The first point would argue that only the best will remain in the game thereby making the game that much more competitive. Is it fair to say that a highly competitve market is an efficient market?
Only in the sense that other highly competitive markets are close to maximum efficiency, like the market for talent in, say, Major League Baseball. (And even there you have distorting bias and prejudice distorting the market; check out 'Moneyball' by Michael Lewis.) The academic sense of the term 'efficient' as applied to markets has no meaning in the real world. There is no such thing as perfect distribution of information or perfect rational choice etc. regardless of how talented the players are. Efficient market theory is a somewhat useful effort to model real world phenomena through the judicious use of oversimplifications, but declaring the rigid conditions of the model to actually exist is folly. Think of it like this: How could something as complex as a perfect market actually exist, when something as simple as a perfect circle can't exist except in theory? The efficient market hypothesis has maintained a high level of evolutionary fitness by serving the emotional and financial needs of academia and of Wall Street. And as a simplified model it actually does have some use, in the same way that a sociologist can get potential real world insights from the Sims. But declaring the model to be real makes no sense. To borrow a phrase from Edward O. Wilson, much of today's stuff is actually 'folk economics'. I am willing to bet that it's only a matter of time, 10 to 20 years or less, before we see a body of research asking the question why something so obviously flawed as EMH gained as much prominence as it did, and dominated as long as it did. The answer will run along the lines of sociology, psychology and utility. Economics and politics will get much more interesting when we finally work up enough intellectual courage to strip out the emotional bullshit and hidden agendas that drive so much of supposedly objective 'research' today. A hundred years from now, a lot of today's academically respected political and economic theories will be regarded with the same sense of ridicule as some of the wacky medicinal stuff from the 1800s.
I too a going to try trading with a binuaral beat program that produces Theta I believe I have heard good things about I will post once I have had a chance to try it out. In my short time day trading I have found that I am my worst enemy or best friend and it is a direct result of my mind. The more I study about trading I believe that most failures are a result of the mental state of the trader not their trading system. Many trading system seem to produce 50% winners, but traders still consistently lose because of their mental states of mind IMO.
Hello: Because of the title of the thread, I thought I would mention a couple of things. First, your "subconcious" state, is your underlying mental set. It is already "designed" or setup for you. It has been there since you were an infant. It is the result of your many experiences in the world of cognition. Depending on the luck of the draw, including your parent's ability to structure a nurturing environment for you as a child, you may find that you have an naturally optimistic or pessimitic view of the world. Also if you are an adult, you will by now have had enough experience to know whether you are a "winner" or "loser" in this world. Trading is no different. If what you want to do is try to change what years of experience and indoctrination have done to (and for) you, you may find that it is very difficult to do so with self help books, music, massage, or therapy. With a lot of work, and time, you may however learn to "accuentuate the positive" so to speak. Ultimately we are mostly the product of our upbringing. So if you are a loser in life, or an underachiever, chances are pretty good that you will be that same person when you trade. Certainly there can be exceptions, and no one can doubt that the human spirit can prevail at times. For the most part however, by the time we are adults, the die is cast. Good luck, Steve
I agree Steve, and I also believe strongly in NLP. I used it to become a top salesman when I had no previous exp in the industry of my previous field. I firmly believe that if I continue to study the wining traders I can model myself to be like them to an extent. Excellence can be duplicated!
