miracletech,
A good article and the beast idea is very compatible with some modern theories of the mind (although generally there are multiple beasts contending for control).
Sadly the solution proposed (just pause a few seconds and ask yourself if the trade really meets all your setup criteria) won't work for many people and/or situations. This can occur when either the strategy is incompatible with the individual or is not strong enough to deal with the underlying learned processes. One of the common situations where it won't work is described below.
The problem as Steenbarger points out is that you trade in one state of mind (the beasts') while you plan and decide what to do in future in another state of mind. This is the same as deciding not to eat the chocolates in the fridge (I live in the tropics) and then later, on opening the fridge, discovering that there is a chocolate in one's hand, well on its way to one's mouth.
So, you have a conditioned response, when you are in "beast" state.
Most of my trading errors fall into the categories:
- real time thinking mistakes (where I can see the belief and thinking preceding error); and
- conditioned responses (where I can't, it just seems to happen without perceptible thought).
You can fix the first type by fixing thoughts (replace beliefs etc).
The second type is most amenable to the same tricks one uses to reduce chocolate consumption. I apply two approaches:
a) I make it impossible to do (no chocolates in the house). So, for reflex reentries after a loss I can't do it because once I enter a trade, and set my targets and stops, I switch to an observe only chart ... and stay with this until I need to trail a stop or have taken a loss/target and resumed a mode of thought where a reflexive conditioned response is highly unlikely.
b) During the trade I read out process to myself. This keeps my mind in the planning mode (not the entrained, tick following mode) and focusses me on taking the next planned action.
The combination of these two strategies has almost eliminated conditioned response errors for me - but may or may not work for others.
More in this t2w thread.
