Perhaps for you trading is like pealing an onion, at least it is for me... we go round and round the same thing, but layer by layer at a deeper level. Every now and then a threshold jump.
Listened to the last interview Mark Douglas gave (as posted in the RIP thread). I don't know that it applies to you, but here are my notes (not necessarily exactly what he said):
Mark Douglas
http://www.insidefutures.com/article/1542890/Mark Douglas - The Final Interview.html
About 1:50 min in… around 2:05 is really interesting. The down days and up days can be learned to not have the slightest change in your trading behavior. Everyone’s threshold for euphoria or despair/shock is different – and the point where self-preservation kicks in and you exit a trade that is just getting worse. You don’t want to trade when you are in either euphoria or shock – because your judgement becomes off. You need the appropriate beliefs to not change your trading behavior with wins or losses; and not have wins or loses change your ability to see what is happening (as opposed to what you think should or might happen). The basic helpful belief is that there is no way to eliminate the risk. There is no way for your technical analysis or approach to be “right”. If it does win, it is just planned synchronicity,
not having anything to do with
why you took the entry. It will just work or it won’t. It is a planned synchronicity with the order flow. Or if it lost, it doesn’t mean you were wrong or your technique was wrong. Once you put on the trade any random event can happen. Your analysis has
no correlation to the conclusion. The outcome of individual trades are essentially random. Find the variables that give you an acceptable risk to reward, you get more winners then losers, and treat each trade as a probability game so that you can execute properly. Losses have
nothing to do with being wrong. Losses are just a business expense. Wins the same – wins have nothing to do with being right, or having the right analysis or approach.
The reason Mark Douglas says the above is because he describes being around the trading floor and watching a particular mrkt in a range. At the bottom of the range a certain couple of guys were buying low, then selling high and rebuying every time it came back down to the bottom of the range. Eventually the range broke out the bottom. Why? The guys buying had gone to lunch. It was that simple. Many things that happen are due to the big guys doing things for illogical reasons or no meaningful reason at all (like going to lunch).
If you are putting effort into your analysis to eliminate all risk… that take’s you off track: it twists your beliefs. You are trying to do something that can’t be done. You are trying to avoid the unavoidable. And from there you cannot be in a “carefree state of mind”, that is, being present to participate alertly and fully, unbiased… without feeling that you, your trades or trade conclusions are “wrong”. [With trading you are here specifically to work with risk; accept it.]
How do you collapse a belief? Take the energy out of it… but that doesn’t mean the belief is gone. Douglas believes a belief never actually goes away, it just loses energy. But you can energize beliefs that are consistent with your objectives. It is two steps. One is the energy, the other is de-energizing other beliefs. Analysis is not the key to any trader’s success. Being objective is the key; along with developing a state of mind where they are not afraid anymore. …afraid of being wrong (if you do something & enter), losing out or missing money (if you don’t enter), or leaving money on the table (if you get in and it goes in your favor! Think about it... there can be fear/frustration no matter if you win, lose or do nothing!) – Everything changes: When these fears are gone the trader can be present, execute flawlessly.
In kind with random after you enter, once a trade is going in your favor there is no way to know how far it will go. So then there is nothing to miss out on… you are going to do the best you can do. AND get better at it. And the way you get better at it is to become more objective (letting go of your attachment to the outcomes). Letting go of your attachment things become clearer and you see the possibilities of this trade, or… I don’t know the possibilities of this trade and I can scale out. Scaling out is something many won’t do but is psychologically great for building objectivity. As to being a scalper, swing or position trader… it’s a personal thing.
So it’s not the right system, the right trading platform, the right broker… that risk can be eliminated. Instead of this you have to become detached from your results. You hire yourself, and then nothing you do has to do with being right or wrong. Risk is the plan’s responsibility.
