In my best NOD-esq reply WOOT!!! WOOT!!!! To error - we all do Making mistakes..., is not the same as shirking our responsibilities - never confuse the two You remained in control..., even when mildly frustrated (walked off and regrouped) See..., you do have it in you to be a fucking trader Never let go of that Good Job J RN
Took 5 trades and all were managed well. (One questionable entry I need to review.) Not that they were all profitable and only 1 went fully to target. Still the discipline and plan worked and I got paid again. Last trade (attached) was especially gratifying. Thought about lowering target (for the easier win), thought about exiting early on the initial pause after entry. Then the rat brain kicked in and said wait, I'm overthinking and trying to out guess the market. Then I think, at least for a brief moment, I completely let go. I was resigned to whatever happened. (This is all in a 4 and a half minute trade.) Then boom target hit. Didn't even see it just heard "Target Filled" Lost my focus during an hour and a half range and just watched the break out last half hour. I'm pleased with my performance today.
Astonishing to think how many lives we live within a minute bar - let alone 4 1/2 minutes Why was the last trade "especially gratifying" RN
I love this study, perfect trader mindset (rats & pigeons) vs 95% of traders mindset (smartass Yale students): http://economix.blogs.nytimes.com/2011/02/17/forecasting-is-for-the-birds-and-rats/?_r=0 What's crazier than the rat study is the pigeon study because the "win" rate is so much greater, yet the humans still make a mess of it.
Astonishing to think how many lives we live within a minute bar - let alone 4 1/2 minutes. Boy, that's the truth. Why was the last trade "especially gratifying" Because I did what I was supposed to do and it worked. I needed that positive reinforcement. Strangely I felt more in control by letting go. ========= Thanks, ND.
I hope Jas doesn't mind me asking a question here, but I found this quite curious in the article and hence it leads to a question that perhaps someone can clear up. Here are two facts from the article. "Four out of five times, it’s green; the other time, the red light flashes. But the exact sequence is kept random." "Stranger still, humans persist in this behavior even when researchers tell them the flashing lights are random." So I'm a bit confused about what they told the humans. Given that the light can only be red or green, but its rigged to be 80% green, how is this random? Sure the sequence is random. Out of 10, you might have 8 greens in a row and then 2 red to keep the 80% green ratio. But if someone told me something was random which only had two outcomes, I would assume it should be 50/50, like a coin toss. Therefore, I would assume that even though each individual outcome is random, after too many of one in a row, given that it should be 50/50, the other is long over due, or rather, this sequence of too many of one is quite rare. Of course it doesn't mean that the next one or the one after that will be different, but the chances of something that is random with a 50/50 outcome being 10 of the same in a row is highly highly improbable, although it can of course happen. Or better put, 2 of the same in a row is likely, 3 of the same is likely, 4 happens sometimes, 5 can also happen, 6 is getting quite rare, etc... until you hit 10 which you would almost never expect but of course have to plan for. Anyway, so I'm just wondering what I'm misunderstanding. If they meant that the next light to come up is random, then I get it, meaning they don't have the sequence of how the lights come up written down in advance. But to say its random even though its programmed to flash 80% green is I don't think accurate in the sense of what random means given only two outcomes.
You've addressed a key reason why traders fail and that's the belief that an individual outcome within a series of events for which there is a particular probability (60% or 80%, for example), but a totally random distribution, can become "more likely" (or "overdue") based on the previous outcomes. "Random" and "50/50" are totally different concepts. If a sequence of events is rigged so that over each series of N events one outcome will occur 60% of the time and the other outcome will occur 40% of the time, but the distribution of outcomes is randomized, the big question you want answered is "What is the value of N?" If the "rigging" of outcomes is set up to occur every 10 events, it won't take long to figure out which event is happening more often and then to be the rat who simply chooses left every time because left feels more rewarding. If the rigging of outcomes is set up to occur every 1000 events, then chances of a long string of one outcome is likely at some point, because the distribution is random. However, just because there's been a long string of one outcome doesn't mean that the odds of the other outcome have changed. The odds are still 60/40 on that particular turn. The belief that something's "due" or "overdue" causes traders to become complacent about risk management and when things turn sour they often become "strong willed" about their position and look for every imaginable reason to support their bias. The human behavior in the 80% scenario is typical of humans' quest for perfection. By attempting do better than what are already very favorable odds (in order be the best, smartest, cleverest...ego...blah...ego...blah) the humans do worse. The trader who finds favorable odds over each series of N trades for a given setup and can accept the uncertainty of what will always be a random distribution of outcomes will enjoy the most important outcome of all, which is consistently profitable trading over time. "3. There is a random distribution between wins and losses for any given set of variables that define an edge." - Mark Douglas
Beautifully put ND! I for sure knew that when I said overdue... I was touching on the gambler's mindset... and I am staying clear of that! I love how you also worked in the "strong willed" reference.... tee heee! It is my belief that the main reason why most traders lose money isn't because they don't have an edge (of course the edge is crucial), but its because they keep changing their trading patterns. A consistent loser could after all just do the opposite. Reminds me of your advise when contemplating to take a reversal trade in a strong trend, but doing the exact opposite just as you're about to get in after thinking you're missing out on the reversal. So by being absolutely consistent in the types of trade you take, how you take them and how you exit, it probably wouldn't be too hard to to tweak it just a little. If you're fabulously consistent at losing, doing the opposite would make you fabulously consistent at winning. Being consistent and meticulous with your trades would more than likely bring you very close to BE, at which point you would need a bit of an edge to put you into the winning circle. But in some ironic way, a consistent loser might actually have an edge if he can define precisely how he trades and just do the opposite. Needless to say, I am fully seeing the light about the need for consistency in trading and thinking in terms of probabilities about a series of trades with the outcome of one being next to useless. (Sorry about this tangent in your journal Jas.)
As long as it's about trading there's no tangents to worry about. Post away, KP. As for doing the 'opposite': One can't simply start buying instead of selling. Maybe the optimal opposite behavior would be to use a larger stop rather than smaller. Or hold a trade longer rather than take quick profits. As you said, if one can precisely define how one trades then one can look at how to improve each of the components of the method; entry, management and exit.
Nothing strange about it - just another bassackward trading truism (to gain control - we must let go) It the way of proper trading Let's talk about this ^ YOU did what YOU were supposed to do First..., and with no buts - Good Job Today Period ======================== Now let me gently introduce a new level of necessary self reliance It will come to pass - that you'll do exactly what you're supposed to - yet not receive any positive reinforcement whatsoever In fact you will receive no (break even) ..., or negative (loser..., series of losers) reinforcement - for all your efforts None of us can control/ influence the outcome of a trade...., series of trades Loser(s) (negative reinforcement) will happen - not maybe - absolutely will It's at these times..., and..., until you completely detach proper trading..., from the results iow - you become completely self contained..., self reliant..., self supportive - to hell with the outcome That you'll need to dig down deep..., and keep reminding yourself - stick to the plan / stick to proper trading..., come hell or high water You will be tested At these times - keep your head down..., keep moving forward Mkt is hard - we..., are harder ================== All this said; Good Job Sir Tomorrow is a new day - let's do what we've been doing for the last two RN