I find it quite ironic that @iqgod made this post on Brian's thread. It wasn't all that long ago, that I used to have this very same discussion with Brian. I used to get extremely frustrated, because I knew Brian was a very bright guy, and that he understood that his methodology was far from optimal. And I also knew he was a really great guy, so I really wanted to see him make money.
I used to tell him ( in no uncertain terms) that he would never be profitable if he continued do what made him feel comfortable, rather than what was the correct thing to do - and that he needed to reprogram his behavior. Which is exactly, what I think he has accomplished. I read his reply to the OP's post, and it was spot on. However, his transformation did not take place overnight.
In Brian's case, he knew that he was doing certain things incorrectly, (and I was always kind enough to point them out to him). But he wasn't emotionally ready to stop what he was doing wrong, and change his behavior. He needed to confront the challenge head-on, in his own way. And, through trial-and-error and perseverance, he appears to have accomplished this goal.
Trading cannot only be a negative game financially, but emotionally. The highs are high, and lows are low, but the highs never seem to reach the same heights , that the lows sink to. Trading is full of such asymmetries that make it an emotionally negative sum preposition. The problem is that human nature does not operate to maximize gain, but rather to maximize the chance of a gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. And the market is quick to reinforce this tendency; as most small profits often tend to vanish, the market teaches you to cash them in before they get away.
Of course, in the short run, this makes the trader, feel like a winner. He is enjoying a success rate, with a lot of winning trades and small losers, but in the long run he hasn't shown a profit. Interestingly, some of my biggest months P&L wise, have been accompanied by my lowest winning percentages. The success rate of trades is the least important performance statistic. Quite simply, its not important whether you are long or short, but how much, and for how long, you are long or short.
Taking premature profits is an attempt to make current positions more likely to succeed, to the severe detriment of long term performance. It is also quite a normal tendency. The St. Petersburg Paradox teaches us that people consistently prefer to lock in a sure win rather than accept a gamble with a higher expected payoff. These evidently instinctive human tendencies, contain more than a drop of poison for the trader who cuts his winners short. It in fact, prohibits him from attaining profitability. This reality alone, should provide any trader, in his right mind, the motivation to resist the temptation to abbreviate his winners.
That being said, you need to develop a trading plan, whose criteria, will lead you to profitability, which includes:a realistic profit expectation, based on current volatility and type of day(range, trend). ATR, ADR, SD, value areas, will help you to determine optimal risk reward parameters. Only then, can you confront your problem head-on.
Last edited by tigertrader; May 31st, 2013 at 02:23 PM.
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I was usually pissed off at @tigertrader after one of these exchanges.....I still am a little bit...not really but it was very uncomfortable for someone to tell me I was doing something wrong and to reprogram myself without giving specifics as to what to do exactly. I am not a person that grasps hidden meanings well. And @tigertrader seemed to often have hidden meanings....like the truth was hiding in plain sight but I couldn't see it.
Frustration was very high at this point. I knew I needed to change something but couldn't figure out what it was and He wouldn't tell me clearly. I nearly blacklisted him from my thread. I'm glad I didn't. I am still working on stuff to be sure, but feel I am finally on the right track.
Some of this you need to come to the realization on your own. Other stuff you can be taught. But the teaching can't be done effectively until you are actually ready to learn.....and we rarely are ready to learn when we say we are...
I think it was Al Brooks that said "sometimes you just have to hold your nose and enter". That seems to be true 100% of the time.
Think about the 95% that fail. What is the classic wisdom taught to the masses? Think about the so called truths you think you know. Write them down on a piece of paper. Then ask yourself, "what if I did the opposite"? What would happen? Write this down. Really think about it. Answer the questions......
What if you sold support instead of buying it? What if you never went break even? What if you never trailed your stop until you would rather be in a trade the opposite direction? What if you scaled in instead of out? What if you tripled your stop. What if you quit worrying about your homework, your bias and just went with the flow. What if you could never use indicators again? What if you put your entry where your stop would otherwise go? What if you took profits where others are just getting in? What if there were no stops and no targets allowed, you had to physically push the button to get out. How would this change your thought process? What if your broker would only allow you one trade a day. What would you do differently?
I'm not saying you should do all those things, I am saying you should think about them in regards to how YOU trade.
