No one has to deal with anything they do not want to in individual trading practices. My personal view is that trading can be masterful when a person has a terrific and comprehensive belief system. The more objectivity the better. All trading executions are just behavioral and are based on beliefs. I love knocking out the trades in any modus I feel like. They all just deal with gathering data from the factual display. Then using my brain to do analysis. Well that is just great and I do know I am knocking it down. I just step over to my belief system when I have the analysis done and turn it over to my belief system to let it tell me what action to take behaviorally. Then as another success rolls in, I feel my beliefs reinforced yet once more. It is good to have really clear pictures and to have pictures that accurately cover all the bases. The originator of the thread is very different than me, that's for sure. I am thinking about how people operate all the time. Everyone is at choice and we all do it differently.
Those who think that it is only a question of psychology are probably still in the initial phase of the acquisition Maturity Capability Model process see "Discipline is not specific to trading: you can inspire from Maturity Capability Model " http://www.elitetrader.com/vb/showthread.php?s=&threadid=23116 "1. Initial [Phase] - The acquisition process is characterized as ad hoc, and occasionally <font color=red>even chaotic</font>. Few processes are defined and <font color=red>success depends on individual effort</font>. For an organization <font color=blue>to mature beyond the initial level</font>, it must install basic <font color=green>management controls</font> to instill <font color=green>self-discipline</font>." <font color=green>Management controls</font> means CONCRETE methods and tools and not only psychological autosuggestion - of course you must have commited yourself psychologically but it is not enough and you will exhaust yourself if you don't find a concrete path to do things. So instead on concentrating on the goal (which is only psychological) you'd better concentrate on the process that is to say action but one must act and then CHECK the results and then proceed to modification but only if it is necessary and not each time it is bad - so the need to have statistical and methodologies knowledge to decide if it is necessary or not. It is the checking process that will give the statistics and so the assurance that you have made progress.
I trade a system and develop systems. I have the system automated and have some of the newer systems on test with hand. I really don't have much problem putting in the orders or painful thoughts. I just put the orders in from the computer and there's nothing more to it. No hesitation and etc.. That's the start of my anti-psychological focus as a trader. Well, then I started to take that and started viewing the market. Let's assume that the market is psychological.... How the hell do you trade that? In a sense, that's what you think after some shift in market pattern. Let's say the market changed it's trend, then you say or think, "The market psychology changed." How can you actually say, "The market psychology 'will' change." without taking in consideration of what you think and purely from the market move. I think it's more of a rational explanation of a pattern you found. For example, there's La Bogola move from Niederhoffer's book. It's just saying that after a fast and large move, market tends to move back down in the same degree. Which is a pattern you see during extreme (kinda) conditions (well look at the market during a number or Fed day ). It's just a pattern of the market, and one can assume why it happens via human/crowd psychology. But... a pattern in reverse (Market makes a surge but doesn't return but continues) also happens and can assume a psychological reason of why... There's all these double standard and most of the reasoning that we do seems to be conditional and empirical. Just a thought from an uneducated man.
all price charts are just paintings of fear and greed from the past. when you fully understand the connection between a series of price bars and human emotion, the game becomes very easy to organize. it becomes very easy to develop a strategy to take advantage of human behavior. ignoring psychology separates the relationship between price charts and the reason behind them. show me a painting from the 18th century and tell me what the artist was going through, then i will fully understand and respect its nature. i will understand the DIFFERENCE that makes this painting so special and UNIQUE. show me that same painting without any context, and i might dismiss it as just another painting that looks similar to some that i've already seen....do i make any sense?
Which is more important: Knowing "What" is happening or Knowing "Why" it is happening. I take "What"... I'm trying to make money in the market. Not trying to understand the market. Relatively.
There are quants and there are system traders. They have no sense of fear or greed in the market. Successful discretionary traders trade with rules. Rules don't have fear or greed and a disciplined trader don't weigh the psychological aspect on the RULE. Systems and quantative trades create patterns. Rules of traders create a pattern. Cumulative rules and systems make the market. Just my 2 cents
Right, DB. Gann, I think you nailed it. I've also come to believe that man's desire to know "why", really screws him up. Who cares why? Focusing on "what" means you can react. The "why" will cripple you. Best not be involved with money when pondering the why. Save it for pseudo-intellectual discussions on social issues of real importance in your local coffeehouse. I'm not there yet in that regard, I still want to know why. André
I actually know why the market moves in it's way. OK, OK just kiddin' ... Hey, I've still got the Gann Analysis part as an individual. Which I am confident to say out loud that I am one of the best in the world, and only a few have got to a point to understand it as much as I do. With all that work done, it had nothing to do with making money. Analysis is really just a brain food and things to pursue when you're bored.