deja vu moment
I wanted to ask you, if you also experience a daja vu moment. What I mean is when I watch the chart live I suddenly see a signal appearieng or forming. It's a moment I know that there is or will soon be a very high probability that the market will go up or down. It's hard to explain, but if you experience this as well, you will know what I mean. 70-80 % of times I experience this, the trade is a winner, but I'm struggling to act on it because it's so obvious and I think that it is impossible that this time something will happen the same way as it happend many times in the past.
Do you guys have got similar experience, do you know what I'm talking about?:) Any advice and comments much appreciated:)
Re: deja vu moment
You've obviously identified a repeating circumsatnce/set of circumstances ie a technical condition/conditions that has a possible strike rate of 70-80% (winning trades as a % of total trades) - ie a possible trading edge. You probably haven't quanitified it yet hence the confusion at what to do when it sets-up.. What you also do not made clear is whether you can gain a positive expectancyfrom it or indeed over what sample size you have seen this repeat. Write down what that condition/conditions are and make your reaction to it as rule based as possible - ie that/those condition (s) do or do not exist. If you can apply the correct money and risk managemnt to it and realise that positive expectancy you may indeed have discovered/observed a trading edge.
Re: deja vu moment
Thanks for your reply.
So my next question is: do you guys trade only when something happens exactly as you described it in your rules or do you take every set up which meets certain criteria and which u have seen it in the past and know it has got high probability?
Re: deja vu moment
So you have a r:r of 1:4 and the set-up (s) you describe have been witneseds for 42-44 tradings days (2 calendar months) or therebaouts, so that's a total sample size of 43-44-+ (depending on how many times a day you witnessed them ?) This is not a big sample size particularly if on the higher t/f's ., but a good r:r which would give a positive expectancy even with a lower strike arte is this could be achieved and maintained in a live a/c...By the way what strike rate did you note ? (ie winning trades giving such r:r as a % of total )
As you point out - discretionary trading can involve harmful emotions - particularly when live trading and there is money at stake. It is therefore best to try and make it as rule based as possible even if that means that there are different rules for different individual repeating ' set-ups' that make up your trading edge. It is possible that you could run into trouble again if you do not...ie the '..bad impulse..' and 'revenge' trades you have been involved with in the past being two such examples. There are others. There must be repeating characteristics of each type of set-up that you see so it is best to try and quantify them as much as it is possible.
For example if I am considering trading a set-up (s) against the prevailing trend/move I have rules about the type of confluence I need to see in place (that makes up a contra trend trade set-up) given the potential strength of any move/trend being traded against...ie the more successively higher t/f's the trend is present on, the more confluence I need to see - both in terms of the type of potential support/resistance factors confluence and on what t/f's they are present - but also the number and type of set-up on t/f's above and supporting that being used as the trigger for entry. (sounds complicated I know but I have these down to succinct simple rules.)
As for your question in bold below; We are all different, but I try to trade only when my trading edge sets-up according to the rules. This is because by having such 'rules' it is to try to remove as much discretion as possible so that those harmful emotions cannot influence me, ie it is a set-up that meets the rules or it is not. [ This is not to say I stick to the rules all the time as discipline sometimes slips but for the vast majority of the time I do. ]
Actually, the question means one and the same thing because if the 2nd part you describe occurs again and again - surely this should be part of your trading edge ?
Re: deja vu moment
But these statistics are not important at the moment. The problem is that I don't take all signals. I think this is for me the last puzzle to beeing constantly profitable and I feel I'm on the edge to achieve this.
I took a different approach. The reason I made impulse and revange trades, which is the main reason I lost money, was that I was thinking about money, so I made rules to train my mind to think about trading in different ways. I also noticed that it's easier to see signals when I'v got clear mind and when I'm totally focused on trading (no phone, no webpages etc.) so I made another rule to be only focused during trading on trading and after each trade, winner or looser, I leave computer for some time, read all my rules and focus on selftalk which is very important part of trading in my opinion. I also try to look during trading not only at charts but also at myself, the way I think, behave and with right selftalk correct myself. So I made many psychological rules, mainly how should I think and what kind of mindset I should have to trade good and I try to train my brain and subconscious mind, so it becomes a part of me, without thinking about it anymore.
Re: deja vu moment
What is "Blink" about?