A trade plan is made up of three parts:
1. A defined edge for entry. you do have one correct?
2. A defined edge for exit for both profit and losses. I call this risk and profit management. One that is based on something other than,OMG, I think I need to get out!!!!! You have this correct?
3. A defined edge for money management. (this does not mean your stop placement) If you don't know what money management is, time to stop trading and figure it out.
Of the three, 2 and 3 are the most important. The entry can be random if you do 2&3 correct, you will make money.
If you do not have a method that you can categorically lean on for all three aspects of the trading plan, you shouldn't be trading at all. A lack of any one of these three will cause you to constantly second guess yourself and you will end up taking 6 ticks when you should have had 60. Or loosing 60 ticks when you should have lost 6.
This is a losers game. Your job is to figure out how to lose the least and maximize not your opportunity for gain but to maximize the actual gains you find yourself in.......like @tigertrader said, its all about HOW MUCH and HOW LONG you are long or short.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
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I think what fails most traders, is not lack of intellect, or even patience, or even discipline, but the unstoppable desire to be right, to prevail. This makes them keep doing thing they think right, and continue the search for confirmation of their rightness. There are two options in market: be right or take money. Amazingly most people prefer to be right. Being humble is a half way to success!
Trade to live. Not live to trade.
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This week I signed up for a gym membership. Something I thought I would never do. But since I must walk to live, and necessity being the mother of many things, I refuse to walk 30 minutes a day in the Arizona heat during the summer. So to avoid the 115+ degree heat, I join a gym.
In a weird twist, I had to decide which one to go to. The cheap one 5.5 miles away or the expensive one less than 2 miles away? I used my trading skills and figured out which one had the most risk of neglect. In other words, which one was I most likely to go to? Further, what was the monetary cost between the two.
As it turns out, the close one that costs more money won. Two reasons. It was more likely I would go there, and the cost differential was about the same after factoring in the cost of fuel to drive 11 miles round trip to the gym plus the 20 minutes or so each way vs 5 minutes away and less than 3 miles round trip. Add to that the first month was mostly free and it was a no brainer.
The cheap one was the cool place....huge, lots of fancy machines, great parking, etc, this is where I wanted to go. But the right choice was the closer one.....just like trading, often what we want to do and what we should do are complete opposite of each other.
Healthwise I continue to make baby steps. I've eliminated most sugar. Not hard mentally or emotionally but near impossible if you buy anything in a package. I've spent more time reading labels than anyone should ever have to spend. Why can't food manufactures just do the right thing instead of poisoning us with all those chemicals they put in food these days?
That being said, I have found some stuff I like without sugar. Gradually changing my diet and my family's' diet. No soda in 6 weeks, (although I would kill for an ice cold coca cola over ice in a real glass right now!) no fried food in 6 weeks, very little animal product, one pizza, two burritos, one breakfast burrito, no milk, tiny amount of cheese, one tiny ice cream cone from DQ and some of the most incredible dark chocolate with chilies in it.....this has been the extent of my "cheating" in six weeks.
I've added a couple of supplements to my regimen due to the suggestion of a friend here on the forum with regard to my heart health and I've had no episodes since the first one. No angina or anything like that.....so far so good.
Next of course is the gym to really get dialed in on the cardio stuff but at the same time, I need to rebuild my upper body strength. Trading does not lend itself to good physical conditioning and the cardiac incident seems to have left my arms and shoulders somewhat weaker. Not sure about this but it feels like and so I need to do something about it.
I've lost about half of the weight I need to lose. I suspect the next half will be much more difficult. This is my goal for the rest of the year. To get back in shape physically for the first time in probably 10-12 years.
At the gym, I intend to hire a trainer, come up with a plan and then journal it daily. If its not to much of a pain in the rear, I'll put it up here on the thread at least weekly.
I'm also mentoring a couple of traders. I like this a lot. It gives me a creative outlet, provides a sense of purpose beyond myself, and at least one of them has offered to pay me....not in the traditional sense but instead a trip to Italy next summer. We'll see about how that works out but I like the idea very much!
Now its time to help my kiddo with her end of school science project.....
