Most Difficult Trade
- Thread starter NoDoji
- Start date
I'll bite, please give me 1 set up for active trading with an edge sharpness rating between, sharp and very sharp. Specifics please, you said "set up", not general strategy. Very excited to hear what you have to say. And thank you for sharing as when I start trading your set ups, it will dilute your own profitablility, you are so selfless. The truth is, If I were you I wouldnt give away any, yet you are willing to give away 10. You are an amazing person. I never expected anyone to be this giving on an anonymous forum, thank you!
Greetings NoDoji:
Iâm no âmarket psychologistâ, but after 20 plus years in trading, I have spent more time examining my own âgrey matterâ than the average person. And as such, I have worked out for myself, some of the very same problems as outlined on your excellent thread. My intent in writing this slightly long missive, is to describe the thinking that has worked for me, in the hope that maybe it can do the same for someone else on your thread. Or at least, it may perhaps stimulate thoughts, ideas, or solutions. Again, I am no expert. But this state of mind works for me. Sometimes in the course of active day-to-day engagement in the market, our precise logical and reasoning abilities can get in the way of seeing what is obvious to others. And for the sake of this discussion, I believe this is one of those instances.
To me, your thread strikes at the very core of what trading is really about. Pardon me for sounding cliché, but trading really is a game that is played in the mind of each individual trader. When you honestly stop to think about it, what else could it be. Essentially, the market just transmits ticks. The game being played, and the meaning assigned to those ticks, resides in the head of each individual trader. Its not you against the market, its just you reflecting who you are in the market. Conscious or unwittingly, good, bad, or indifferent. You can only trade what you âknowâ, and what you âbelieveâ. That is the sum total of what is inside of you. So therefore, you donât honestly see the market as it really is,â¦but as you really are. Once understood, the implications of this simple truth can be absolutely profound.
For example, lets take a look at a hypothetical trader plagued with the often-recurring problem of inconsistency in executing his/her trading methodology. And lets say that this trader believes that this inconsistency is due to the fact that the dollar risk of their method keeps changing in the market with each signal. And this constantly changing variable causes them to âthinkâ while âexecutingâ. And since this risk frequently moves outside their âcomfort zoneâ, this also causes them to sometimes mentally hesitate or freeze when they see their signal, further eroding their ideal state of mind. These things wreak havoc on their account balance, trading mindset, and consistency. Lets also say, that this trader firmly believes that their mental makeup, or psychology, needs to be somehow âadjustedâ in order to âgrowâ beyond this recurring cycle of frustration.
From my perspective, I do not believe that the trader in this situation has a psychological problem with maintaining consistency. As I see it, they have a consistency problem that is affecting their psychology. I see that they are allowing what is basically a doable technical risk control problem, to stand in the way of their maintaining the consistency necessary for their continued success. I do believe that they have somehow failed to understand the concept that:
âConsistency is a State of Mindâ.
Consistency is a way of thinking. You donât get consistency from the market! You bring your consistency to the market! You do this as a natural expression of who you are. YOU ARE CONSISTENT. In my mind, the above trader only needs to create a consistent means, to build around this âcomfort zoneâ problem, so that they can get back to maintaining consistency in the market. As Douglas says: âThe hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible for creating itâ. You see,â¦â¦..it has to come from you!
When the trader truly âownsâ this concept, the struggle in the market will naturally cease. You will realize that you were the cause of your own market dissatisfaction. And this was engendered by the way you were thinking, and how you were thinking. You created your own unfavorable market experience by your own inconsistent thinking and actions. Trading is a game that each individual trader plays in his/her own head. Understanding this, you will no longer be attending to âsymptomsâ on the outside, while at the same time, harboring the âcauseâ on the inside. You will be congruent in intent and in deed.
What can this thinking do for you? Let me provide you with a quick practical example of integrating this concept. Now I am not advocating or promoting this trading style for anyone. You need to create your own. Itâs just what I do. I use Constant Range Bars and price action in my trading. And since I chose the fixed range of the bar, I can thereby align the bar so as to fit my personal âcomfort zone riskâ. In doing so, I have pre-built âcomfort zoneâ into my pattern signal. As a result, I already know how much Iâm likely risking on any given signal setup. Consequently, I am comfortable with consistently taking every signal that meets my criteria. More importantly, my emotions stay in check.
