Fear and The Market 1 of 2

[Hun]

Excellent writing! I also liked this post of yours:

“Conquering yourself is what will make you a successful trader.

Try this:

1) Make a list of your weaknesses.

2) After each trade, regardless of the result, write down what you attribute to the result.

i.e. let's say the top 3 weaknesses are: not sticking to the stop, changing timeframes, and rationalizing (BSing yourself to stay in).

3) Work on one weakness at a time. After each trade you may find the number one weakness. Start with that one, by tackling it everyday. Once you have gone 5 trades without doing it again, the chances are...it's beaten. Then keep repeating the steps.”

Can you please write on DISCIPLINE too? In many books and posts people talk about the importance of discipline (which I agree is the most important for success), but rarely anybody writes how to become disciplined. Practical things we can do to achieve discipline in trading.

Thanks, Hun

 

[NihabaAshi]

Quote from Hun:

...Can you please write on DISCIPLINE too? In many books and posts people talk about the importance of discipline (which I agree is the most important for success), but rarely anybody writes how to become disciplined. Practical things we can do to achieve discipline in trading.

Thanks, Hun

There are many well-written books about discipline, empowerment, self-managing at your local bookstore.

Yet, regardless if there are specific strategies being discussed for implementing discipline at a discussion forum or in some best seller book...

its extremely difficult to apply without someone teaching it too you because its such a philosophical term because its interpreted in so many different ways.

Lets put it this way...I use to be a serious athlete a long time ago...all the discipline that I used to compete successfully in sports...

I simply transferred such to my trading.

Discipline from Thesaurus: Training, drill, drilling, schooling, indoctination, enforcement of rules, rigor, diligent exercise, practice, preparation, regulated activity, prescribed habit, regimen, self-enforced practice, course of exercise, drill, prime, break in.

Of the above words...what stands out to me are the following...

training, schooling, enforcement of rules, practice, preparation, regulated activity, prescribed habit and self-enforced habit.

Think about it carefully...I have. When I was a well-trained athlete...

I had a healthy routine (mind, body and soul) that I stuck to diligently.

Proper physical rest, proper mental rest, positive activities, re-energizing environments, good nutrition, minimize stress outside the event especially just prior to competing...

I always reviewed tapes of my most recent performance...studying what I did wrong and what I did right...seeking consultation for chronic problems...

I would practice my technique in my head throughout the day...prior to bed, prior to competition, after competition, while day dreaming...visualization...

just the same...when it came time for a break to get away from it all...

I did just that.

Yet...in all fairness...I didn't wake up one day and suddenly had discipline.

It took years to develop and learn while being an athlete which has now been transcribed into my trading.

It ain't easy.

Now...can a trader learn discipline on his/her own?

Yes.

However, most traders don't have a deep enough trading account to endure the learning process prior to learning discipline...

while those that quickly implement discipline into their trading profession...most likely had implemented discipline elsewhere in their life and know exactly what to do to succeed at trading.

Mind, Body and Soul...as one coach use to tell me.

Discipline.

NihabaAshi

 

[RAMOUTAR]

Quote from Hun:

Excellent writing! I also liked this post of yours:

“Conquering yourself is what will make you a successful trader.

Try this:

1) Make a list of your weaknesses.

2) After each trade, regardless of the result, write down what you attribute to the result.

i.e. let's say the top 3 weaknesses are: not sticking to the stop, changing timeframes, and rationalizing (BSing yourself to stay in).

3) Work on one weakness at a time. After each trade you may find the number one weakness. Start with that one, by tackling it everyday. Once you have gone 5 trades without doing it again, the chances are...it's beaten. Then keep repeating the steps.”

Can you please write on DISCIPLINE too? In many books and posts people talk about the importance of discipline (which I agree is the most important for success), but rarely anybody writes how to become disciplined. Practical things we can do to achieve discipline in trading.

Thanks, Hun

Hun, so many people ask me, "Jai if you're such a good trader, why do you teach?" Well I'm a great and successful trader, and the amount of success I get from trading does not give me anywhere near the pleasure I feel when I've helped someone else. I said that (the three ways to conquer your weaknesses) for the first time in 1996, 4 years later someone whom I know very well took those three steps above, and made it their own in a book that they wrote. At first I was annoyed, but afterward, I was very happy since that book made it to many people, and it's helped them. In the end it doesen't matter, I suppose, so make that and anything else I put here on ET yours.

Discipline is on the list of essays that will be posted here. Glad you're enjoying. Feel free to look thorugh some of the posts I've put here on ET, they may help you.

 

[RAMOUTAR]

Quote from NihabaAshi:



There are many well-written books about discipline, empowerment, self-managing at your local bookstore..............................NihabaAshi

Great post, NihabaAshi. BTW, if you woudln't mind please PM me with the origin of your username. It's sounds like it roots back to an Asian divinity.

 

[Momento]

Great post.
Thanks for the sharing

 

[Prime-Line]

Quote from RAMOUTAR:

The best methods, strategies, and systems are useless until you start tackling your fear. As I stated earlier, if you focus on the actions you take rather than the results you will ultimately improve the results. Sticking to your plan, adhering to your entry and exits, and proper education will minimize your fear, increase you confidence and make you a better trader.


