Greetings All, Though GG proposes an interesting thesis, I tend to disagree with this point of view. My reasoning is below. While I somewhat agree with the statement that; âTrading is all about finding a robust method or algo with positive expectation as a function of time and then applying proper risk management to minimize risk of ruin and maximize equity growth. All else, is a waste of timeâ. I do not believe that negating or ignoring ones emotions and their subsequent impact on the traderâs state of mind, is a âwaste of timeâ. I believe that our emotions are an essential part of the human condition, and as such make us human. And from what I have seen, although totally divorcing oneself from their emotions is possible, I believe that it is likely that most individuals who have accomplished this feat are what society has come to label as âpathologicalâ. And fortunately for all of us, most of the extreme cases reside in the appropriate institutions for dealing with these conditions. I do not see this kind of âpathologyâ as an âideal state of mindâ for any trader. Further, if you are in an altered state of mind due to your emotions, no amount of Algo analysis can change that. This is because your emotional issues are likely due from your own individual fears. These fears can only be resolved as a direct result of dealing with, and learning how to manage their negative effects. I also disagree with the statement below that: âBy the time you manage to deal with your emotions, the game is lost, you are a burnoutâ. There are plenty of traderâs who stalk this forum, who have, as evidenced by the âtruthâ in their words, obviously managed to survive this âPass of Painâ. They have somehow managed to emerge victorious on the other side and avoid this âburnoutâ. And as a matter of fact, to some of them, trading is obviously an all consuming passion in their lives aside from the money. They are the often âsilent minorityâ, whose presence here makes this forum an occasional intellectual treat. Further, in the world of Automated Trading, there are plenty of Algo traderâs who daily sit at their desks in a âdark poolâ of dripping human sweat. This is true even when their Algo is working extremely well. As markets tend to change states from time to time, constant vigilance of the efficacy of their Algoâs is their intense center of focus. As a result of this stressed state of mind, they too are thereby subject to an array of individual fears, that oftimes have little to do with the market, but everything to do with how it can directly impact the technical changes to their highly profitable Algo. Witness a hypothetical case of a demanding Algo boss, who constantly asks for more and more profit, from an Algo that is likely already highly optimized to its maximum for todayâs market conditions. As most seasoned professionals can attest, the traderâs state of mind, and their trading method, are two uniquely different subjects. They cannot be construed as the same thing, nor in application, can they be entirely divorced from one another. That too is the human condition. This will be the case as long as humans are in the loop, or humans are in some manner in direct control of the loop. As I find this missive interesting, I look forward to an insightful response to these views, if any. I seek to learn and grow from contemplative, civil, views and commentary different from my own. And in point of fact, that is one of the primary reasons why I enjoy the âtreasure huntâ on the ET Forum,...stalking for the occasional priceless tidbit. KDASFTG
I was sorting through a pile of trading-related stuff I collected over the years and found a scrap of paper upon which I'd written: Detachment is key to optimal results. Once attached to an outcome, profit goal, or desire, objective trading becomes near-impossible! Those who've developed a positive expectancy plan and finally mastered the psychology of trading it know the importance of detachment from individual trade results and the joy that comes from the positive outcomes that take of themselves.
The OP introduced a thoughtful point of view and then backed it up by shutting down the "this versus that" trite reply. The OP's post is a good statement of being on a path to success. What trading is is best described as a thoughtful pathway. A lot of baggage is already in hand as a potential trader begins. Nodoji is elegant in her statement about what is not important. All the parallel stories of various cultures as collected and appraised by Joseph Campbell do shed light on the the path to trading success. Warriors have existed in so many cultures. Sportsmen have too from the point forward where time was available for doing sports. Tennis and skiing come to mind. Consider going from one place to another. Some people can travel in a great variety of ways. Others are very limited by their means. What trading is is very clear to me. Trading is a vehicle. Whether driving, gliding or sailing, the vehicle cost is over 100K. I make use of the vehicle properly and I get to where I want to go. 4 years into trading makes a person and his family self sufficient for any lifestyle. Most famous warriors of history spent a half a century honing their powerful teams to have what they desired. The trader succeeds by arming and tooling himself up to do the job. Trading is winning using burnished and polished tools that are up to the job. I do watch the forces bend my wings a few feet in their 50 foot span. I am doing the acrobatics I know my ship can handle. It will always withstand the forces I create by manuvering. I do not care if blue water is hitting my winches as I heel as far as the sail can hold wind and point as high as the sail can hold wind. 56 years into trading allows a person of expertise to handle any market condition, circumstance or situation. What it is is not Eastern or Western it is a completely known system built with a defined structure, process and results. Everything is in the Present and no where else. I wear a fiveway harness to fly. I have to to be able to handle 5 G forces I create. Everything involved has to work properly to complete the manuver. Nuts, bolts, webbing, cables, rivets, bearings and wind surfaces perform as planned. What trading is is the use of human extensions that are proven and reliable. Hope and risk and betting and odds or probabilities are not involved. Building an operating system is what trading is. This building is only done once. In trading, everything is real just like the glider I fly. The glider is an extension of me. I am very very firmly part of the glider. To go through becoming at one with the market requires that you tear the market down into it's pieces. All parts have to be known and fully defined. In what is trading the definitions are certain and complete and they are all "in kind". "In kind" means total compatibility and a seamless connectiveness. The whole of the construct may be SEEN as shells which are composed just as is done in physics to construct the molecular package that contains all the working parts of a molecule. As a trader, I