No Plan, No Trade

dbphoenix

Legendary member
Most traders who lose are damaged by greed and fear, induced by committing real money to risk, to the point where they make irrational decisions.

Some poor decisions can be way before opening a trade and some can be insidious, e.g. -
* losing money after a day's trading is the worst thing that can happen
* forex has a risky reputation so I'll trade stocks
* my aim is to make £25 every day
* I am a retired professional with time on my hands, I'm going into daytrading
* the Dow has got really high so I'm going to short the DAX
* I'm prepared to risk 30 pips so I'm going to hold this damn trade until I get +60
* I've got +60 so I'm going to close this one
* last 3 trades today were losers so I'm shutting down and going to the gymn

Such ways are how traders sabotage their own chances of success.

Most dumb daytrading systems lose money. Most long-term trading systems make money. Most new traders start in daytrading.

All points towards psychology being way more important than the individual system.

Your first statement is true. However, it does not necessarily lead to your conclusion. A system which allows the sort of decisions you list is hardly a system, much less a sound system. A sound system will not allow these kinds of decisions. To the contrary, a sound system, one that is thoroughly tested, will discourage if not eliminate fear as the trader will be approaching his trading deliberately and rationally, not trying to "feel" his way through the session.
 

tomorton

Legendary member
Your first statement is true. However, it does not necessarily lead to your conclusion. A system which allows the sort of decisions you list is hardly a system, much less a sound system. A sound system will not allow these kinds of decisions. To the contrary, a sound system, one that is thoroughly tested, will discourage if not eliminate fear as the trader will be approaching his trading deliberately and rationally, not trying to "feel" his way through the session.


dbp - These decisions are examples of irrational decisions that are poor and emotionally based, at the very least questionable. Yes, they don't form a system, I don't say they do, but they are so often starting points for new traders, even before they have a system.

There can only be 2 reasons for a losing trading career - a poor system or trading a good system poorly.

Applying a winning system with emotional input introduces greed and fear and their subordinate biases leading to wrong decisions. Though wrong, these are often carefully reasoned and supported by advanced indicator work: it would be incorrect to think that emotionally-driven bad decisions are impulsive, they can be based on an emotional bias put in place, perhaps sub-consciously, years earlier.
 

dbphoenix

Legendary member
dbp - These decisions are examples of irrational decisions that are poor and emotionally based, at the very least questionable. Yes, they don't form a system, I don't say they do, but they are so often starting points for new traders, even before they have a system.

There can only be 2 reasons for a losing trading career - a poor system or trading a good system poorly.

I misunderstood your conclusion in part. You said that "all points towards psychology being way more important than the individual system," which I took to imply that all of what you posted earlier was part of some sort of system. In any case, this conclusion cannot be reached simply by providing examples of emotional or otherwise dysfunctional trading. Much is made of "psychology", particularly in trading forums and in trading literature. But psychology need not even be pertinent, at least not more so than any other situation in which the interaction of demand and supply enters into whatever decision one chooses to make with regard to conducting a purchase. If one develops a trading system properly, fear is short-circuited. It serves no purpose. It is irrelevant. Those who do not have a thoroughly-tested trading system, on the other hand, which accounts for nearly all beginning traders (who insist on trading by "feel"), will be fearful almost from the moment they switch on their computers. One need only skim the journals to see how prevalent this is.

Applying a winning system with emotional input introduces greed and fear and their subordinate biases leading to wrong decisions. Though wrong, these are often carefully reasoned and supported by advanced indicator work: it would be incorrect to think that emotionally-driven bad decisions are impulsive, they can be based on an emotional bias put in place, perhaps sub-consciously, years earlier.

They aren't impulsive, just unnecessary. I've written enough and possibly too much about trading fearlessly and emotionlessly so won't repeat it here. But anyone who wants to do a search shouldn't have any trouble finding the stuff.
 

foroom lluzers

Veteren member
I misunderstood your conclusion in part. You said that "all points towards psychology being way more important than the individual system," which I took to imply that all of what you posted earlier was part of some sort of system. In any case, this conclusion cannot be reached simply by providing examples of emotional or otherwise dysfunctional trading. Much is made of "psychology", particularly in trading forums and in trading literature. But psychology need not even be pertinent, at least not more so than any other situation in which the interaction of demand and supply enters into whatever decision one chooses to make with regard to conducting a purchase. If one develops a trading system properly, fear is short-circuited. It serves no purpose. It is irrelevant. Those who do not have a thoroughly-tested trading system, on the other hand, which accounts for nearly all beginning traders (who insist on trading by "feel"), will be fearful almost from the moment they switch on their computers. One need only skim the journals to see how prevalent this is.



They aren't impulsive, just unnecessary. I've written enough and possibly too much about trading fearlessly and emotionlessly so won't repeat it here. But anyone who wants to do a search shouldn't have any trouble finding the stuff.

We have been through this emotionless trading etc .Writers write and vendors sell , but traders trade ,no other person can tell you what real trading is about .

