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Why Trading is so hard


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Why Trading is so hard

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  #1 (permalink)
Melbourne, Victoria, Australia
 
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My points will hardly make for an exhaustive list however I just updated my journal based on dealing with operating in the "unknown". Using a trade in the SPI index futures from yesterday. there were a number of concepts in that trade which led to me jotting down some points.

Learning about and then implementing cognitive tools
Making money from trading doesn't occur for me without using a range of cognitive tools. Always dealing in the unknown, remaining uncomfortable (eg just being patient is uncomfortable) constantly questioning oneself to check if I'm remaining bias free, losing trades, making mistakes and accepting them, decision fatigue etc are both exhausting potentially harmful to your actions. This is where breath work, market prep, positive priming, physical exercise, diet (supplements such as fish oil included), routine, meditation, journaling and yoga all play a part in my trading. And I don't see myself as some new age type, its just overtime in trying to improve, I've sort the guidance of professionals in these areas and these are standard prescriptions.

Context and Market Structure
Reading price action successfully is a very under rated skill. So much of interpreting price is understanding how the other participants in the market are likely to react. And this often involves knowing what has occurred or not occurred at other levels so you can gauge where other players will be trapped, and how their exiting is likely to fuel a move.

Bias
Being alert to changes in bias before the crowd so you can be on the right side of the market

Contraction and Expansion
This concept literally turned my trading around. Being in a position prior to the transition from contraction to expansion is what keeps you a step ahead of the crowd. Often once price has undergone an expansive move and its now obvious which direction price is moving, it requires "time" for the different participants to adjust, and this usually leads to complex price action which is best avoided as it leads to getting chopped up.

Market Pace
I'm specifically referring to intraday trading here. There may be a better way to describe this however the pace of the market action will be the deciding factor as to whether or not I keep re-entering into new legs at higher and higher prices (if long, reverse if short). This skill comes purely from time based in front of the screens.

That's it for now

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  #3 (permalink)
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Maybe your expectations are too high.
Defining risk per trade, low volume, and probability mixed with a
little luck. Being able to hold your winners and define your losses.

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  #4 (permalink)
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kickmic View Post
My points will hardly make for an exhaustive list however I just updated my journal based on dealing with operating in the "unknown". Using a trade in the SPI index futures from yesterday. there were a number of concepts in that trade which led to me jotting down some points.

Learning about and then implementing cognitive tools
Making money from trading doesn't occur for me without using a range of cognitive tools. Always dealing in the unknown, remaining uncomfortable (eg just being patient is uncomfortable) constantly questioning oneself to check if I'm remaining bias free, losing trades, making mistakes and accepting them, decision fatigue etc are both exhausting potentially harmful to your actions. This is where breath work, market prep, positive priming, physical exercise, diet (supplements such as fish oil included), routine, meditation, journaling and yoga all play a part in my trading. And I don't see myself as some new age type, its just overtime in trying to improve, I've sort the guidance of professionals in these areas and these are standard prescriptions.

Context and Market Structure
Reading price action successfully is a very under rated skill. So much of interpreting price is understanding how the other participants in the market are likely to react. And this often involves knowing what has occurred or not occurred at other levels so you can gauge where other players will be trapped, and how their exiting is likely to fuel a move.

Bias
Being alert to changes in bias before the crowd so you can be on the right side of the market

Contraction and Expansion
This concept literally turned my trading around. Being in a position prior to the transition from contraction to expansion is what keeps you a step ahead of the crowd. Often once price has undergone an expansive move and its now obvious which direction price is moving, it requires "time" for the different participants to adjust, and this usually leads to complex price action which is best avoided as it leads to getting chopped up.

Market Pace
I'm specifically referring to intraday trading here. There may be a better way to describe this however the pace of the market action will be the deciding factor as to whether or not I keep re-entering into new legs at higher and higher prices (if long, reverse if short). This skill comes purely from time based in front of the screens.