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
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Excellent decision to start training. You won't regret it. Try to find a way to enjoy it and turn it into something fun, instead of seeing it as drudgery. It's a great feeling to see steady improvements in health and fitness.
I'm sure you'll find lots of healthy foods you can enjoy as well, as you continue to improve your diet. Change is always a bit tough at first, but you'll adapt to it very quickly I'm sure. Your body gave you a wake up call..and you've done the smart thing by altering your lifestyle .
Good for you!
Failure is not an option
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Making the gym fun and interesting is tough, I found going with buddies and setting goals helped me stick with it for about a year. Then I started going to a rock climbing gym and I'm all about it. I don't get bored like I used to in the regular gym. I also don't get my legs worked like they probably should but I have horses at home for that. Still it all depends on how you climb as to whether you get cardio or just strength building. Just an idea to through out there for everyone. Good luck panda!
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Hardest thing I ever did was to quit drinking coca cola. Its now been 7 years since my last Coke. It took me a year to stop drinking it. Had a three step process - stop drinking it at home then stop drinking it at work and finally stop drinking at lunch and when I went out to eat. The last one was the hardest. Its one of the best things I have ever done for my health. My energy level increased and I stopped feeling so sluggish all the time. Although, I still get cravings a couple times a year. I dont think that will ever go away. Its so tempting to get just one... Just for the taste and to feel the burn of a Coke with no ice in the morning. The stuff is addicting.
nosce te ipsum
Trade what the market is doing; NOT what you think its going to do.
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You made an analogy between trading and an everyday activity or pursuit in your first few paragraphs. I think anyone who has traded for an extended period of time inevitably, participates in this same “exercise” at one time or another. Personally, I don’t go a day without doing it, especially if it is some kind of performance related activity. I’ve mentally drawn comparisons to trading with; driving in traffic, raising children, various sports, chess, relationships, business start-ups and coincidentally working out.
Pragmatically speaking, its a very good habit to fall into. Not only recognizing the parallels in the activities, but the actual participation in the activities themselves. Henry Carsten refers to this phenomena as “Second Order Immersion”. Immersion is a necessary path to expertise that can be augmented and accelerated by creating a 'Second Order Immersion' as a feedback loop to enhance, expand and deepen a primary immersion. It adds dimensionality and nuance to the primary expertise. For example: A trader immerses himself purposely in gaining trading expertise. At the same time the trader immerses himself in a hobby - his Second Order Immersion. As he mindfully immerses himself in his hobby, he consciously relates its lessons back to trading in such a way that a multidimensional and additive feedback loop is created: Insights and perspectives from the hobby are routinely used to provide fresh insights and perspectives into trading.
The majority of people that join health clubs quit within 6 months. Would it be fair to say that 5% continue to train while the remaining 95% don’t make it. New traders and people that are new to training both experience a growth curve. They have to experiment with new and different techniques and methodologies till they find one that is effective. Lots of time figuring out a personal style and an edge, honing their skills, and carving out modest gains. Growth is tedious at first, but through patience and discipline, they eventually increase their size and eventually they reach an inflection point, where gains breakout - some making more gain than others. Of course, its not a linear path- there are good days and bad days. On the good days they press and move up in size, and on the bad days they're in and out.
For those who work-out, its important to have an effective routine and its important to realize when that routine ceases to be effective anymore. Has my body become resistant to growth? For those who trade, they need to ask themselves, what is my methodology and when do I stop using it. Have the markets or the regime changed? Those who fail to self-correct in either endeavor, will cease to make further progress.
So, all you have to do is apply the principles you learned trading, to your training. Good luck in your latest endeavor, and keep up the good work in the former.
Now give me another, rep. No pain, no gain!
BTW: I don't lift weights often, but when I do, I do 12oz. curls (XX).
Last edited by tigertrader; June 2nd, 2013 at 01:05 AM.
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Lifestyle, health and weight can also be the mother of many things. I am recovcering after a prolapse disc and the pain was like nothing like I have ever felt before. It has taken 6 months and now to strengthen my back I need to hit the gym. It seems that after 40 things start breaking down lol
Whatever you can do to keep things working well and to avoid pain - do it. The gym may be a hassle but to have complications that can take away mobility foe me makes the gym option an easy one.
Good on you and I wish that you hold the mother of many things at bay.
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