Another breakthrough: Realizing that trading is about making money, not about making myself feel good. Example: I like catching the bulk of a trend day, and would tend to hold onto positions hoping that they would continue to run in my favor up to the close. I would become myopic, and be closed to considering possible reversal setups. Most times the market would not trend to the the close, but would reverse before then, taking back my gains. What I do now is exit my positions at pre-determined profit targets, no exceptions. Once I am out of the position, I am able to see clearly again. I've enjoyed the breakthrough's posted so far. I look forward to hearing more of your ground breaking insighs. -- M
I second your comments....!!!! Livermore (LeFevre) pointed that out many years ago; and not just with resepct to entires b.t.w! ICe
1. I had to believe that my analysis was as good as anyone else's (including any well-regarded guru) and that I would be better off without others' opinions and advisory services. In my opinion, if you're relying on others' opinions about the market, you're not where you need to be. Other than a trading partner who I've known for 18 years and bounce ideas off of because we both know how each other thinks, I trade alone and have my own strategies that I've developed (although I have incorporated certain ideas from others that I've learned along the way). 2. I realized that getting in and out of trades needs to be easy and simple. It's the research that goes into your methodology and its constant evaluation and improvement that involves the hard work. 3. I learned to identify a trend and trade with the trend except for low-risk reversal plays. 4. I had to decide whether I wanted to be an analyst or a trader. A trader is more interested in execution and results. 5. I realized that sentiment and contrary opinion is only useful at extremes and when confirmed by other technical indicators. The crowd is often right during the trend but then completely misses the reversal as the crowd is generally wrong at that point. 6. I learned to distinguish among trading time frames and figure out which one I wanted to trade in. For example, we may trade lower than the lows we saw in October 2002 but if you've been short over the past year, you've missed out on some good opportunities on the long side. As part of this, I developed methods to help identify the magnitude of the various time frames that impact my trading. 7. I've learned to not "anchor" myself to a belief about the market and instead be flexible. I had to make sure I wasn't "filtering" the information the market was providing to support a viewpoint that I was holding onto. Ruth Roosevelt, a trading coach and psychologist, has said that successful trading boils down to (1) finding a strategy that works, (2) verifying that the strategy works, and (3) implementing the strategy as it was designed to be traded with consistency and discipline
I've had hundreds of "ah-ha" breakthroughs. Usually I get them after a losing trade. About half of them proved to be false (with real money) and maybe 20% of the false breakthroughs proved to be true again. For me, breakthroughs are a never ending process of small advances and retreats. Two steps forward and one step back.
DB, I was wondering about your quote. Do you mean that once you realized that trading was about having an "edge" (a probable outcome) and consistently executing it.... vs .... trading to be right, you were then able to eliminate those common trading errors? I know in my personal trading when I trade with a probability mindset: I literally say to myself: "Everything that I consider MY edge is lined up for a trade, take the trade, this is where I am out if it moves against me, this is where I am out if it moves in my favor. Stop loss exit / profit gain exit. When I say this is probably what I think will happen I trade without stress. When I trade with internal dialogue that says this WILL happen next, is usually when I take my worst hits. DTP