Repetition, The Mother of Success and Failure. RAMOUTAR REPORT VOLUME 10

Discussion in 'Psychology' started by RAMOUTAR, Jan 14, 2004.

  1. Repetition, The Mother of Success and Failure RAMOUTAR REPORT Vol. 10

    To reiterate the disclaimer:

    The ignorant and malicious are free to reveal themselves with replies that I will not acknowledge. The inquisitive and intellectually stimulated are invited to post constructive replies, and or questions.

    Albert Einstein’s famous quote:” Insanity is doing the same over and over again and expecting a different result”, a trite statement with a profound aftertaste. think of your trades. Does this quote apply to your results? I know it applies to mine. My capital has succumbed to the virtue of Einstein’s quote many times, and thankfully with the fortune of hindsight and the humility I have been able to recoup the losses with the unstable resource of discipline.

    Technology has advanced quite rapidly, and with superior technology we can achieve greater results. However, the availability of the technology is secondary to how we use it. I have met many traders over the years who place the blame on everything and everyone else but themselves. When I accepted the fact that loss is a component of the market, I stopped blaming the markets and began blaming myself. I improved my trading results drastically by “planning the trade, trading the plan and sticking to the plan.” Let’s break that statement down:


    Planning The Trade:

    We can never plan the outcome of the trade. However, through scanning and analysis we can plan our entry, stop and target.

    - Entry – Stop = Risk
    - Entry – Target= Reward

    After evaluating the risk reward and its ratio, we decide if the trade is worth taking. At this time we have determined the risk and accepted it, this will help us control the internal fear factor. If you are not comfortable with the risk, don’t enter. Predetermining the reward is a concept neither understood nor accepted by many. The famous question is, “How can you predetermine the reward? How do you know where the stock will go, why don’t you just let it ride.” If you use technical analysis and understand the concept, theory and self-fulfilling prophecy of support and resistance, you will understand.

    Trading The Plan:

    This requires reliable and real-time quotes, a direct access trading platform, an education in the difference between passive and active trading and a great deal of focus. I have often missed my entry and reevaluated the setup. Sun-Tzu (Art of War) said, “Every battle is won before it is fought”. It really reduces the tension and stress that comes along with uncertainty.

    Trading with a plan, when done properly is very boring. When I embraced this discipline several years ago, my ticket counts (commissions) and blood pressure dropped and my confidence and Sharpe ratio increased.

    By trading the plan you’re not chasing the market, instead the market comes to you. We can’t predict the outcome of the trade, but we can predetermine and follow the plan we have set forth for handling the outcome of the trade.

    If you don’t have predetermined entry and exit points you are gambling, it’s just that simple. Give this a chance. Planning the trade and trading the plan will not only improve your results, it will also help you develop and strengthen your “trader’s instinct”.

    Sticking To The Plan:

    Ah yes, discipline. That seems to be the toughest part. The definition of discipline is the fortitude to stay the course. It can be a challenge to maintain your fortitude if you do not know what the course is, that’s where the plan comes in. The plan is your course, it is a set of directions that we have predetermined before we began our journey. I know when I’m in a losing trade the instant I see “filled”, the hairs on the back of my neck stand up and I overtaken by fear and stupidity. If I’m careless enough to stay in the trade, the results almost always take money out of my account, and I have no one else to blame but myself.

    Lack of discipline and a plan are usually the causes of a trader’s demise. Whether you’re a beginner or a veteran, stop and take a long and hard look at your trading. Do you have a plan? If you don’t or your not terribly excited about your plan, spend more time refining it, it will be well worth the time invested. May the trend be with you!

    You may find previous reports at these links:

    Volume 1 – Fear an the Market

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=19559



    Volume 2 – Switching Timeframes

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=19881

    Volume 3 – Elements for Successful Trading

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=20208

    Volume 4- What Are You Looking At?

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=20285

    Volume 5 – Building Your Trading Stable

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=20510

    Volume 6 – What Really Drives Prices.

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=20998

    Volume 7 - Trading Is War (typo as Vol 6)

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=21849

    Volume 8 - To Adapt and Evolve is To Succeed

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=22821

    Volume 9- Knowing When Enough Is Enough, and When It’s Not Enough

    http://www.elitetrader.com/vb/showthread.php?s=&threadid=24190&highlight=ramoutar+report


    If you have any problems with the links go to search, and type in Ramoutar report, or PM me for links.

    You may also find me at www.esignalcentral.com
     
  2. Hey Jai! Haven't seen you for months!

    Finally some value coming back to ET! Nice to have you back man! May you stand defiantly against the trolls! :)
     
  3. :)
     
  4. PetaDollar

    PetaDollar Moderator

    I made a lot of progress once I actually typed up my plan.

    Also, my current philosophy is to use discretion when planning the trade, but the result of that should be a set of instructions that a robot could execute.

    If something happens not addressed in the instructions, I keep that in mind for the next trade, but I don't change my instructions for the current trade.
     
  5. NET

    NET

    It's a shame a post so well intended and right on target should need such a disclaimer.

    Couldn't agree more with the contents of your post. Well stated.
     
  6. simsim

    simsim

    You are making Sense.

    I have to read all your past posts to come up to the pace.
     
  7. will you be at the EXPO in NYC next month?
     
  8. It is a shame, but required here. However, the majority of the people here are helpful. I hope that balance remains, I refer many knowledge seekers to this site. Thanks.
     
  9. Cheese

    Cheese

    Planning the trade. Trading the plan. Sticking to the plan.
    Ramoutar

    Excellent, excellent, excellent. Such great advice to both newbies and trading oldtimers. There is otherwise such a lot of twaddle out there with which people can confuse themselves.

    So okay you don't plan to fail; you just fail to plan. Then take Ramoutar's advice

    Now to Ramoutar's 3 steps add your system. My system is a numerical system which determines where the market is going to go (ie Dow) .. simply put: either up or down and an idea of by how much. Very occasionally its wrong; occasionally it doesn't take me anywhere because its a narrow range day (but you lose no money on NRD's). Incidentally I don't trend follow; I look to exploit each day.

    So IMO sort out your system: add Ramoutar's 3 steps.
     
  10. RAMOUTAR, think about what u said in the Trading The Plan section. U are presupposing that gambling in the markets is bad but at the same time u say "We can’t predict the outcome of the trade" which is thought of as a gamble by most. I can see your pattern already.
     
    #10     Jan 15, 2004