Trader's Mindset

Discussion in 'Psychology' started by TraderTactics, Jul 17, 2010.

  1. Please share some of your expert advice on how the trader's mindset should be.

    I for one practices Positive brainwashing and practicing the 3 R's ( Record keeping, Routines and rituals and Research).
  2. Redneck


    What’s mine is mine

    What’s yours will soon be mine

    And I am dead nuts serious

  3. The trader who has a significant positive expectancy system needs no mind. It is a hindrance. He must be a trading robot. Mind only comes into play in devising backup systems. That is why when I am trading I occupy my mind with trash like ET and other forms of pornography to keep it out of the way.
  4. Hey... wasn't that 4 R's?
  5. Lol. I stand corrected, it's 4R's. Thanks for pointing that to me Bolimomo :)
  6. <del>over-analysis</del>
  7. There are two general themes: coherence or incoherence.

    The CW is a good check on when the coherent theme is at its limit.

    Coherence is a result of a routine based on knowing that you know at all times.

    When you do not know What Must Come Next (WMCN), a set of incoherence feelings comes up; they include anxiety, fear and anger. Lo at MIT verified these as characterisitics of traders at big financial firms. These traders had results common to the financial industry which practices the Conventiional Wisdom.

    Traders often trade from one viewpoint or another; each epitimizes a separate minset theme.

    To check out these types of things, you can ask the two types of traders.

    What is most common for the CW oriented traders is incoherent feeliings and they happen to, commonly, entry/exit trading (A). Sometimes they are in the market; sometimes they are on the sidelines.

    Occasionally, when knowledge and skills become beyond the CW level of trading, a trader practices hold/reversal trading (B) and is in the market all the time. This modus has a mindset that dispays feelings of support, comfort and confidence. These feelings come from being in the market and being on the correct side of the market, segment by segment. The trader is always in the same situation: segment after segment of profits are being taken.

    Feelings do not come from the mind. The test of coherence is better done with a Fourier analysis of the heart waveform. So it is difficult to measure mindset with other than performance of the miind.

    Going from no skills and no knowledge to full skills and knowledge is more easily evidenced by the style of trading: A or B, mentioned above. An indirect measure is the bottom line of trading accounts and how frequently they are swept to bring the capital in line with the market's capacity.

    Minset A has two states; mind set B has only one mindset. There is no overlap of these three mindsets.

    The better minset is knowing WMCN while doing the four different mental activities that are part of trading. These four always flow in the same order and closure is reached each frequent lap through the four activitiies.

    In CW trading, which is risk and betting based, the order is OODA. In coherence based trading the activity sequence resembles Science: Monitor, Analyze, Decision making, and the closure of Action (either behavioral or just mental closure).

    The record is pretty clear on mindset as judged by the failure rate of potential traders. The mind cannot be built when incoherence prevails. Most of this kind of time is spent learning failure.

    When coherence, which resembles meditation prevails, a person can build the long term memory of trading. When full knowledge and skills are attained through purposeful experience the inference of the mind is highly organized and always availalbe on demand. The neuroscience name for this is full differentiation. Everyone has full differentiation for some things. Congratulate your self on having it for driving your car using three mind operators called spatial, movement and pattern. These are the same three used in expert hold/reversal trading.

    If you feel anxiety, fear and anger while trading it is becasue you are under stress caused by not having a differentiated mind for trading. And this lack of differentiation causes you to draw blanks while in trades. Getting differentiated is a process. People who do it traditionally can take 10,000 hours. If you can drive a car, you have a rough estimate of how long your mind required for full differentiation to trade as an expert. You may slow this process down somewhat by not having purposeful experiences. An example is "inventing" how to trade.

    Purposeful esperience has a name: Drills. Drills are done in a sequence where a foundation is laid first and building blocks are placed on the foundation.

    In formal education, most people try to get the least for their money. Goggle sex and booze. Moreso they do get the least for the TIME they spend. Again google sex and booze.