That's it for now

Why trading is so hard. Because you are always fighting you inner demons.
Cheers John

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  #5 (permalink)
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Trading is easy! How much effort does it take to click a mouse?

Trading successfully; that's another story.

If you are not trading successfully, determine what you are doing that is causing you to not be successful and stop doing that.

When you talk you are only repeating what you already know. When you listen you might learn something new
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  #6 (permalink)
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Watch the original "Wall Street" , Gordon Gekko makes one of the most profound statements related to trading- "Don't get emotional about stock, it clouds your judgement".....
I always try to trade like "Spock" devoid of any emotion, just doing the job...

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  #7 (permalink)
Sydney, NSW, Australia
 
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Id say its mainly because of our cognitive biases so imo its mostly psychological why trading is hard. When we take several losses we can become very aggressive and take crazy risk to make it back, or we can become fearful, or we can overtrade because we are bored or feel pressured to make money, and when we are on a winning streak we can then become fearful of losing it and not take good trades, or become overconfident and take on a ton of medicore trades etc etc. The human brain is also wired to avoid pain so we like to forget our losses which is bad because we can learn from them, we have recency bias, the list goes on lol. And then you have to have an edge and it has to stay profitable over the long term, in an ever changing market. Ive found that my best trading days have come from when I wasn't really trying to "do" anything, I was just watching the market and executing as I saw signals. I was in a relaxed but alert state, both are important because Ive been relaxed but apathetic which also meant I took too many trades and wasn't thinking about risk - and Ive also been alert but anxious meaning I miss some trades or I really want to do well and force trades. This is most of the time, hence why Im still on sim Focusing on slowing down breathing and taking deep breaths + relaxing shoulders is advice dr steenbarger gives to help reduce anxiety and stay in that optimal meditative state.


In one the market wizards books one of the guys interviewed knew some other guy who entered into a trading competition and placed trades completely randomly and cam fourth or something out of a few hundred participants (sorry no specifics, this is completely off memory which is horrible with details), could have been extremely lucky but the point that was being made was that most traders trade worse than compared to a completely random system.

Understanding yourself is just as important as understanding markets.
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  #8 (permalink)
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* I suspect that the reason most rookie traders fail, is that Traders with accounts too small cause emotional stress, because you're afraid to lose and it has a huge negative effect on trading results.. (been there done that)..
.
If you had a $5k account, would you be stressed out over a $1000 loss ? yes..
If you had a $1million dollar account would you still worry about a $1000 loss ? no ....

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  #9 (permalink)
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Two important things:
1.Trading as a means of steady income is not a painful process if you know what you are doing
2.Trading can be a very painful process if you listen to the wrong information
New traders suffer a severe disadvantage because they do not understand what moves the market and how to react to certain outcomes. When attempting to learn, the overflow of information out there can be both beneficial and disastrous. Deficiency of knowledge in any endeavor is usually going to lead to failure.

* If investing gets too difficult for a seventh grader to understand, the system is needlessly complex
* Markets produce an enormous volume of information, much of which is redundant
* In every game and con there's always an opponent, and there's always a victim. The trick is to know when you're the latter, so you can become the former
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  #10 (permalink)
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Jonson View Post
Two important things:
1.Trading as a means of steady income is not a painful process if you know what you are doing
2.Trading can be a very painful process if you listen to the wrong information
New traders suffer a severe disadvantage because they do not understand what moves the market and how to react to certain outcomes. When attempting to learn, the overflow of information out there can be both beneficial and disastrous. Deficiency of knowledge in any endeavor is usually going to lead to failure.

I would argue that trading can be a painful process and is most certainly challenging for pretty much everyone, even seasoned pros have periods of drawdown as well, and income is by no means steady. On top of this you have to continually adapt your trading methodology to changing market conditions. Look at the lack of volatility in early 2014 compared to the post 2008 crash period, gains during 2014 would have been much much smaller in comparison and then within years there will always be weeks with relatively low volatility and high volatility.

Understanding yourself is just as important as understanding markets.
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