Now look what we've got here: http://www.boston.com/news/odd/articles/2005/10/23/danes_design_singing_pillows_for_soldiers/ http://www.musicurepillow.dk/defaultUK.asp
There are several pertinent posts here showing how worthwhile it is to know whats going on with your mind and body. As far as making money goes a lot of stuff does enter the picture. For about 20 years of investing (short term position trading is the current designation), from 1957 to 1980, It seemed more like information was being made more available and there was a significant shift in who was interested in the markets for making money. More people and a much broader range of interests. The advent of real time monitoring (beyond the ticker tape and chalk boards) where electronics became involved did change how people processed information for making money. The same rules applied but there were many additional considerations that were made. Electronic trading using market oriented software and trading platforms also came into being. this made it possible for market operators to create new trading products to protect financial strategies and there was the by product of trading these speculatively. That brings us to the present and how a person contemporarily makes money. I noticed over this 50 year period that it was important to know how computers and orders worked electronically as compared to the telephone oriented past systems. Interestingly enough with the advent of using PC's the "other half" of trading, namely how a person did what he did to be able to keep current and prepare to "telephone" orders in and make money came to be important. As time passed looking at the whole situation faded away as a possibility for many investors and traders. "Edges" came into being more or less because of the large supply of real time information. It was an interesting development. as interesting as the development of periodicals in the trading and investing fields. I had to look to see what was going on with my mental processes as times changed and the advent of technology in the market place came into being. Adjusting 36" discs on perches could be done as easily as the yagi rigs for ham radio; a great alternative to telephone lines which occasionally carried lightening transients into mother boards (we all had multiple lines by then). Finding out that trading involves four separate independant deductive types of thought processes was a very fruitful process which meant I also had to go through looking at the human circuit boards involved and how they were built, operated and maintained in the body. The field of immunuology was the most fruitful for maintenance. NLP was importance for learning about interfacing myself with the electronics involved. Were I to list the most important new learning that I had it would be the lead in to the psychology part of trading. That lead to learning about "training" in making money and in particular parallels with past sports, military and espionage training. You can see here that this general thread has great commentary and as yet it is not getting down to where the rubber meets the road vis a vis performance and effectiveness in each of the four sectors of mental processes in trading. The one that contains the meat of where emotions come into the picture is a terrific and exciting one. By grasping what making money is all about and the various indepenent thought processes involved, you will rapidly get to an understanding of how destructive the processes are which the thread starter advocated. Sleep is a different thing than is stated in the comments and the icon referenced articles. If a person ID's a problem, it is better to address the problem and turn it around into an opportunity to improve. Most all problems do two things: they lead you to solutions and then, secondly, the solutions deepen your consciousness of the larger opportunity. For me, I was finally able to guide myself to a trading personal condition and modus that allows for being fully synchronized with the electronic support system I own and operate. Someone said here what comes out of your system is much more important than what goes in. Neither is important, relatively speaking, compared to knowing how to "train' and even moreso "knowing what you are training". Looking at inputs and outputs of a black box is what the person addressed. The better considerations are how to buld, operate and maintain black boxes. "Black box" is a way of stating the fact that you have something personally that is very well designed and made that operates in a very excellent way that others "outside" can only perceive as a container of a specific color. If any person does become conscious of any challenge, what this consciousness, de facto, states that the person can meet the challenge successfully. People do not become aware of anything in their space that they cannot deal with ultimately. A person can pass on facing the challenge but it will be presented over and over until it is dealt with. When you become conscious of what you are doing step by step, you then have the obligation to perfect what you have become aware of.
