Mark Douglas on Emotionless Trading

[tar]

Thank you for this insightful information. Although one can argue that actually applying these principles is easier said than done...

Agreed , trading is about buying and selling its not about writing some fancy books and getting into endless theoretical arguments ... etc . Thats why you dont see a fruits stand trader sitting at home making arguments about trader's emotions but rather goes to his stand every morning trying to make a living by buying wholesale and selling at retail price ...


GL

 

[Fugazsy]

That's pretty much what Trading In The Zone is all about. But, put as succinctly as I can, the mental structure is changed by developing and following a thoroughly-tested and consistently-profitable trading plan, something which all but a few traders will avoid at all costs, largely because they don't want to assume the responsibility for their outcomes (as one of our new members recently said, "I like to jump in and hope for the best").

Db

Not sure who you referring to... please refrain lecturing others and placing yourself continually on a pedestal, (we already know modesty is not your forte and I wonder why) ... words in trading mean not much.

Read the book many times, it an excellent book but it will not deliver because it lacks of a complete vision which is the fundamental force behind a shift in mental structure, in theory it makes sense but in practice is wobbly as his idea to take partial profit quickly......

 

[lucie_fxtrader]

True. Studying and testing and formulating is more time-consuming than posting on message boards, but one must eventually decide why he/she is in this in the first place.

Once one has the abovementioned trading plan, emotions are an irrelevance. If, on the other hand, one thinks he can just "feel" his way through the trading day . . .

Db

Interesting. Would you agree that the less experienced a trader is the more emotional he/she is while trading?

 

[lucie_fxtrader]

Agreed , trading is about buying and selling its not about writing some fancy books and getting into endless theoretical arguments ... etc . Thats why you dont see a fruits stand trader sitting at home making arguments about trader's emotions but rather goes to his stand every morning trying to make a living by buying wholesale and selling at retail price ...


GL

Nicely written I agree with you, what really matters in my opinion is which theories each one of us can bring into reality

 

[Pnty]

Trading is all about having a strategy and sticking to it if it works. Not playing any games, mixing trading with emotions. The best traders have very simple strategies and they have no emotions.

Does it make sense Lucie m?

 

[dbphoenix]

Not sure who you referring to... please refrain lecturing others and placing yourself continually on a pedestal, (we already know modesty is not your forte and I wonder why) ... words in trading mean not much.

Read the book many times, it an excellent book but it will not deliver because it lacks of a complete vision which is the fundamental force behind a shift in mental structure, in theory it makes sense but in practice is wobbly as his idea to take partial profit quickly......

What trading plan did you develop as a result of having studied the book?

Db

 

[lucie_fxtrader]

Trading is all about having a strategy and sticking to it if it works. Not playing any games, mixing trading with emotions. The best traders have very simple strategies and they have no emotions.

Does it make sense Lucie m?

It does thank you But how can a trader achieve having no emotions?

 

[dbphoenix]

Interesting. Would you agree that the less experienced a trader is the more emotional he/she is while trading?

That depends to a large extent on the emotional baggage that one brings to his trading ventures. Young children make excellent traders largely because they have no ego invested in what they do. They also are far better at reading charts, perhaps for the same reason.

Be that as it may, experience in and of itself does not necessarily translate into emotionless trading, especially if one has no plan such as that which I've mentioned. In fact, engaging in the same unproductive process again and again translates into a greater degree of emotional trading, not less. But you will nonetheless encounter the advice from "experienced traders" that you must immerse yourself in it, preferably with real money, and just keep at it until "things turn around". And people will do so. For years. Does that make sense? On the face of it, no. But there are reasons for it, chiefly the "superiority bias".

Db

 

[dbphoenix]

It does thank you But how can a trader achieve having no emotions?

That, again, is pretty much what TITZ is all about. The only reason to be emotional about one's trading is that one has something to be emotional about. Unless and until one determines just what that is, he will continue to sabotage his own efforts.

If you're interested, read an article I wrote on fear. It's not long

Db

 

[ffsear]

I prefer the "Know what you are" approach. It all very well saying "be more disciplined" etc etc....

But I think one of the things that people should focus on and rarely do is their weaknesses. Know your weakness, understand your weakness and how it affects your trading. When you understand your weakness, you can build a trading plan that helps you avoid it.

Simple example. I'm quite impulsive. Having the Buy and Sell buttons staring me in the face all day is just a recepie for disaster. At some point I lose my control and take a trade with know signal, no entry requirement met and so on, and before you know it, a weeks profit is gone. Alternatively the impulsiveness would often lead me to cut winning trades short.

The solution for me was to trade with orders, rather then physically hit the buy/sell button. I'm still trading the same method, looking at the same levels, but now I just set my orders and stops and walk away. I only check the markets only 3 - 4 times a day now. It funny, my biggest profits have always come from trades made while i'm not at my desk!

I've not changed my method, I've just changed the way I trade it and at the same time i've managed to remove one of the biggest problems I had when it came to trading.


Took me almost 10 years to realise that trading is not about changing yourself, its about understanding yourself.

 

[dbphoenix]

I prefer the "Know what you are" approach. It all very well saying "be more disciplined" etc etc....

But I think one of the things that people should focus on and rarely do is their weaknesses. Know your weakness, understand your weakness and how it affects your trading. When you understand your weakness, you can build a trading plan that helps you avoid it.