People who write are good at writing and those who are good at peddling THE INFORMATION (their beliefs and knowledge about trading ), are found on forums peddling stuff.Forum sites/vendors sell information to members ,that does not make them traders , they just picked up the information from somewhere.

Only real traders will tell you about emotions , stress responses ,patience and other psychology.They experienced it and can tell you about it.You can not write with authority , on something you don't understand or ever experienced .There are plenty of "music to my ears " content writers , who write on trading , and most never traded.Others are still on forums after 20 years , they can't find a holy grail.

I have nothing against vendors selling , good luck to you , but don't come and teach a grandmother how to suck eggs.
 

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foroom lluzers

Veteren member
When you are dead , you have no emotions , you can then trade without emotions .

When you are alive , you trade with emotions , and often trade emotions , not the system.

Trading is stressfull mental activity , it arouses emotions and stress responses , Your emotional brain is faster than your rational , it calls all the shots in live trading.

Our emotions have helped us immeasurably over the course of human evolution. Emotional responses are milliseconds faster than cognitive (thinking) responses; the lightning-fast reactions that bypass the rational brain centers were often survival responses for our distant ancestors. The limbic brain sends us the warning of a crisis before the rational brain can even process the incoming signal: the body has been alerted and is ready to act on our behalf.

Search on google

"amygdala and prefrontal cortex emotion"
"amygdala hijack"
"amygdala hijack examples"

Search free videos on youtube on emotions and learn.

http://www.trade2win.com/boards/psy...nt/194038-no-plan-no-trade-5.html#post2893488
 

dbphoenix

Legendary member
I've been in the market since '76, about the time I "picked up" the information while earning my doctorate in psychology.

The most psychologically fit trader on the planet will fail if he doesn't have a thoroughly-tested and consistently-profitable trading plan. And he doesn't have to spend a dime to develop one.
 

piphoe

Legendary member
I've been in the market since '76, about the time I "picked up" the information while earning my doctorate in psychology.

The most psychologically fit trader on the planet will fail if he doesn't have a thoroughly-tested and consistently-profitable trading plan. And he doesn't have to spend a dime to develop one.

Exactly.
 

piphoe

Legendary member
All this does not work in reality , good luck with your vendor business and marketing sales.

Traders trade their beliefs ,cognitive biases and related distortions ,emotions ,stress responses (rective patterns ,freezing on trigger ,mistakes etc),subjective anylysis ,personality( Perfectionism ,Worry ,Overconfidence,
Negative Thinking.Self-blame etc),state of mind ,current body condition (tired ,fatigue,sleepless) and other influences .The trading phsychology is a complex subject ,the author has given a summary.



http://www.trade2win.com/boards/edu...92-your-brain-wasnt-built-handle-reality.html



Traders are like monkeys , they suffer from the MONKEY BIAS, THEY DO MONKEY BUSINESS ON LIVE ACCOUNTS


Like this?

Humans are very clever and we get clever , when it is not in our interests .When given a highly profitable system , we second guess systems , because we are smart and smarter than the creator of the system.We are like monkeys and do monkey business on live accounts .It is called self sabotage.


http://www.trade2win.com/boards/edu...-do-succesful-traders-hang-around-forums.html

We are curious and try new things , inventions and do the same in trading.
We get too clever for our own good in trading ,like these monkeys.


Even with the realization we are monkey's, and all the wisdom that comes from that we are still..ALAS monkeys nonetheless.

actually humans came from gibbons not monkeys, as an aside
 

darktone

Veteren member
Trading is stressfull mental activity
Not for everybody its not.
You can accept the reality of what youre doing.
You can realise you are _______, rather than just your thoughts.
You can have a level of emotional intelligence.

Then you are free to execute in any way you choose, not just the narrow band of ways average tarding mind allows.

An you can help the folks who get upset and want puke it all up, eh pip ;)
 

foroom lluzers

Veteren member
Not for everybody its not.
You can accept the reality of what youre doing.
You can realise you are _______, rather than just your thoughts.
You can have a level of emotional intelligence.

Then you are free to execute in any way you choose, not just the narrow band of ways average tarding mind allows.

An you can help the folks who get upset and want puke it all up, eh pip ;)

All above is all possibe , when you know your psychology., but until you understand your psychology , you can not achieve because you can not plan to win against psychological demons .


This monkey has emotional intelligence , until something triggers his emotions.


A lot of external emotional triggers lead to trader self sabotage.

http://www.trade2win.com/boards/gen...erfect-trade-entry-look-like.html#post2893658

https://www.google.co.uk/webhp?sour...v=2&ie=UTF-8#q=self+sabotage+traders+/trading
 

foroom lluzers

Veteren member
I've been in the market since '76, about the time I "picked up" the information while earning my doctorate in psychology.

The most psychologically fit trader on the planet will fail if he doesn't have a thoroughly-tested and consistently-profitable trading plan. And he doesn't have to spend a dime to develop one.

Customer :You are selling information about trading , yet you deny psychology has any bearing on trading.

Vendor: My course is about trading , I do not want to tell customers about psychology.

