How does anyone do this?
- Thread starter Clueless
- Start date
Without knowing much about you and your trading, my first guess would be that any edge you have (if you even have one) gets eroded by the psychological issues that all of us traders must face at some point.
FRuiTY P.'s post #123
FRuiTY P.'s post #123
Wow, this was a valuable post...I am just getting to the point where I can say that I understand how alot of these points show up in my trading and how they impact my p&l.
Hmmm how did I do today?
- yes I traded counter-trend once today, but did so on purpose it being options expiry and all.
- didn't try to call a top or bottom all day. Did not catch a falling or ascending knife.
- did not get enough sleep last night. Chronic problem out here on the west coast. Took my expectations down a notch and slept in a bit despite knowing I'd probably (and did) miss a good setup in the morning.
- of the sins I'd have to add my personal #8...getting spooked and exiting early. Guilty as charged.
- wasn't so good about waiting for my high-probability setups, though I did end the day profitably.
Hmmm how did I do today?
- yes I traded counter-trend once today, but did so on purpose it being options expiry and all.
- didn't try to call a top or bottom all day. Did not catch a falling or ascending knife.
- did not get enough sleep last night. Chronic problem out here on the west coast. Took my expectations down a notch and slept in a bit despite knowing I'd probably (and did) miss a good setup in the morning.
- of the sins I'd have to add my personal #8...getting spooked and exiting early. Guilty as charged.
- wasn't so good about waiting for my high-probability setups, though I did end the day profitably.
Someone once told me that smart people don't make good traders.
I think this is true. Why? Because those types of people will always look for some type of system or mathematical model to justify a trade or a trading concept. A good trader, one who is consistently profitable, will always beat a system or model. Systems and models are great for theory and chit-chat, but they fail to work out over time because they cannot take into account the two most important elements of the market: fear and greed. In other words, market psychology.
Not that I have years of experience to back this up on, but IMHO, trading has nothing to do with your intelligence level. In fact, I think that if you had any smarts whatsoever, you would have nothing to do with trading!!
Your biggest obstacle to success is yourself. You are your own worst enemy. Don't blame it on the specialist or on market conditions. The market owes you nothing and yes, revenge trading is an easy trap to fall in to.
I have taken some of these falls myself and most of us probably have at one point or another in our trading "careers." This has only propelled me forward and I have developed my own style. Each person is different and you have to find a style that suits your personality and risk tolerance. Unfortunately, some people will never find that style. It doesn't mean that you are stupid or incapable, but it just means that trading is not for you.
So, if you are having a horrid time and you are not making any money, I think it would be wise to stop.
You have to earn a living somehow, right? Don't dig yourself into a grave.
That's just my .02
I think this is true. Why? Because those types of people will always look for some type of system or mathematical model to justify a trade or a trading concept. A good trader, one who is consistently profitable, will always beat a system or model. Systems and models are great for theory and chit-chat, but they fail to work out over time because they cannot take into account the two most important elements of the market: fear and greed. In other words, market psychology.
Not that I have years of experience to back this up on, but IMHO, trading has nothing to do with your intelligence level. In fact, I think that if you had any smarts whatsoever, you would have nothing to do with trading!!
Your biggest obstacle to success is yourself. You are your own worst enemy. Don't blame it on the specialist or on market conditions. The market owes you nothing and yes, revenge trading is an easy trap to fall in to.
I have taken some of these falls myself and most of us probably have at one point or another in our trading "careers." This has only propelled me forward and I have developed my own style. Each person is different and you have to find a style that suits your personality and risk tolerance. Unfortunately, some people will never find that style. It doesn't mean that you are stupid or incapable, but it just means that trading is not for you.
So, if you are having a horrid time and you are not making any money, I think it would be wise to stop.
You have to earn a living somehow, right? Don't dig yourself into a grave.
That's just my .02
Lots of answers and I'm not sure where to start...
First off, all of you are correct. I do not have a plan that I trust. I do have a detailed written plan, but I don't trust it. So I tend to trust my own instincts and shoot from the hip. My up days seem to occur when I'm fuzzy on my plan and miraculously just go with the flow. I hang on through huge shakes and seem to know just when to get out. I skip trades that technically meet my criteria and somehow only take the good ones. Those days teach me to trust my instincts. My down days seem to happen when I either stick mechanically to my plan, somehow miss the good trades, or I make mistakes (missing stops and overtrading are my 2 major ones). When I mechanically follow the plan I seem to be wrong on every trade and every shake becomes a reversal. I can't define the fuzziness that draws the line between good and bad days. Missed stops and overtrading on my down days become fuzzy successful trades on my up days. Since I can't find a pattern to it, I attribute it to luck and randomness. ie. no edge.