It's a book about rapid cognition, about the kind of thinking that happens in a blink of an eye. When you meet someone for the first time, or walk into a house you are thinking of buying, or read the first few sentences of a book, your mind takes about two seconds to jump to a series of conclusions. Well, "Blink" is a book about those two seconds, because I think those instant conclusions that we reach are really powerful and really important and, occasionally, really good.
You could also say that it's a book about intuition, except that I don't like that word. In fact it never appears in "Blink." Intuition strikes me as a concept we use to describe emotional reactions, gut feelings--thoughts and impressions that don't seem entirely rational. But I think that what goes on in that first two seconds is perfectly rational. It's thinking--its just thinking that moves a little faster and operates a little more mysteriously than the kind of deliberate, conscious decision-making that we usually associate with "thinking." In "Blink" I'm trying to understand those two seconds. What is going on inside our heads when we engage in rapid cognition? When are snap judgments good and when are they not? What kinds of things can we do to make our powers of rapid cognition better?
Read the book, and update this post afterwards whether it addresses your happy condition!
Re: deja vu moment
And I must say that this book indeed describes partly what I experience sometimes.
Other times it is more as I called it a "deja vu moment". I think it's more like photographic memory.
I'm in the middle of "Reminiscences of a stock operator" by Edwin Lefevre and in one chapter it is explained, to some extent, where this "phenomenon" ,as you called it, comes from. It's also explained in the first couple of chapers of "Blink" of course.
The training of a stock trader is like a medical education. The physician has to spend
long years learning anatomy, physiology, materia medica and collateral subjects by the
dozen. He learns the theory and then proceeds to devote his life to the practice. He
observes and classifies all sorts of pathological phenomena. He learns to diagnose. If his
diagnosis is correct and that depends upon the accuracy of his observation he ought to
do pretty well in his prognosis, always keeping in mind, of course, that human fallibility
and the utterly unforeseen will keep him from scoring 100 per cent of bull's-eyes. And
then, as he gains in experience, he learns not only to do the right thing but to do it
instantly, so that many people will think he does it instinctively. It really isn't
automatism. It is that he has diagnosed the case according to his observations of such
cases during a period of many years; and, naturally, after he has diagnosed it, he can
only treat it in the way that experience has taught him is the proper treatment. You can
transmit knowledge that is, your particular collection of card-indexed facts but not your
experience. A man may know what to do and lose money if he doesn't do it quickly
Observation, experience, memory and mathematics these are what the successful trader
must depend on. He must not only observe accurately but remember at all times what he
has observed. He cannot bet on the unreasonable or on the unexpected, however strong
his personal convictions may be about man's unreasonableness or however certain he
may feel that the unexpected happens very frequently. He must bet always on
probabilities that is, try to anticipate them. Years of practice at the game, of constant
study, of always remembering, enable the trader to act on the instant when the
unexpected happens as well as when the expected comes to pass.
A man can have great mathematical ability and an unusual power of accurate
observation and yet fail in speculation unless he also possesses the experience and the
memory. And then, like the physician who keeps up with the advances of science, the
wise trader never ceases to study general conditions, to keep track of developments
everywhere that are likely to affect or influence the course of the various markets. After
years at the game it becomes a habit to keep posted. He acts almost automatically. He
acquires the invaluable professional attitude and that enables him to beat the game at
times! This difference between the professional and the amateur or occasional trader
cannot be over emphasised. I find, for instance, that memory and mathematics help me
very much. Wall Street makes its money on a mathematical basis. I mean, it makes its
money by dealing with facts and figures.
When I said that a trader has to keep posted to the minute and that he must take a purely
professional attitude toward all markets and all developments, I merely meant to
emphasise again that hunches and the mysterious ticker-sense haven't so very much to
do with success. Of course, it often happens that an experienced trader acts so quickly
that he hasn't time to give all his reasons in advance but nevertheless they are good and
sufficient reasons, because they are based on facts collected by him in his years of
working and thinking and seeing things from the angle of the professional, to whom
everything that comes to his mill is grist.
Experience has taught me that the way a market behaves is an excellent guide for an
operator to follow. It is like taking a patient's temperature and pulse or noting the colour
of the eyeballs and the coating of the tongue.
I have found that experience is apt to be steady dividend payer in this game and that
observation gives you the best tips of all. The behaviour of a certain stock is all you need
at times. You observe it. Then experience shows you how to profit by variations from
the usual, that is, from the probable.
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