have the tools to monitor and analyze the events in markets. I know the pieces from smallest to largest. I can watch all the aspects of the market and participate to take the full offer of the market. This just involves continually extracting the market's full offer segment by segment. The OP has some experience. He shares his efforts and results so far. He is acquiring a vehicle. Dividing 4 into 56 demonstrates how thinking purposefully can take some time to acquire all of the pieces of the market and put them together in the form of high utility tools to extend the trader into the system of operation of the market. Handling a 5 G force means you know you cannot stick your hand out from your body to reach for and control the "stick" of the glider. You have to have your hand on the stick before you create 5 G forces and stay in the 5 way harness as an operator. Warriors can handle the "challenge". By having tools, the challenge is controlled in the what of market trading. All the concentic shells provide a total context. What is trading is being at the center and being able to see the shells from all angles. You have your hand on the stick all of the time and you hold and reverse to take the full offer of the market. It is a quiet place. You are fully harnessed in the place you belong. The shells do not permit any noise to come to you. You are surrounded by all the layers and none of them are bent, spiraled or mutilated. There are no flaws in the construct. You never have to deal with anomalies. As you participate in what is trading, all you are dealing with is the PRESENT. You always know you know. Think of 56 years as sitting through the politics of 14 Presidential elections. If you are sitting at the core of the shells you know the number of the Whitehouse so to speak. From memory: 1 202 456 1414. I can count all the pieces. I can define all the pieces mathematically. I can fit all the pieces together. Anyone can learn to use the pieces of the market in forty days and then have the facility to take the full offer of the market everyday. The reasons why people choose to not take this opporutunity have to do with noise, flaws and anomalies that are seen erroneously. So as an alternative, people bet and hope and use probabilities. If a person is tied to guessing and estimating probabilities he is never (in a multiples of 4 years) going to get very far. Can a human spend 40 days getting tooled up? No, not in this world. What is trading in markets? For me it is using seven lookup tables and following a nested set of 5 OOE's, period. QED.
OP good stuff. I like the part about Discipline. It is one of the most challenging things to master in all aspects of life and in trading but the pursuit is well worth it to improve oneself. In fact it reminds me, I used to smoke cigarettes at the beginning of my trading career and back then I thought to myself, if I can't even have the discipline to keep myself healthy then how will I ever have enough discipline to survive in the markets? So I quit smoking as a drill of discipline in my life and it helped many other aspects of life. I always say, Everyone knows how to lose weight, simple, less calories coming in than burning off, but how many people have the discipline and motivation to do it? Not many, look at American Obesity rates. I have the word DISCIPLINE carved into my desk to remind me.
well, first, it's my job. but i really enjoy it. it allows me to work from home, see my family, have time to do other things, be my own boss, and make some money. most people who i've talked with think it's great i can work from home. they also have understanding of some of the risks associated (a bunch of people say "i'd never get anything done, i'd watch tv / play games / etc. all day") including risk of money. that's always something to consider - if you've got a headache, you'll still go to most jobs. if you're trading and have that headache, it can cost you some serious money. the mania of crowds (a part of trading) can be applicable in other areas of life as well. you don't want to be the person buying the tickle me elmo doll / zhu zhu pets because when the craze dies down, you can get it for lots less if you really want it. same with many fad stocks.
I traded 5yrs+. in order to trade successfully or become a successful consistent trader to me, 1. I do not buy " trading is a job". if trading is a job, then I better find a regular pay job with precitable results. I like Donad's " think big, live large". trading makes me possible to become millionaire, billioaire, that drives me to do it. I donot trade each tick! trading is like fishing/hunting, you may trade allday but nothing, butyou trade a hour, a whole year's income is there. regular job is linear. but trading is exponetional, explosive. if I catch a double, then next one,several steps, you may never need think about this tick/that tick! typical failure belief! market pays you not according tohowmuch hours you sit front the screen or trade. that is why 90% day traders lose, lose,.... 2. Never follow others, if you are who you are, then you are who you are. admit it, if you are emtional,then you are emotional. that is human nature. but you need know how to take advantge of those what you have to define who you are. my fear often kicks in when I see large profit, may evapilze? that saves me lot lot. 80%time when my fear comes in, I know I should book profit. if I follow people's "let profit run", that is disaster!! 3. follow common sense, do not waste too time on methods/strategy/plans or holy grail magic. must be practical. whatever your insticnt tells you, do it. often 90% time is correct. BE PRACTICAL, BE PRACTICAL. good cats catch mouses whether black/white. if one trade can send you into never falling sky, why not try that? I started with a small stake, but I crossed the advantage of undercaptilized, I ALL IN when chances are there. what the heck of position sizing,... FORGET ABOUT THAT FIRST! what you need care about: win win win ... there is time everyone can make money, those are thetime you need all in! 4. do not generalize market behaviors. NEVER. Treat each trade case by case. 5. if the market is unpredicatable, do not trade! only markets present predictable behaviors, trade it. start with a worst case PLAN B. donot trade if you didnot or could not grasp the market behavior pattern. for example, waiting for a report: the results are unpredictable. 6. delete /remove common miscoception about the market, such as market is safe, market is dangerous,...whatever stereo type concepts.in your mind. 7. BE PRACTICAL BE PRACTICAL. traders fail becuase they have misconceptions about themselves .they start to doubt their abilities and follow others ... and misconceptions about the market. I do not think DISCIPLINE will help since you do not know what to discipline! I do not think emotional control/managemeng will help since you deny the fact human beings have emtions ... losers have tons of reasons to blame . they lack of captial .they lack discipline .they lack emtion control. .... all those are just execuses!