Part of the problem with following my plan is that many times I'll see something and absolutely KNOW this stock is going HERE. But since there is no real setup, discipline says "you can't get in" as I watch the stock hit that exact spot. I missed a 2 point run yesterday and a 1 point run today because of this. So sometimes I say "to hell with it, this stock is going up, but keep your risk tight since this isn't according to plan", so I get in with a tight stop and get stopped out. Or the specialist "lies" to me with his bids/offers, and I start thinking "it's just a hunch, you're not following your plan, your risk is out of control" and spooks me out (before hitting that spot). That happens a lot. What's the difference between that and blind luck and overtrading? How do you know the difference? Or maybe all the other times I do this I get smoked and only remember the good ones?
Sometimes there is this esoteric something that says, "you know, you've got enough out of this trade, just take the money". Frequently that turns out to be the end of the move. Sometimes I listen to that thought and sometimes I don't, but in retrospect it seems like usually I should. Where that thought comes from I have no idea. I can't find a pattern to it. It's not from prints or chart patterns, it's just a feeling "this is enough, risk is high here, get out". It sometimes feels like everyone else has has the same profit objective and just bails at the same time. How do you work a hunch like that into a definable plan?
Those are my successful days. My unsuccessful days I'm jumping all over the place, taking trades that are supposedly according to instinct (like my successful days), and if it goes against me I think "no, this is just bullshit, it's a spook, hold on for a second longer. Remember all those times your 'instincts' were right". And I bail or am stopped out at the exact low or high print before the reversal. Yet I can't distinguish these days from the "lucky" good days.
I'm convinced that mechanical trading does not work. I'm also convinced that successful traders are tapping into some esoteric feeling. But if I can't even define it, how do I know when to rely on it or when it's even there? Everyone is going to make occasional great calls on pure blind luck.
Everyone says trading is simple. Just keep it simple. The difficult part is doing it. While I agree doing it is difficult, I can't find a plan that says "do it". But that does suggest to me that trading is largely mechanical. And if so, the computer should objectively tell me if the plan will work or not. Why can't I find one that works consistently? .05/share with a high frequency of trades would be fine with me. I can handle 10 losing trades in a row reasonably well. If I truly trusted the plan, I could handle more.
So, my focus has been two pronged:
1. Assume the grail is mechanical. Find a system I can program in and say "Look, just do this and it nets .05/share". Haven't found it. Works for some stocks, not others, works some times, not others. How can I trust that?
2. Assume the grail is yourself, and find (and be able to recognize and recreate) this esoteric psychological sweet spot where suddenly you'll just know what to do. (assuming this state exists) Then you start getting all metaphysical with "know yourself", use the force, be one with the markets, etc. etc. And those times I think I've felt it... I really don't know if that sweet spot is me or simply luck. The result and the feelings are the same. Douglas says it's the zone, but I'm not convinced it's not pure luck. I have ordered Van Tharp's Peak Performance course which I will follow dutifully. We'll see.
As with most things, it's probably a combination of the above. Yet where's the line?
I do know:
Not caring about the money is important.
Not caring about the trade's success is important.
What I don't know:
What do you mean by "know yourself"? Please give me an example of something that you learned about yourself and how it was hurting your trading. What did you do about it and how did that lead to successful trading?
Obviously I need to find a plan I can trust. But my belief is that mechanical plans don't work. And since my belief that discretion and "hunches" for entries and exits are important, those must be worked into the plan. But how do you define a plan for these hunches? Should you? After writing all this out, maybe that is my dilemma.
Those are my thoughts and maybe someone can shock me back on track. Like, "What the hell are you doing???" I think I'm close... but I've been thinking that for months and months...
Clueless
First off, all of you are correct. I do not have a plan that I trust. I do have a detailed written plan, but I don't trust it. So I tend to trust my own instincts and shoot from the hip. My up days seem to occur when I'm fuzzy on my plan and miraculously just go with the flow. I hang on through huge shakes and seem to know just when to get out. I skip trades that technically meet my criteria and somehow only take the good ones. Those days teach me to trust my instincts. My down days seem to happen when I either stick mechanically to my plan, somehow miss the good trades, or I make mistakes (missing stops and overtrading are my 2 major ones). When I mechanically follow the plan I seem to be wrong on every trade and every shake becomes a reversal. I can't define the fuzziness that draws the line between good and bad days. Missed stops and overtrading on my down days become fuzzy successful trades on my up days. Since I can't find a pattern to it, I attribute it to luck and randomness. ie. no edge.
Part of the problem with following my plan is that many times I'll see something and absolutely KNOW this stock is going HERE. But since there is no real setup, discipline says "you can't get in" as I watch the stock hit that exact spot. I missed a 2 point run yesterday and a 1 point run today because of this. So sometimes I say "to hell with it, this stock is going up, but keep your risk tight since this isn't according to plan", so I get in with a tight stop and get stopped out. Or the specialist "lies" to me with his bids/offers, and I start thinking "it's just a hunch, you're not following your plan, your risk is out of control" and spooks me out (before hitting that spot). That happens a lot. What's the difference between that and blind luck and overtrading? How do you know the difference? Or maybe all the other times I do this I get smoked and only remember the good ones?
