emotion vs. prediction

This is a discussion on emotion vs. prediction within the Psychology, Risk & Money Management forums, part of the Methods category; Originally Posted by pennycapitalist I was trying to quantify the series of indicators I use to help me trade, and ...

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Old Jul 26, 2015, 11:02am   #16
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Originally Posted by pennycapitalist View Post
I was trying to quantify the series of indicators I use to help me trade, and discovered something interesting about myself. The indicators are Price Action, 7,14 moving average, 7 day RSI, and MACD. I loaded five years of data for a stock and adjusted the screen so I could quantify each indicator for the day's close as plus or minus, With weight going to Price Action only in case of a tie, I calculate a composite "indication" and then click forward one day to compare the "indication" to the reality.

I learn that my composite indicator is right about 60% of the time, but is much higher when trending, and around 50% when consolidating. More important I learned that I felt an emotional hit once I had an indication when the click revealed it was incorrect. I wanted it to be right and felt the hit when it wasn't.

By thinking the word, "indication" rather than prediction, I escaped part of the emotional hit. With practice, I hope to train myself to trade the series of probabilities and not charge each piece of data with emotion.

I want to keep myself in a state where I am aware of all the probabilities and accept each of them as a natural part of the trading experience---the final experience being winning in the probability of my system and not on the luck of the next price action.

Good work, going back over your track record. And yes, everything's easier when you're part of the trend.
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Old Jul 26, 2015, 10:33pm   #17
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Originally Posted by Pat494 View Post
I read somewhere, maybe market wizards, that one of the great investors always had the "it'll never happen " attitude to all his trades.
It could be in life that one naturally builds up a negative view of one's actions especially in others etc. which will beat you in the end. Could be a way of lancing this mental boil ?

yes, they do and they obstruct our perception in our next endeavour, it is a pain avoidance mechanism......
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Old Jul 28, 2015, 1:20pm   #18
 
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http://www.trade2win.com/boards/psyc...ml#post2561090
Thats the one. Concentrate on being the fool who helps the greater fool doos what they want.
Another book you might be interested in is 'The Behaviour Gap'
Click the image to open in full size.

In a 10 yard loser? Aim for a 5 yard loss.
In a 10 yard winnner? Aim for a 15 yard win.

And feel no way about either situation. Not hard really is it.
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Old Aug 17, 2015, 10:33am   #19
 
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I think you need to be concentrated during the process of trading. Emotion is not something what helps you to be concentrated.
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Old Jan 14, 2016, 4:10pm   #20
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No, focusing is all but impossible when you're nervous or anxious or even excited. Which is why it's so important to learn to control your emotions. The problem is, for me at least, that even if I control my emotions during trading afterwards I let and I feel the stress I would've felt a lot more keenly. In other words that control is just temporary. That can be very exhausting.
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Old Jan 14, 2016, 5:21pm   #21
 
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I think men generally have a much more sanguine approach to life's problems and that helps. No shrieking or throwing stuff about. Oh no.
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Old Jan 17, 2016, 1:23pm   #22
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Originally Posted by pennycapitalist View Post
Northeastern Univ. Professor Lisa Feldman Barret says she has found the specific location in the brain that is the "epicenter" of predictions. Her report asserts that limbic tissue which helps create emotion is the center of predictive ability.
This is pure speculation
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Old Jan 18, 2016, 5:23pm   #23
 
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Originally Posted by Charles Bronson View Post
It is not so much about keeping the emotions under control. It is about becoming aware of them.
Completely agree
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Old Jan 18, 2016, 5:33pm   #24
 
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If you're emotional at all, you're doing it wrong.

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Old Feb 13, 2016, 4:50pm   #25
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pennycapitalist started this thread When I emoted on each trade independent of the trades before it, my emotion matched the trade. I learned to smooth my emotions over a whole series of trades. It helped for me to believe that over a whole series the end result would be profitable. Recently I had 14 losses in a row; my confidence began to wane. I took a couple of days off from the market, confidence came back, I went back to the market with my same old system and took seven straight wins. When the 1st loss came, it came with little emotion except gratitude that I have learned to limit my losses and maximize my wins tuned to the current market. When the market moves against me and my emotions start to rise, I recall my resolve to trade and believe in the series rather than the individual, watch the stop line on my chart knowing everything is under control. I may move my stop closer to the negative price movement...but never away from it. A history of success in the series drains the emotion of a single losing trade...even a number of them as I mature as a consistently successful trader.
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Old May 28, 2016, 7:43am   #26
 
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Forex market is not for those who are emotional and take any Trades based on their emotions and never base their predictions on their Knowledge and its really dangerous for any one who want to start Forex with such habit.
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Old Aug 11, 2016, 11:25am   #27
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Forex market is not for those who are emotional and take any Trades based on their emotions and never base their predictions on their Knowledge and its really dangerous for any one who want to start Forex with such habit.
We're all emotional though. It's human nature to be emotional, there's nothing wrong with that. That said, learning how to control your emotions and keep a cool head is vital for any trader wanting to succeed.
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Old Aug 11, 2016, 12:42pm   #28
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For "emotions" in trading we normally think of Fear and Greed. Conjures up an image of a hysterical, manic, bi-polar, frantic trader.

But the term is loose in English and maybe we should keep in mind the danger comes form anything psychological which we project onto the trade, rather than objective information from a chart, etc. So, suspicion, hope, bias, optimism, pessimism, instinct - and all other mental "attitudes" and biases - are going to be prejudicial to objective trading.
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Old Aug 25, 2016, 12:12pm   #29
 
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we can differentiate between affective characteristics (eg. moods and emotions) and cognitive (eg. beliefs and expectations). As regards social factors (eg. Networks and social norms), they act facilitating or inhibiting the expression of a given behavior.
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Old Oct 28, 2016, 5:25am   #30
 
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I don't think emotions should be the directing force when making a decision, whether you're entering a deal or something else. If you keep in mind that emotions are of a temporary nature, you will probably regret the decision you had made several minutes prior and lose a large sum of money in the end. My advice is before entering a deal, think it over for a few minutes and then, after calming down a little make the right choice.
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