I agree with the general thrust of this but disagree with some of the implied assumptions. (In fact please consider this post more a clarification than a disagreement.) There is a fascinating book called 'On Intelligence' by Jeff Hawkins. Well worth reading. If Hawkins is on track, then the conscious / subconscious divide is useful as a heuristic but does not actually exist in a meaningful concrete way. Biologists are discovering that much of what Freud thought and taught is bunk. At the same time, Freudian beliefs have so thoroughly infiltrated our society that it's natural for the average joe to think of the mind in Freudian terms, without questioning the model. I include myself in that group -- while I have always been interested in psychology, it's only recently that I've taken an interest in the biological aspects of how the mind works. I made a lot of Freudian assumptions too, and now realize they have little merit. Based on Hawkins' hypothesis, "you" are essentially your neocortex. All the patterns and memories that make you a unique individual are stored in your neocortex. There is no actual 'subconscious' as opposed to 'conscious'; there are simply vast hierarchies of patterns, with some of those patterns more accessible than others. (With that said, it remains useful to refer to the subconscious for discussion purposes, because the concept is so universally accepted.) It is true that people are shaped from early days by patterns learned from their parents and their environment. It is also true that these patterns can be extremely hard to change, because the roots run so deep. What I disagree with is the notion that certain patterns are impossible to change, i.e. the fatalist notion that you are screwed for life if your upbringing was subpar. The brain's key attribute is plasticity --- learning is little more than registering new patterns, breaking down old patterns, and combining patterns in new and complex ways that did not exist before. With this in mind, there is no reason why the most ancient patterns -- the ones we learned as children -- cannot be uprooted and replaced if need be. It could take a lot of time, energy and effort to accomplish deep-rooted pattern change, no doubt about that. Maybe more effort than 99% of people are willing to expend. But that doesn't remove the possibility of success. Your neocortex is defined by plasticity. Your neocortex is also "you." Therefore, barring a debilitating chemical imbalance, you can become whoever you want to be (within the context of your environment). Psychological studies have shown that the right combination of motivation and "self-talk" over time can have the same positive effects on depression patients as actual prescription drugs like Zoloft or Lexapro etc. I don't think this is magic; rather, it's the result of a painstaking process in which faulty or destructive patterns in the brain are 'rewired' via conscious effort. A healthy mind is more durable and less susceptible to the destabilizing effects of chemical change. But rewiring deeply ingrained mental patterns is a very different thing than a pep talk. If you've been afraid of snakes all your life, you can't dissolve the fear by hyping yourself up or lying to yourself. The process is one of contemplation and understanding, where you focus on the issue with enough depth and detail to deliberately influence a whole host of patterns in your neocortex. In this manner, the fear can be dissolved rather than overcome. A dedicated process of understanding can thus enable new patterns that displace and destroy the old ones. Again, not magic. Just an understanding of how the mind works. The process is painstaking because your neocortex doesn't respond to verbal commands. It doesn't "know" which patterns are good or bad, which connections to pay attention to, which connections to add or remove. That's why there is so much effort involved. It's also why I am skeptical of the instant-healing claims of NLP. If your fear of snakes is a physical thing -- that is, an actual configuration of patterns held in place by electrical tracers within your brain -- then you cannot remove that fear instantly, and neither can anyone else... because no one, including you, has direct access to the interlocking mesh of patterns that created that fear in the first place. It's not a matter of saying "I think I'll change my mind now," even if you really, really want it to be. You have to get in there and dig for the unexpected connections, which is done via contemplation and rationally directed thought process. The process of positive change and the process of self-discovery are one and the same. In my opinion, many of the problems traders have stem from an unwillingness to face the real world. I talked about 'realistic goals' in another psychological thread, Radical Constructivism or something like that. If you are trying to bring about a physically impossible goal, or don't actually understand your deeper motivations, or trying to bite off more than you can chew, then it doesn't matter how much energy and effort you put into the process -- it won't work. The 'losers' and the 'underachievers' of this world are those whose thought processes are dominated by faulty or destructive patterns, such as a belief that success without hard work is deserved, or that those who succeed have access to some secret potion, or that raw motivation is the key to their problems rather than clarity and willingness to change.
Can a discretionary trader (not a blackbox or 100% systems trader) learn the market patterns through experience over the years (of course let's assume that he/she doesn't blow up in the meantime)?
i was turned onto patrick o'hearn from a person i know --- i listen to this when i am sleeping and when i am thinking about ideas for trading when i am alone and have zero distractions. i have found some of these very beneficial states of tranquility mixed with a mild euphoria due to this music --- love the feeling i have when this happens. http://www.patrickohearn.com/recordings.html check out the cd "slow time" and listen to track 3 --- "let's move on" ---- that song puts me right into that state i have mentioned above when i am alone and have no other distractions --- great stuff in my opinion since we are all playing a "mind game" in trading.