Sometimes there is this esoteric something that says, "you know, you've got enough out of this trade, just take the money". Frequently that turns out to be the end of the move. Sometimes I listen to that thought and sometimes I don't, but in retrospect it seems like usually I should. Where that thought comes from I have no idea. I can't find a pattern to it. It's not from prints or chart patterns, it's just a feeling "this is enough, risk is high here, get out". It sometimes feels like everyone else has has the same profit objective and just bails at the same time. How do you work a hunch like that into a definable plan?
Those are my successful days. My unsuccessful days I'm jumping all over the place, taking trades that are supposedly according to instinct (like my successful days), and if it goes against me I think "no, this is just bullshit, it's a spook, hold on for a second longer. Remember all those times your 'instincts' were right". And I bail or am stopped out at the exact low or high print before the reversal. Yet I can't distinguish these days from the "lucky" good days.
I'm convinced that mechanical trading does not work. I'm also convinced that successful traders are tapping into some esoteric feeling. But if I can't even define it, how do I know when to rely on it or when it's even there? Everyone is going to make occasional great calls on pure blind luck.
Everyone says trading is simple. Just keep it simple. The difficult part is doing it. While I agree doing it is difficult, I can't find a plan that says "do it". But that does suggest to me that trading is largely mechanical. And if so, the computer should objectively tell me if the plan will work or not. Why can't I find one that works consistently? .05/share with a high frequency of trades would be fine with me. I can handle 10 losing trades in a row reasonably well. If I truly trusted the plan, I could handle more.
So, my focus has been two pronged:
1. Assume the grail is mechanical. Find a system I can program in and say "Look, just do this and it nets .05/share". Haven't found it. Works for some stocks, not others, works some times, not others. How can I trust that?
2. Assume the grail is yourself, and find (and be able to recognize and recreate) this esoteric psychological sweet spot where suddenly you'll just know what to do. (assuming this state exists) Then you start getting all metaphysical with "know yourself", use the force, be one with the markets, etc. etc. And those times I think I've felt it... I really don't know if that sweet spot is me or simply luck. The result and the feelings are the same. Douglas says it's the zone, but I'm not convinced it's not pure luck. I have ordered Van Tharp's Peak Performance course which I will follow dutifully. We'll see.
As with most things, it's probably a combination of the above. Yet where's the line?
I do know:
Not caring about the money is important.
Not caring about the trade's success is important.
What I don't know:
What do you mean by "know yourself"? Please give me an example of something that you learned about yourself and how it was hurting your trading. What did you do about it and how did that lead to successful trading?
Obviously I need to find a plan I can trust. But my belief is that mechanical plans don't work. And since my belief that discretion and "hunches" for entries and exits are important, those must be worked into the plan. But how do you define a plan for these hunches? Should you? After writing all this out, maybe that is my dilemma.
Those are my thoughts and maybe someone can shock me back on track. Like, "What the hell are you doing???" I think I'm close... but I've been thinking that for months and months...
Clueless
Before you can get "esoteric" you need to master the fundamentals... the tools and rules, so to speak. Check it out. Do you (we) have it down 'cold' such that noise and emotions will not unduly influence decisions?
After this you can evolve through experience, practice and self-awareness (not unlike growth in any high level competitive endeavor) to a point at which you
1. reach a higher plane of instinct and judgment
2. increase ability to "feel" the energy of the market, and most important
3. Know and fully understand your strengths and weaknesses... such that you may increase reliance on the former while avoiding too much of the latter.
However, if you (or any of us) think this will evolve into a perfect or unflawed state of total "flow" all the time.... you (we) are setting up for certain failure. This is a career wherein sometimes shots comes easy... in the paint so to speak, while at other times you throw up an airball. That is the nature of the "game".
A less "esoteric" response is a notion one gets that you (Clueless) are (over-) trading... without having reached a sufficient foundational skill level (not intelligence mind you). In this I include a basic "trader's instinct", and better trust in your ability (ies).
Obviously the more experience you (we) gain... the more this becomes self-explanantory, and within your comprehension not as a conscious thought but as something you just know and feel. This is the goal and a state (imho) that the best traders seek to reach, and continually perfect.
Iceman
I've learned the most important lessons about trading from two professional gamblers that I've had conversations with. It boils down to the house will always have an edge until you can DILIGENTLY research (most, myself included, want to bypass this because it means boring hard work) an edge over them--then work it with the utmost DISCIPLINE. Once you find it in gaming, you'll never lack money again...its the same with trading.