within the control of the owners/managers."

I suspect similar figures for traders, as many come back again and again with refunded accounts. The main thing here is 81.4% of all small business failures are within control of owner. I would also say that is the same for traders.

For 2011 I am suggesting in trading as well as life realize there is an inner sweetness within each of us who acts as our mentor. All we need do is begin to connect there. Whatever information, technical way of analysis, markets best suited to our style, and real traders we need connect to will appear.

Many have belief systems that prevent this meeting, due to family, philosophical or intellectual reasons. The reality of successful trading is always preceded by an improved emotional state of being. If every trading dollar profit was a struggle for me I'd have been long gone. The fear is gone for the professionals. They are in control of their emotions and understand risk money management.

There is a long way to achieve this which I travelled. Or, as I do now, devote time to my inner being within reaching for my personal inner sweetness and then trade. Your account as well as your wife/girlfriend/partner will love you even more as well! Why? You just become a sweeter person when winning trades and nice profits appear week after week.

Shivaya

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  #32 (permalink)
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Shivaya View Post
"Cornell University and Michigan State University conducted a study of restaurants in three local markets over a 10-year period. They concluded the following: After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were gone; and after five years 60% closed. At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed. Those are far different numbers than a 90% failure rate after the first year quoted by many. Another academic research study concluded that 81.4% of all small business failures result from forces within the control of the owners/managers."

I suspect similar figures for traders, as many come back again and again with refunded accounts. The main thing here is 81.4% of all small business failures are within control of owner. I would also say that is the same for traders.

For 2011 I am suggesting in trading as well as life realize there is an inner sweetness within each of us who acts as our mentor. All we need do is begin to connect there. Whatever information, technical way of analysis, markets best suited to our style, and real traders we need connect to will appear.

Many have belief systems that prevent this meeting, due to family, philosophical or intellectual reasons. The reality of successful trading is always preceded by an improved emotional state of being. If every trading dollar profit was a struggle for me I'd have been long gone. The fear is gone for the professionals. They are in control of their emotions and understand risk money management.

There is a long way to achieve this which I travelled. Or, as I do now, devote time to my inner being within reaching for my personal inner sweetness and then trade. Your account as well as your wife/girlfriend/partner will love you even more as well! Why? You just become a sweeter person when winning trades and nice profits appear week after week.

Shivaya


Hi Shivaya,

Top of the New Year to ya!!! I'm glad to read that they are realizing that this SWEET SPOT has some work in order to be obtained and that it is something beyond what the mind can comprehend...yet, ironically, we utilize the mind to get there or do we ...

It's kind of funny because, I was just reading the thread on "What kind of music you listen to as a trader" and the last post was from someone who said he listens to techno, but when he get's sloppy he reverts to reggae music....well, I must say, if reggae gets him in the SWEET SPOT then why leave that place of success? But then again I should be the last person to talk




gio5959 View Post
thank you for your kind words - merry xmas

Hey gio, I'm glad you took that high road of a response, it truly reflects on your good nature and the members of futures.io (formerly BMT)....don't worry....there are basically two types of Masters....ones that are ego-less and ones that have big egos...the latter has more to loose than the former, but all is good in the scheme of things.

"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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  #33 (permalink)
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jstnbrg View Post
I don't think that a "sweet state" alone leads to trading profits, but I have always felt that when I am doing something my absolute best, whether it is trading, golf, tennis, minesweeper, Defender, whatever, that I am in a state where the critical, conscious, verbal mind is quiet and I just react automatically to the action going on around me. "The Inner Game of Tennis" by Timothy Gallwey is about how to learn to achieve that state of mind. It seems that activities with very continuous action, like Minesweeper and the old video game Defender bring about that state of mind for me the most easily because I have to concentrate so intensely and react continuously. Pit trading in a fast market was the same; no time to reflect, just act! I don't often experience that state sitting at a screen waiting for the next set up.