Customer : psychology is more important in trading ,than any other activity

Vendor :I just like to tell him the good side of it , so he buys my course

Customer :You failed at psychology?

Vendor :I tell him about the pschology course , after he has paid for the first course and and tell him why I failed because of it.
 

foroom lluzers

Veteren member
'Gekko syndrome'
So why do banks recruit these gamblers in the first place?
"What I have observed is a big emphasis in banks on technical competence - high cognitive ability or IQ," says Mr Curnier.
"When it comes to EQ [Emotional Quotient], my sense is that people are not spending a lot of time focusing on that."
Michael Douglas
Image caption
Does the "high roller" image of Gordon Gekko attract the wrong kind of candidate?
EQ is a measure of individuals' ability to manage their emotions and their relations with others, developed by psychologist Daniel Goleman.
Mr Curnier says many traders suffer from "Gekko syndrome", like the "greed is good" anti-hero of the film Wall Street.
They lack self-awareness - the ability to understand their own emotions and how they affect others.
The aggressive, risk-taking, boundary-pushing, "high-roller" image of the trader tends to attract exactly that kind of applicant.

http://www.bbc.co.uk/news/business-19849147

https://www.google.co.uk/webhp?sour...on=1&espv=2&ie=UTF-8#q=Emotional+intelligence
 

tomorton

Legendary member
Day-trading attracts gambler types.

Day-trading is the only form of trading new traders think they have a chance to profit at and can enter cheaply and start making money quickly. It might be the only form of trading they have ever heard of. It will wipe out most of them within a year. Can't shed many tears for them though: they're the sort of people who chance a red light now and then.

If you're a new trader, don't day-trade until you can trade.
 

darktone

Veteren member
All above is all possibe , when you know your psychology., but until you understand your psychology , you can not achieve because you can not plan to win against psychological demons .


This monkey has emotional intelligence , until something triggers his emotions.


A lot of external emotional triggers lead to trader self sabotage.

http://www.trade2win.com/boards/gen...erfect-trade-entry-look-like.html#post2893658

https://www.google.co.uk/webhp?sour...v=2&ie=UTF-8#q=self+sabotage+traders+/trading

Agree for the most part, but theres different levels of emotional intelligence :D

Theres very little in the markets imo, thankfully (y)
 

dbphoenix

Legendary member
Day-trading attracts gambler types.

Day-trading is the only form of trading new traders think they have a chance to profit at and can enter cheaply and start making money quickly. It might be the only form of trading they have ever heard of. It will wipe out most of them within a year. Can't shed many tears for them though: they're the sort of people who chance a red light now and then.

If you're a new trader, don't day-trade until you can trade.

Not unlike the wannabe poker player who enters a professional tournament without knowing the difference between a straight and a flush.
 

foroom lluzers

Veteren member
Day-trading attracts gambler types.

Day-trading is the only form of trading new traders think they have a chance to profit at and can enter cheaply and start making money quickly. It might be the only form of trading they have ever heard of. It will wipe out most of them within a year. Can't shed many tears for them though: they're the sort of people who chance a red light now and then.

If you're a new trader, don't day-trade until you can trade.

The reason why most go into day trading is , we believe in certainty and all our actions are based on seeking certainty in what we do.If we cross the road , we want to be sure no traffic is coming.

There is uncertainty about , how the market will behave in the future ( swing periood of 2 to 5 days or next month ).There is more certainty , when you see charts intraday , but this also means trading noise. . this is what attracts people into daytrading.
 

tomorton

Legendary member
The reason why most go into day trading is , we believe in certainty and all our actions are based on seeking certainty in what we do.If we cross the road , we want to be sure no traffic is coming.

There is uncertainty about , how the market will behave in the future ( swing periood of 2 to 5 days or next month ).There is more certainty , when you see charts intraday , but this also means trading noise. . this is what attracts people into daytrading.


Its an illusion that intra-day price behaviour is more predictable than multi-day. Its possible that both are equally predictable or unpredictable but its equally possible that multi-day is easier to predict. Though "prediction" is really not what we're about but you know what I mean.

But this illusion is what attracts new starters into day-trading, they feel they're taking lower risks. There is no evidential or experiential basis for this. After all, most new traders are day-traders and 90% of them fail.
 

dbphoenix

Legendary member
Its an illusion that intra-day price behaviour is more predictable than multi-day. Its possible that both are equally predictable or unpredictable but its equally possible that multi-day is easier to predict. Though "prediction" is really not what we're about but you know what I mean.

But this illusion is what attracts new starters into day-trading, they feel they're taking lower risks. There is no evidential or experiential basis for this. After all, most new traders are day-traders and 90% of them fail.

A perception that is easily missed.

As for predictability, it depends on whom one is trading with. Those who daytrade aren't focused on the same movements as those who trade daily and weekly and monthly charts. In fact, the latter don't even see what small-interval daytraders are looking at, so any substantial move at any given point or level is purely coincidental. Even accidental. If one wants to enhance his success at daytrading, it is important to be aware of what those who are interested in longer timeframes are looking at, as it is they who move money and thus prices.
 
 
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