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The Greatest Weakness
Started: by George Views / Replies:23,764 / 107
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The Greatest Weakness

  #61 (permalink)
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rtrade View Post
Fat Tails can you give an example of book keeping of emotions and behavioral patterns?

I am not yet doing this correctly, I have a hand written journal where I write down my errors during trades. This allowed me to detect some pattern that I need to avoid, such as entering a trade too early, that is prior to confirmation (anticipating too much) and exiting early, a behavior that reflects loss aversion. I am not exactly keeping book of my emotions, but the two books by Brett Steenbarger have convinced me that this is probably important.

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  #62 (permalink)
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Fat Tails View Post
I think we should come back to the topic. The Trader Survey shows that fear is not the dominant reason for failure, so I do not think that it is the greatest weakness.

The key statement of the survey shows that profits increase over time, only if post trade analysis is done. This is an essential ingredient in learning, you need to organize the feedback process to improve your skills. No feedback leads to no improvement.

So looks like the most tedious of all tasks, the reporting of our doings is the key to success. That said, it is well known that companies that do not use appropriate controlling tools are usually punished by history, as they disappear.

Not only psychology, also book-keeping - this includes book-keeping of emotions and behavioral patterns - is required.

I am new to trading as well. But I've never felt the "fear" factor. May be because I'm new, that I might not have experienced it. Otherwise, I feel trading, particularly day trading to be one great fun. It is fun to beat the markets. I didn't fear may be because there was so much caution and discouragement for me to enter in the trading, that got settled in my mind, ie., that loss is a way of trading .. lol

Cheers'

HAPS
Meaning of selected Notam

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  #63 (permalink)
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Journal of emotions


I tried to keep a journal with trades at their completion and found that I diminish the role of emotions when I enter, during and at the exit of the trade.
So now I try to describe my emotions immediately after I enter (attach a picture), during the trade (I was not exiting with a few pips and had the trade turning into a loss at the stop) and when exiting.

Describing my emotions during different phases and attaching images allows my to review my weaknesses during weekend review and prioritize the issues I will be working on.

It was shocking to discover that soem trades should not have been taken, because they did not comply with the trading plan (entry setup), but were emotions based - chasing, pushing, forcing for different reasons.

I decided to spend some time in the trading environment to relax and get ready for trading, even though it may mean missing the beginning of the major market moves (London, NY). - I do this to distance myself from outside emotions like work, family, traffic and so on.

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  #64 (permalink)
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vtechdir View Post
I tried to keep a journal with trades at their completion and found that I diminish the role of emotions when I enter, during and at the exit of the trade.
So now I try to describe my emotions immediately after I enter (attach a picture), during the trade (I was not exiting with a few pips and had the trade turning into a loss at the stop) and when exiting.

Describing my emotions during different phases and attaching images allows my to review my weaknesses during weekend review and prioritize the issues I will be working on.

It was shocking to discover that soem trades should not have been taken, because they did not comply with the trading plan (entry setup), but were emotions based - chasing, pushing, forcing for different reasons.

I decided to spend some time in the trading environment to relax and get ready for trading, even though it may mean missing the beginning of the major market moves (London, NY). - I do this to distance myself from outside emotions like work, family, traffic and so on.

Awesome - very glad you came to this conclusion, I share it and I wish more people would do as you are...

Mike

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  #65 (permalink)
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General

Futures Edge on FIO

Which products do you trade?

 
I believe that learning to lose helps me to win. There are a few elements in play here. Culturally, many of us are trained to win. That loss is unacceptable. Like it or not, when you're losing, that meme is in your head and can trigger unwanted emotions. A trader, imo, needs to learn to recognize when that reaction is being triggered.

The other element is technique. Learning when to let go of a losing trade. When you see how a bad decision or process leads you into a bad trade, seeing that bad decision through to a disasterous result (on Demo, of course) provides you with experiential knowledge you can then apply to cutting losing trades. That when you get it through your thick skull that yes, it CAN go higher/lower (for the fifth time in a row!) as a trade moves against you.

I trade Forex exclusively now. Learning to understand a currency pair and how it operates over time (I'm guessing I have about 5,000+ hours of screen-time) can let you ascertain when and how to hedge your way out of a bad position, and making significant profits in the meantime. So, in that case, trading DEMO, making some intentionally bad trades to put yourself into bad situations which you then have to work your way out of, can be valuable experience.

I've been involved with computers and programming for 35+ years, so logic and trading unemotionally isn't as difficult as it seems to be for most. The greatest thing I learned to date has been PATIENCE. I can now scan a dozen currency pairs in a few minutes and spot the golden opportunities. I only trade golden opportunities. The rest I give a pass. Over-trading out of boredom or whatever other reason is for Demo Trading only, and that only for early on as you are learning a currency pair.

I'm currently trading high leverage, and my win/loss is normally between 90-93%. That is probably too high. My current demo is running 100%, but twice now I've made bad trades which put the account in jeopardy, although those trades did manage to come back and close in profit.

My current focus and apparent weak area is Money Management, and I'm spending the weekend reading The Trading Game to get a handle on that. The traders I'm mentoring are doing very well, and I'm proud of their progress.

I trade a handful of pairs and pretty much stick with the M15 for my charts, although I've made it a point to ALWAYS check H1 and H4 before making an entry. Saved myself some very bad mistakes by adding that policy to my bag of tricks. I Gap Trade profitably on most market openings, and use a few indicators, mostly Harmonics, although sometimes I trade naked charts and just rely on my perception of Price Action.

I'm open to questions and constructive comments.

Best regards,
Merlin (midway between Copacabana and Ipanema beaches in Rio!)

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  #66 (permalink)
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so true

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  #67 (permalink)
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Wise and foolish


Fat Tails View Post
Thanks for your answer, George.

I absolutely agree with you. I would sign lots of statements of W.D.Gann, amongst them the one you cited. It is just amazing how somebody can be wise and foolish at the same time.

Some of the worlds most intelligent people are wrong about huge swaths of what they believe.Their own intellectual conceit prevents them from questioning the assumptions underlying those beliefs.It's difficult to unravel an entire belief system when you encounter a piece of info that doesn't fit the mold.It's much easier to dismiss it as poppycock,and carry on as before,along with a new assumption.That whoever presented you with said piece of info is not worth listening to.

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  #68 (permalink)
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blammo View Post
Some of the worlds most intelligent people are wrong about huge swaths of what they believe.Their own intellectual conceit prevents them from questioning the assumptions underlying those beliefs.It's difficult to unravel an entire belief system when you encounter a piece of info that doesn't fit the mold.It's much easier to dismiss it as poppycock,and carry on as before,along with a new assumption.That whoever presented you with said piece of info is not worth listening to.

You just explained, why economics is still a pseudo-science. Every economist should read Popper before earning a degree, in order to understand the empirical foundation of science and to grasp the meaning of the word FALSIFICATION.


Last edited by Fat Tails; December 23rd, 2011 at 06:38 AM.
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  #69 (permalink)
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I appreciate the food for thought!Yummy!


Fat Tails View Post
You just explained, why economics is still a pseudo-science. Every economist should read Popper before earning a degree, in order to understand the empirical foundation of science and to graps the meaning of the word FALSIFICATION.

Thanks Fat Tails.
I had not heard of Popper.A quick wikipedia search tells me I'm going to like him. I'm already a bigger sceptic than I was 10 minutes ago. My wife will hate this!

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  #70 (permalink)
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Shivaya View Post

Om Tat Sat

Shivaya

Hello Shivaya

By curiosity, could you translate that "Om Tat Sat"

Have a good day

Martin
Montreal, Canada

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