Hello @jstnbrg, I'm glad to know that not only are you a fellow trader but a fellow tennis player. I too play tennis, but not as much now. And since the Australian Open is over, I started to think about this Sweet State...I have been working on this not only in my trading life but in my personal life as well.

You mentioned that "Pit trading in a fast market was the same; no time to reflect, just act! I don't often experience that state siting at ta screen waiting for he next set up."

...and I agreed with that until after the Australian Open...I subtly notice there where two types of Sweet State. Let me explain. As tennis players we hone our skills drill after drill after drill. Hundreds of backhands, forehands, volleys we perform on courts to get us ready for the match...ie simulating our trades till we think we get it right before live trading.

I find it amazing that a player can loose the 1st set, let's say 6-0, and then win the next set 3-6, and then win the final set 4-6....why? Assuming both player are evenly rank.

Pit trading in a fast market was the same; no time to reflect, just act!
This is when the ball is in play...let's say an exciting rally like Djokovic and Murry...they both were in the Sweet State.

I don't often experience that state siting at ta screen waiting for he next set up.
This is when the ball is no longer in play...let's look at this as if the set is over and both players are sitting on their respected benches....this is the other Sweet State.

What I mean by the other Sweet State, and I really can't see what's going on in the tennis players heads, but I think you'll agree with me with our experience playing the game is that if one player is thinking about the HOT ball girl and the HOT fan giggling her hooters and the other player is going over what he did right and wrong in the past set...then I think you'll agree that the latter player will be more prepared in being in first Sweet Spot that the Pit traders use, just act.

So that's as far as I've come to understanding it and when it comes to my trading, like tennis...drills, drills, drills.

Try trading the minute chart of any instrument, ignore the points or money value and I believe you'll experience this state of...just act....but since, I'm assuming, that's not your trade play...your Sweet State is when your on your bench thinking how your going play the next set.

"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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  #34 (permalink)
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rtrade View Post
... if one player is thinking about the HOT ball girl and the HOT fan giggling her hooters and the other player is going over what he did right and wrong in the past set...then I think you'll agree that the latter player will be more prepared in being in first Sweet Spot that the Pit traders use, just act.

made me chuckle ... thx.

cheers,
-e

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  #35 (permalink)
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I've been following this thread and I'm wondering if any of you who have more experience have an opinion on something I have been considering in life as well as in trading.

I find that the human mind (my mind as it were) can, in times of stress, revert from the, what I'll call enlightened state to a place where my mind gets locked in a negative cycle.

Has anyone had any success in breaking negative thought cycles? I would like to better identify periods in which I am in a positive mental state for trading and when I need to step back. When I step back how can I remove myself from the negative cycle of fear, doubt, anxiety etc.

I feel that as humans in the course of our lives build programmed responses to stressful situations that, when unchecked, become scripted psychological and even physiological responses that are very hard to break.

Negative emotions in trading lead to entering early (impatience, fear of missing a trade), entering late (hesitation, fear of being wrong), tightening stop loss (fear of losing $, self doubt), removing stop loss (fear of accepting failure, greed, paralysis), tightening profit target (fear being wrong, self doubt), loosening profit target (greed). That's just a list that I thought of and a few emotions I associate with those things. Physiologically we can experience tightness, shortness of breathe, narrowing of vision, elevated pulse. etc.

Does anyone have thoughts or literature about this?

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  #36 (permalink)
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jtradr View Post

Has anyone had any success in breaking negative thought cycles? I would like to better identify periods in which I am in a positive mental state for trading and when I need to step back. When I step back how can I remove myself from the negative cycle of fear, doubt, anxiety etc.

I feel that as humans in the course of our lives build programmed responses to stressful situations that, when unchecked, become scripted psychological and even physiological responses that are very hard to break.



Does anyone have thoughts or literature about this?

This is something I've had to deal with throughout my trading career. If you're feeling really foggy in the morning before you trade or if something really negative is going on in your life not related to trading, do not trade. Some of the greatest traders I've known at the Board of Trade had their careers threatened by trying to trade while going through divorces.

