You thinking way to much my friend.
First thank you, and Yes, you are right.
Alpha asked me to explain something I said a while back here on J’s thread and I started posting my thoughts-in-process which I usually don’t do. Some people seemed to resonate with it, but this kind of wandering and wordy approach is certainly not for everyone. So I’m working out some things in public which is a little weird for me.
But the reason I’m going back around to this level of stuff is that my niece asked me to teach her to trade back at the start of the year. I started wondering about how I could have grasped some things earlier, been taught better. Once I thought of a curriculum for her I actually stopped trading live for a few weeks and put myself through it, thinking about where did I get more on track, and where did I get more off track.
Having received a paycheck for teaching for a few years, I knew my trading would improve by sorting through how to teach it – and it certainly has.
I’m putting this on J’s thread because his willingness and ability to describe his experiences as a trader, along with RN’s input, has helped me a lot to understand trading and ‘getting it’ better. I hope my POV is helpful to him. It is an interactive thing.
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I can't test being objective, I need black and white. ....
And What is RISK? It is different for everyone.... What is it for you?
This is that objectivity versus analysis conundrum.
Of course... I am trained as a scientist. And in one of the detective sciences, which is different from other kinds of science. Being objective has a different tradition here.
One professor presented our grad school class with a real event. He was hired to figure out some toxic run-off thing for some agricultural field. So he presented the problem to our class. Each of us could only think in terms of our primary research… and came up with a way to use the tools of our trade… if you have a hammer any problem that comes along you hit it. I was doing electrophoresis right then so came up with a way to solve the problem doing that. Each member of the class came up with ways that would take days of intense lab work and cost $$.
Where is objectivity? What the professor actually did was go to the pet store, buy a $1 gold fish, he put it in a cage in a ditch with the run-off water. It was still alive after a week: that was all they needed to know.
Objectivity is important.
Analysis is also.
The two interact in a particular way for traders.
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You can’t trade without doing the analysis before and after you trade. It’s a process. It is essential. As you have observed most people don't understand the process or do it.
But Mark Douglas says that none of the traders who came to him… either because they were failing or just wanted to get better… could do it through analysis per se. They had to become more objective in their trading.
Once you do your analysis, you have to somehow trade and apply it in an objective way.
Once the graduate students had all the tools and analytical part down… they still had to apply what they knew in the most practical objective way possible. The good ones as they moved out into the real world became more objective and you can see their progress. The other students eventually were out with tweezers mowing the lawn…
There is something about trading where you have to have done all the analytical for yourself so you know it at a deep level, but then turn the analytical off once you place your order & take a position. As RN has said no other experience in life requires of you what trading does.
Eventually you hire yourself to do the job and don’t analyze it so much while doing it, just do the protocol the prior analysis says to do.
And then you live the risk.
And then you live the risk?
There it is.
What is risk to me? As a trader I live it.
I live it by being objective, which means not trying to force it in any way. Trade what you see, not what you think. As a trader, the more I analyze the risk while in it, the less I’m in the present. The less I’m present, the less I’m able to just do the protocols. I think too much. Risk becomes unknowable.
I just put the fish in the ditch and watch it.
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NoD’s example of the rats beating out the grad students in the maze is the same point. The rats were objective and learned the larger percent of the time the food was on the left. They stopped analyzing at that point and just lived it.
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The new part for me in the line of recent thought
My plan is based on analysis. But I’m going through it and thinking about each step I put in it and asking myself if that step is allowing me to be more objective when I trade or making me more analytical when I trade? I used to think of my plan as existing in terms of analysis.
The other big thing for me,
I think that concept also of trading in such a way that risk is undefinable (because I’m not trading consistently, trading my plan)… Risk becomes this misty ghost-like thing that can come around and bite my butt when I don’t see it coming. Undefinable risk is
scary as a trader. No wonder trading engenders fear and confusion. It should.
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Further answering Handle’s question, Yes, risk has to become black and white, firm and real… and then I can live it… and when risk is real, it is not scary, it is actually interesting and even fun. “Satisfying” might be a word for it. What I put into my plan, and how I put it in my plan has a lot to do with risk being real so that I can embrace it; live it.
My thoughts have come to a kind of logical conclusion so it is a good time to do more trading and less thinking!
) is hoping to get out the markets.