Jai Ramoutar, Jr.

In the past I have walked on burning coals, even meditated under water falls for hours, to diminish the fear of loss. My personal experience and that of working with other traders is that the demon won't go away until you find a method and strategy that provides control and comfort.

You have great insight in this area. Thank you for your contribution.

Professor Prime-Line

 

[RAMOUTAR]

Quote from Prime-Line:



In the past I have walked on burning coals, even meditated under water falls for hours, to diminish the fear of loss. My personal experience and that of working with other traders is that the demon won't go away until you find a method and strategy that provides control and comfort.

You have great insight in this area. Thank you for your contribution.

Professor Prime-Line

You are correct. The method and strategy will have more clarity, and it's easier to judge its efficacy after fear is acknowledged.

I was able to provide insight here, since I try to increase insight into myself everyday. I enjoy contributing here, and I find reward when members ask questions, comment and appreciate.

I was taught..if you want more knowledge, give it.

 

[bubba7]

Quote from Prime-Line:



In the past I have walked on burning coals, even meditated under water falls for hours, to diminish the fear of loss. My personal experience and that of working with other traders is that the demon won't go away until you find a method and strategy that provides control and comfort.

You have great insight in this area. Thank you for your contribution.

Professor Prime-Line

Somewhere along the line you will recognize that the way out of a difficulty may not be in dealing with it's opposite. A good example is the handicap that predictors have.

Losses apparently engender responses in some people. I think it has to do with their assignment of priorities regarding money.

Here we are oriented to NLP and being trained to a recognized level, we ask others to go through processes to eliminate the pictures that they have acquired which handicap them.

One practical method of handling fear of losses is prevention. if you remove your original capital and periodically remove additional blocks equal to your original capital gradually you will get to the point where you loose track of how much profit you have taken out of the market. This picture you then have makes loosing a trivial consideration.

For beginners, the major alternative is removing risk from the learning process and directly proceeding to the removal of capital schema.

There is a lot said about "learning curves". I have never been able to understand why people cannot skip the trauma of loosing money for long periods of time. They also lose quite a bit of money in the process. I believe they lose so much money as a consequence of stiving for being disciplined. This is another example of dealing with opposites rather than turning either right or left to go in an orthagonal direction to solve the problem.


Here in this thread are several examples of what I mean. If you have a concept wrong; it's opposite is also wrong. To learn is difficult and the focal point in self learning that is supreme is training yourself to test continually to detect when you are learning wrongly.

People can profit greatly by looking to the side to find stuff.

Risk is not measured by comparing capital invested to the supply of capital. Risk is better measured by using measures of the market.

 

[RAMOUTAR]

Hi bltrading:

Here is my post from 7/4 10:02AMET

Quote from RAMOUTAR:



QCOM (scaling swing trade journal)
ST=short term (profits taken on failed patterns)
LT=longer term (profits taken at target on continuing patterns)

6/18/03

Bot 500 @ 34.70, stop at 34.10 ($ .60 risk) next entry 35.90 (or a target if pattern fails, $1.20 reward) LT target $38.72

risk= .60, reward = 1.20

I will use ST target if pattern fails. If pattern continues I will continue to average up and use LT target.

6/19

Bot 500 @ 36.50, new average price = $35.60 stop at $35.08 ( .52 loss) new ST target & LT target are the same, $38.72

risk= .52, reward = 3.12


7/2

Bot 500 @ 37.08, new average price = $36.09

raise stop to $35.24 (.85 loss) ST and LT target reduced to $38.18 (re-evaluated supply on daily)

risk = .85, reward = 2.09

7/3

I raised stop to $36.58 for 1,500 shares , target still at $38.18 will pick up last 500 at $37.90 if stock trades higher and takes out highs from 6/19. 7/1 and 7/2

On Monday, if I buy last 500 shares at $37.90 my avg cost will be $36.545. My stop will be raised to $37.15.

On 2,000 shares, if stopped, I get $1,220, if target is reached $3,280.


If stock doesn’t trade above the three highs, I’ll hold at 1,500 shares and my average cost is $36.09 and stick with $36.58 stop a $735 profit.

I was able to pick up the last 500 @ 37.90, shorty after the first reversal this morning. Later sold all 2,000 at 38.18, my ACB was $36.54. I was quite annoyed to see QCOM go to $39.40 high. However, here is the way I look at trading:

If I am stopped out and take a loss, then so be it. If I am taken out at my target, even better. Regardless, I DON'T CARE WHERE THE STOCK GOES AFTER I'M OUT. The bottom line is, I predetermine my entry and exits, and I know that either the stop or the target will be reached.

 

[indahook]

Quote from harrytrader:

Something that is an handicap you can exploit as an advantage. Each time you have great fear write it down, write also what the market did. After you have enough historical datas, look if there is a significant correlation : then you have a technical indicator of your own

Well said Harry.