When you get into a negative cycle, my advice is to step away. I always had a rule in the pit that if I had three consecutive losing trades I was done for the day. If I had three losing days in a row I would take a day off. Try to identify what went wrong, but don't dwell on it, just identify the problem or problems and then do something completely unrelated to trading. Then, after you've taken just enough time off to clear your head, get back on the horse. If your trading methodology is reasonably consistent, you'll be fine.

If your negative cycle is due to being unable to put together consistent results, then you have to go back to the drawing board. Read, trade in sim, study charts, backtest ideas even if you don't plan on trading systematically. Sometimes backtesting will identify erroneous trading concepts. Try to develop tape reading skills. A poster somewhere on futures.io (formerly BMT) who claims to have been trained by a superstar described how early in his career his mentor would flip a coin, heads long, tails short, make him take the indicated position, and then he had to trade out of it. A great idea. I used to do something similar in the pit first thing in the morning to get in synch. As soon as I had even a whiff of market direction or value I'd aggressively put on a small position, maybe a tenth of my normal size, and see how it "felt".

"You don't need a weatherman to know which way the wind blows..."
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  #37 (permalink)
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@jstnbrg - excellent post. thanks!


Quoting 
if I had three consecutive losing trades I was done for the day. If I had three losing days in a row I would take a day off.

something to consider adding to my trading plan.

cheers,
-e

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  #38 (permalink)
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eman View Post
@jstnbrg - excellent post. thanks!

something to consider adding to my trading plan.

cheers,
-e

I should amend my previous post a little. I didn't always leave for the day if I had three losers in a row. I
would always leave the pit after the third loser, get some breakfast, think about the morning a bit, and then
decide whether I should leave or give it one more shot. But I would definitely step away for a little bit to clear my head and take stock.

"You don't need a weatherman to know which way the wind blows..."
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  #39 (permalink)
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@jstnbrg - right-on. thanks again. good counsel to step away and not trade out of emotions or revenge.

cheers,
-e

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  #40 (permalink)
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The Journey to the Sweet Spot


Let's say I am a brand new trader starting out today. I have learned how to read charts of price action and located some real live traders who trade real money. I am offered the possibility of a desk to trade from and the capital to trade with. All I have to do is pass their test.

Here's what is asked.

Three months of SIM trades in one market, with minimum 2-5 trades per day.

Now what do you think a professional money manager is going to look for in your results? I know exactly what I want to see. Winning Trades and Nice Profits. They leave behind a story of the trader's journey. I can read that.

If you get into your sweet consciousness state you too will know. Jesse Livermore is one of the game's favourite sons. Yet his saying of 'yes, but can you trade with a loaded pistol at your head?' is full of his consciousness state. He shot himself, his wife shot her son, his son drew a gun at the police. Guns were a big part of his consciousness.

So is SIM trading any use? I have watched so many traders wipe out $20,000 and $50,000 and $100,000 accounts real money because there was no other way to test their ideas other than the real thing.

Now here is the next vital step. You have done 90 days of SIM trading but you ask yourself can you trade for real with a pistol at your head? The answer is No! Why? Now see if you can get this. Because you have asked that question, you are filled with doubt. Doubt leads to loss.

Step one is learn to read charts.
Step two is SIM trade for 90 days
Step three is Virtual trade for the rest of your life.
Step four is understand money management
Step five is trade with real money

Now what is Virtual Trading? It is the weld that joins SIM to REAL. This is where you imagine yourself doing the trades in a sweet sweet state, executing perfectly, feeling all the wonderful energy of being a master trader.

When you move from SIM to REAL there is no doubt. You are a trader in your sweet consciousness before you become one in the REAL world of trading. If you doubt this I am telling you, you will lose. I've seen it over and over.

SIM~VIRTUAL~REAL

Your fingers will just click automatically, when you see your setup. No Fear. When there is no more fear you are ready.

Sweet Trades!

Shivaya

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