Simple example. I'm quite impulsive. Having the Buy and Sell buttons staring me in the face all day is just a recepie for disaster. At some point I lose my control and take a trade with know signal, no entry requirement met and so on, and before you know it, a weeks profit is gone. Alternatively the impulsiveness would often lead me to cut winning trades short.

The solution for me was to trade with orders, rather then physically hit the buy/sell button. I'm still trading the same method, looking at the same levels, but now I just set my orders and stops and walk away. I only check the markets only 3 - 4 times a day now. It funny, my biggest profits have always come from trades made while i'm not at my desk!

I've not changed my method, I've just changed the way I trade it and at the same time i've managed to remove one of the biggest problems I had when it came to trading.


Took me almost 10 years to realise that trading is not about changing yourself, its about understanding yourself.

As long as you have the sort of plan I've mentioned, this is not a bad way of going about executing and managing one's trades. In fact, it's the chief reason I encourage people to avoid daytrading and instead trade longer intervals, at least hourly, if not daily (the trade I posted to my journal yesterday is a good example).

As long as the plan is demonstrably good, leaving it the hell alone is often the best choice. "Discipline" doesn't mean chaining oneself to one's computer in an effort to prove to somebody, including oneself, that one can endure the task. "Discipline" simply means trading the plan, without reservations and without hesitation. If that means placing buy- and sell- and cover-stops and walking away, why not?

Db

 

[barjon]

I prefer the "Know what you are" approach. It all very well saying "be more disciplined" etc etc....

But I think one of the things that people should focus on and rarely do is their weaknesses. Know your weakness, understand your weakness and how it affects your trading. When you understand your weakness, you can build a trading plan that helps you avoid it.

Simple example. I'm quite impulsive. Having the Buy and Sell buttons staring me in the face all day is just a recepie for disaster. At some point I lose my control and take a trade with know signal, no entry requirement met and so on, and before you know it, a weeks profit is gone. Alternatively the impulsiveness would often lead me to cut winning trades short.

The solution for me was to trade with orders, rather then physically hit the buy/sell button. I'm still trading the same method, looking at the same levels, but now I just set my orders and stops and walk away. I only check the markets only 3 - 4 times a day now. It funny, my biggest profits have always come from trades made while i'm not at my desk!

I've not changed my method, I've just changed the way I trade it and at the same time i've managed to remove one of the biggest problems I had when it came to trading.


Took me almost 10 years to realise that trading is not about changing yourself, its about understanding yourself.

Ah, you must have read the "Our Jack" article once upon a time then

 

[Fugazsy]

What trading plan did you develop as a result of having studied the book?

Db

Dp

You see what you and Douglas fail to understand is that you cannot resist emotions, you only can ride them: feel their pain, accepting them, give them space, then use their vitality to grow, taking obstacles in life as great opportunities, bypassing your thinking self going towards your observing self....Mindfulness, here effortless springs....

I find the book intriguing and revealing, a great read.

Did it help me to break through? No, it did not, it was like asking me not to think about an apple expecting me not to think about an apple.......

Beside having a plan and strictly following it will not bring any good results if your money management is poor, which goes back to the classic: "cut your losses quickly and make you winners run", opposed to "taking profit quickly" which shows only fear kicking in and the thinking self back in play.

Only me.....of course.

 

[Fugazsy]

I prefer the "Know what you are" approach. It all very well saying "be more disciplined" etc etc....

But I think one of the things that people should focus on and rarely do is their weaknesses. Know your weakness, understand your weakness and how it affects your trading. When you understand your weakness, you can build a trading plan that helps you avoid it.

Simple example. I'm quite impulsive. Having the Buy and Sell buttons staring me in the face all day is just a recepie for disaster. At some point I lose my control and take a trade with know signal, no entry requirement met and so on, and before you know it, a weeks profit is gone. Alternatively the impulsiveness would often lead me to cut winning trades short.

The solution for me was to trade with orders, rather then physically hit the buy/sell button. I'm still trading the same method, looking at the same levels, but now I just set my orders and stops and walk away. I only check the markets only 3 - 4 times a day now. It funny, my biggest profits have always come from trades made while i'm not at my desk!

I've not changed my method, I've just changed the way I trade it and at the same time i've managed to remove one of the biggest problems I had when it came to trading.


Took me almost 10 years to realise that trading is not about changing yourself, its about understanding yourself.

Great honest post.

 

[dbphoenix]

Dp

You see what you and Douglas fail to understand is that you cannot resist emotions, you only can ride them

I disagree. And so would, I assume, Douglas. But no purpose is served by arguing about it, anymore than there is any point to arguing about the existence of a Zen state.

Beside having a plan and strictly following it will not bring any good results if your money management is poor, which goes back to the classic: "cut your losses quickly and make you winners run", opposed to "taking profit quickly" which shows only fear kicking in and the thinking self back in play.

Money management and risk management must of course be part of the plan. Otherwise it's not much of a plan.

Going back to what I said in my article, the chief question when one examines his fears is what exactly it is that he's afraid of. If one doesn't know, he should stop trading, or postpone starting, until he knows the answer. If he doesn't, he will go on month after month, year after year, and never make any progress toward his goals, unless of course his goals are to trade without profit.

Db