Rework beliefs into complete alignment ================= Sans any perhaps My Friend It the goal..., result..., and benefit RN
When I said that my plan is based on math I don’t mean the results of back testing and a projected win to loss ratio in the future. That is a generalization at best. I mean that before I even drew up my plan I did things like… for example: look at the math behind being all in, taking Lots off, adding Lots. There are threads that run for years and argue these things to no end… good grief. The critical differences seem to me to be the rules one uses as they apply these strategies. So develop sets of rules… work out the math that results if those rules are applied… and pick the best one. I’m not thinking at that point about the probabilities of win to loss; I’m thinking about a foundation for a strategy… with the identified rules… that has an advantage. Solid math. That gives me confidence. A plan is built around math. [For example, applying the same rules to all-in, take-off, and add-on might indicate you need 1 win to cover 4 losses with take-off, 1 win to cover 8.6 losses with all-in, and 1 win to cover 14 losses with add-on.] Small changes in rules can make a big difference. Having rules to complicated to be practical in real time is something worth noticing also. Having solid math to start with, then it is time for all the back testing and other administrative work. Which is important. BUT, set all the administrative stuff aside when it comes to actually trading. Hire yourself to do a job. You don’t think about the money. You don’t change the plan while you are trading, let the plan change you. Don’t think about the probabilities. Embrace the unknowable and do the plan/process as objectively as you can. On the weekends or at the end of the month you put your administrative hat back on and make any course corrections necessary. ...at least, that is the way I see it now. It seems like a waste of time almost to do all the stat's of back testing, forward testing, sim trading. Then when I actually start to trade live those things have zero to do with the unique moment in front of me... The odds that trade will do the expected, or that I expect anything at all. But all that work somehow goes to confidence and development of skill and perspective. The things again that make trading something other than gambling.
True, a proper analysis before taking a shot in forex trading is a thing that makes it different from gambling.
One can analyze till they're blue in the face - still won't foretell what may happen next (future human behavior) Every trade is a gamble - one needs to decide whether place it (trade) as a gambler..., or the house Feel free to disagree to whatever degree this gives you internal conflict Uncertainty... and false / misdirected confidence - in this business - are bitches RN
Can trading become an addiction since it is so similar to gambling? We are asking if it is even gambling. You can say getting in your car and driving is the biggest gamble you take every day. The highest risk. One can define gambling broadly or narrowly. Funny thing is, the same is true about addiction. I have a minor in psych and have sat in counseling classes. As I was taught, most people do not have clinically defined addiction. But to those that do… everything becomes addictive… even breathing comes to be seen in those terms. Because they need to come to see the whole world in addictive terms. And the best way out of addition is to see the world that way and think in black and white terms about the things you choose to accept – like breathing – and the things you reject – which is a lot. That kind of thinking saves the person who can’t afford to take one step in the direction of their addiction. But to the non-addict… black and white (all-or-nothing) thinking is a classical mental error. [As an aside: Some religious organizations define “sin” in addictive terms. To which their answer is black and white thinking. But that is a whole other topic, other than 12 step programs have a religious aspect in this sense.] ……. Addiction and black and white thinking are far from objectivity, which seems to me to be essential to trading. ……. For myself, gambling is where there is no skill involved. Where you cannot have any control over the outcome. While with trading I have no control over what will happen next, I do have control over being in a trade or not. Also I have control over how far I will allow it to go against me. I even have control over what size wins I will accept for any given position. BUT this is where beginning traders have a problem. They keep their administrative hat on while trading and try to control the market (what comes at them) instead of themselves. You hire yourself to do a job and as an employee you don’t control what comes down the conveyor belt… you just have a plan that says what to do regardless of what comes at you. You control the one thing, not the other. Trying to eliminate risk is getting off track. I am not going to confuse stubbornness, dedication, devotion and delight for trading as addiction. To do so takes me further from objectivity. Not only that – I have seen in myself a greater… ability to see reality in life and the world at large… as I’ve become better at trading. Becoming more objective as a general perspective is an unexpected benefit from trading. I less and less try to force the world into my expectations. Life is more fun this way.
Yes it happens with many trader, who over trade in order to maximize their profits or recover their losses, its not good to do so as it might lead to fatigue or desperation.
I agree with this lines. Your action is needed since you cannot control the next event in price movement, that's why you need to understand the risk you're about to take. Stick to the plan is part of discipline (and that's the hardest thing to do since most traders would likely to change their main plan to their backup plan).
What I find noting of fact here is that the day trader is necessarily not an equivalent of the gambler. What the day trader does is open and close trades in the same day. So that by 22.00 GMT, no trade is rolled over to the next day. Day trading for an experienced trader is not gambling because he consciously makes choice of the currency he is trading say the EURUSD, the leverage he will use on his trade which I would prefer to be 1:100, and most importantly he makes use of risk management tools like stop losses on his trade.
Yes..., and No - trading is inherently more risky Each trade's outcome is uncertain - period.., it is gambling Either gamble as a gambler.., or the house RN