T2W Bot
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This is a forum thread for discussing the Knowledge Lab Article, "Discipline in Trading and Investing".
Trader333
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For those embarking on a new venture into trading, it is often important to have a "Mechanical" based approach to postion sizing, setting of stop loss and liquidation of positions at set profit targets. The reason for this is that many aspiring traders have not yet developed the discipline to do otherwise. By using a mechanical approach it will soon become evident if the emotional development is present to be able to stick to the targets that have been set prior to entering a trade.
In my experience this area of trading is probably the most difficult to instill into others. I have found that getting the aspirant to plan for any eventuality before placing the trade and then have them describe how they feel as the trade develops and record this is of great use. Often you find that how they thought they would feel is very different to the reality and when they hear themselves played back it is often said that they cannot believe that it was them saying what they said. It does allow them to then plan how to address these feelings when they occur in a future trade.
Each person is different in how they develop and trading really is a unique activity for each individual. I have yet to see two traders when given identical trading setups trade in the same way for the entry and eventual exit. With this in mind it is hardly surprising that so many find it difficult to master but it can be done its just that some take much longer than others.
Paul
In my experience this area of trading is probably the most difficult to instill into others. I have found that getting the aspirant to plan for any eventuality before placing the trade and then have them describe how they feel as the trade develops and record this is of great use. Often you find that how they thought they would feel is very different to the reality and when they hear themselves played back it is often said that they cannot believe that it was them saying what they said. It does allow them to then plan how to address these feelings when they occur in a future trade.
Each person is different in how they develop and trading really is a unique activity for each individual. I have yet to see two traders when given identical trading setups trade in the same way for the entry and eventual exit. With this in mind it is hardly surprising that so many find it difficult to master but it can be done its just that some take much longer than others.
Paul
T
triplepack
It resonates with everything I have experienced in trading.
Self discipline and recognising your weaknesses, greed ,fear ,impatience etc.
The discipline to stick to your plan even though those little monkeys aresitting on your shoulder telling you to do something else.
It's a fascinating part of trading.
Self discipline and recognising your weaknesses, greed ,fear ,impatience etc.
The discipline to stick to your plan even though those little monkeys aresitting on your shoulder telling you to do something else.
It's a fascinating part of trading.
Spreadbetteur
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"You have to stop trying to will things to happen in order to prove that you're right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're right, but to hear the cash register ring."
Good article. The above quote is a good sum up. Think in probabilities. Trade your edge over a sample of trades. Remember the result of any one trade is the same as a coin toss !
Good article. The above quote is a good sum up. Think in probabilities. Trade your edge over a sample of trades. Remember the result of any one trade is the same as a coin toss !
postiedave
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Hi all i'm new to spread betting so all comments are appreciated i like the sentence about trade what you see not what you think ,
Gosh! I love Joe Ross's articles...seen the website...great.
U know, i love this particular artical so much that i have copied it down word 4 word! I shall read and re-read...makes sense....especially when one has had to deal with the first loss, well actually 2 in a row for reasons no other than wanting to prove that i was right?! ;-)
U know, i love this particular artical so much that i have copied it down word 4 word! I shall read and re-read...makes sense....especially when one has had to deal with the first loss, well actually 2 in a row for reasons no other than wanting to prove that i was right?! ;-)
Meditation May Help: Surprising Secret to Better Returns
2/16/2005 20:30 (Memorable Analysis) Investors need to relax if they want to succeed, according to Andrew Lo's recent five-week study of the performance of 69 day traders.
http://www.investing-news.com/artman/publish/article_475.shtml
trav
2/16/2005 20:30 (Memorable Analysis) Investors need to relax if they want to succeed, according to Andrew Lo's recent five-week study of the performance of 69 day traders.
http://www.investing-news.com/artman/publish/article_475.shtml
trav
Summerset
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"Trade what you see, not what you think ", -You can't afford to get yr opinion involved in yr trading activities"- PERIOD.
If you think in a serene manner regarding this & implement it. You will become a trade robot, strictly following any 2-3 indicators on the market, without implementing any mental bais to what's happening.
Like a robot system you should also readily collect profits once they reach a certain minimum, related to yr money managment, again without thinking of furthering or risking profits.
Like the robot yr successes will out run yr mistakes, & yr profits will slowly accumlate on the long run.
In essencce, to become a succssesful trader, You must rule out yr ego alltoghter to the extent that you must FORGET that you can think.
Actual Trade entries / exits must become more reflex related activities ( like breathing) than mental ones, for the cash register to ring frequently & money to pile.
The sooner traders realize this, the faster they will overcome ego & psychological drawbacks, & become trully trade focused.
Summerset
[email protected]
If you think in a serene manner regarding this & implement it. You will become a trade robot, strictly following any 2-3 indicators on the market, without implementing any mental bais to what's happening.
Like a robot system you should also readily collect profits once they reach a certain minimum, related to yr money managment, again without thinking of furthering or risking profits.
Like the robot yr successes will out run yr mistakes, & yr profits will slowly accumlate on the long run.
In essencce, to become a succssesful trader, You must rule out yr ego alltoghter to the extent that you must FORGET that you can think.
Actual Trade entries / exits must become more reflex related activities ( like breathing) than mental ones, for the cash register to ring frequently & money to pile.
The sooner traders realize this, the faster they will overcome ego & psychological drawbacks, & become trully trade focused.
Summerset
[email protected]
A Model of Self-Control ... Computer Model, That Is
1/9/2005 9:56 (Memorable Education) * From an Oct. 2004 story: This mutual fund is using algorithmic stock trading software as it strives to build a better index than the S&P 500 itself. Maybe this is why E-Trade has recently gone on a hiring spree for Ph.D's skilled in mathematical analysis.
http://www.investing-news.com/artman/publish/article_265.shtml
trav
1/9/2005 9:56 (Memorable Education) * From an Oct. 2004 story: This mutual fund is using algorithmic stock trading software as it strives to build a better index than the S&P 500 itself. Maybe this is why E-Trade has recently gone on a hiring spree for Ph.D's skilled in mathematical analysis.
http://www.investing-news.com/artman/publish/article_265.shtml
trav
Zmark-trader
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Joe, I appreciate the time you wrote this article, and it seems you have a sincere wish to help. But, you talk about this discipline like it's own entity in trading. I am sorry, but I have a big problem with the entire industry talking about discipline, and throwing around those "politically correct" terms that make every educator look good.
Here is the bottom line: No one is disciplined in approaching the markets! Why?because most traders don't have a methodology. Well, lets put it this way: most traders cant develop a winning methodology. If they do, and they see it works, whether in paper, or in rel life, then the "discipline" kicks in.
Ok, sometimes you over ride your own decision, and skip a trade, although the methodology tells to go long or short.
If over time you realize that you system is better than your gut... After a few trades, you decide to follow your system and apply it like a robot.
If you look well at the above 7 points, they all apply to people who trade on intuition and gut. What methodology tells you to add to a losing position? No Stop?
"trade what you see, not what you think." Sorry but people think...and what do they see? Daily chart chart is long, a weekly chart is short, so they make a bet. How could you not think?
I am a real trader Joe, and what I say is from experience.
Joe, again, I appreciate all the hard work you have done over the years, but this is also 2009. Human nature did not change, but technology allows you to implement things to test your methods which is entry, exits, drawdowns, odds, and risks. If one makes those work , and makes money you magically become disciplined.
Here is the bottom line: No one is disciplined in approaching the markets! Why?because most traders don't have a methodology. Well, lets put it this way: most traders cant develop a winning methodology. If they do, and they see it works, whether in paper, or in rel life, then the "discipline" kicks in.
Ok, sometimes you over ride your own decision, and skip a trade, although the methodology tells to go long or short.
If over time you realize that you system is better than your gut... After a few trades, you decide to follow your system and apply it like a robot.
If you look well at the above 7 points, they all apply to people who trade on intuition and gut. What methodology tells you to add to a losing position? No Stop?
"trade what you see, not what you think." Sorry but people think...and what do they see? Daily chart chart is long, a weekly chart is short, so they make a bet. How could you not think?
I am a real trader Joe, and what I say is from experience.
Joe, again, I appreciate all the hard work you have done over the years, but this is also 2009. Human nature did not change, but technology allows you to implement things to test your methods which is entry, exits, drawdowns, odds, and risks. If one makes those work , and makes money you magically become disciplined.
Zmark-trader
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Agreed!
Next lecture will be "Trade with the Trend and how I went long Oil at $150"
All trading marketers "sing" the same song. I use to listen to them like G-ds early in the day. Took me realize I need to listen to another symphony.
cuotes
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Discipline, consistency....
Let's talk about INCONSISTENCY again (i wrote on this in other thread)
If you have read to Steenbarger (it is a MUST) you should know that being inconsistent with your trading is a SIGNAL.
Probably you've made rules. Probably you have planned in advance when to enter, where to exit... probably you got a plan in advance.
For example: I'm going to trade XYZ, enter when A happens and exit when B occurs.
And later... you break all the rules and made something different. You were INCONSISTENT. And not once or twice, but... everytime.
Probably you got angry because you read in books that you should follow a plan. You felt bad. Do you know that feeling? I bet you do!!!!
So, tomorrow you'll try again, and this time you'll follow the plan. You swear!!!
GREAT MISTAKE MY FRIEND!!!
If you're being consistently inconsistent, you just have a signal. A powerful signal that is telling you that you are trading in a fashion that doesn't suits your personality. You must change.
Your losses of discipline are intuitive gravitations to your natural trading style. The answer to your problems is not to bindly adhere to your methods an work on discipline, but rather to determine wether those methods are truly the ones to follow.
What we do when we're inconsistent may just reveal what comes naturally to us.
Try to find what comes naturally to you. After that wou won't need to be disciplined. Simply you won't want to do other thing.
As Zmark said "you magically become disciplined"
sorry for copypaste from other post, but i reckon it could be helpful here
Let's talk about INCONSISTENCY again (i wrote on this in other thread)
If you have read to Steenbarger (it is a MUST) you should know that being inconsistent with your trading is a SIGNAL.
Probably you've made rules. Probably you have planned in advance when to enter, where to exit... probably you got a plan in advance.
For example: I'm going to trade XYZ, enter when A happens and exit when B occurs.
And later... you break all the rules and made something different. You were INCONSISTENT. And not once or twice, but... everytime.
Probably you got angry because you read in books that you should follow a plan. You felt bad. Do you know that feeling? I bet you do!!!!
So, tomorrow you'll try again, and this time you'll follow the plan. You swear!!!
GREAT MISTAKE MY FRIEND!!!
If you're being consistently inconsistent, you just have a signal. A powerful signal that is telling you that you are trading in a fashion that doesn't suits your personality. You must change.
Your losses of discipline are intuitive gravitations to your natural trading style. The answer to your problems is not to bindly adhere to your methods an work on discipline, but rather to determine wether those methods are truly the ones to follow.
What we do when we're inconsistent may just reveal what comes naturally to us.
Try to find what comes naturally to you. After that wou won't need to be disciplined. Simply you won't want to do other thing.
As Zmark said "you magically become disciplined"
sorry for copypaste from other post, but i reckon it could be helpful here
Perhaps having the discipline to adhere to those well-repeated points is why he's lasted for 47 years . . .
"Original" is not necessarily better.
except you'd go broke trading the ross hook.