I believe that for the most part, all it really takes is to understand that; âConsistency really is a State of Mindâ that anyone can create for themselves. Then all you need is a genuine desire to change. Believe me, you have no idea how bad I wanted to change. But thatâs another story (smile). I think the results will be the same for anyone else who truly and honestly âdesires to changeâ. And the best part is; this change can literally take place after you finish reading this message. Fully embracing and understand this concept, resolve to be consistent. Find a way to represent your data to align your patterns and signals within your âcomfort zoneâ. This will free your mind to flawlessly execute as the Casino,â¦â¦â¦..Consistently.
Just my opinion
KDASFTG
BTW NoDoij - I must admit, I enjoy reading just about everything you pen. You truly write with the clarity and precision of an Ayn Rand. And you very much remind me of her fictional character; Dagny Taggert, from her book; Atlas Shrugged. If you havenât read the book, you really need to go visit with Dagny. I believe youâll love everything about herâ¦..Excellent Thread!
Iâm no âmarket psychologistâ, but after 20 plus years in trading, I have spent more time examining my own âgrey matterâ than the average person. And as such, I have worked out for myself, some of the very same problems as outlined on your excellent thread. My intent in writing this slightly long missive, is to describe the thinking that has worked for me, in the hope that maybe it can do the same for someone else on your thread. Or at least, it may perhaps stimulate thoughts, ideas, or solutions. Again, I am no expert. But this state of mind works for me. Sometimes in the course of active day-to-day engagement in the market, our precise logical and reasoning abilities can get in the way of seeing what is obvious to others. And for the sake of this discussion, I believe this is one of those instances.
To me, your thread strikes at the very core of what trading is really about. Pardon me for sounding cliché, but trading really is a game that is played in the mind of each individual trader. When you honestly stop to think about it, what else could it be. Essentially, the market just transmits ticks. The game being played, and the meaning assigned to those ticks, resides in the head of each individual trader. Its not you against the market, its just you reflecting who you are in the market. Conscious or unwittingly, good, bad, or indifferent. You can only trade what you âknowâ, and what you âbelieveâ. That is the sum total of what is inside of you. So therefore, you donât honestly see the market as it really is,â¦but as you really are. Once understood, the implications of this simple truth can be absolutely profound.
For example, lets take a look at a hypothetical trader plagued with the often-recurring problem of inconsistency in executing his/her trading methodology. And lets say that this trader believes that this inconsistency is due to the fact that the dollar risk of their method keeps changing in the market with each signal. And this constantly changing variable causes them to âthinkâ while âexecutingâ. And since this risk frequently moves outside their âcomfort zoneâ, this also causes them to sometimes mentally hesitate or freeze when they see their signal, further eroding their ideal state of mind. These things wreak havoc on their account balance, trading mindset, and consistency. Lets also say, that this trader firmly believes that their mental makeup, or psychology, needs to be somehow âadjustedâ in order to âgrowâ beyond this recurring cycle of frustration.
From my perspective, I do not believe that the trader in this situation has a psychological problem with maintaining consistency. As I see it, they have a consistency problem that is affecting their psychology. I see that they are allowing what is basically a doable technical risk control problem, to stand in the way of their maintaining the consistency necessary for their continued success. I do believe that they have somehow failed to understand the concept that:
âConsistency is a State of Mindâ.
Consistency is a way of thinking. You donât get consistency from the market! You bring your consistency to the market! You do this as a natural expression of who you are. YOU ARE CONSISTENT. In my mind, the above trader only needs to create a consistent means, to build around this âcomfort zoneâ problem, so that they can get back to maintaining consistency in the market. As Douglas says: âThe hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible for creating itâ. You see,â¦â¦..it has to come from you!
When the trader truly âownsâ this concept, the struggle in the market will naturally cease. You will realize that you were the cause of your own market dissatisfaction. And this was engendered by the way you were thinking, and how you were thinking. You created your own unfavorable market experience by your own inconsistent thinking and actions. Trading is a game that each individual trader plays in his/her own head. Understanding this, you will no longer be attending to âsymptomsâ on the outside, while at the same time, harboring the âcauseâ on the inside. You will be congruent in intent and in deed.
What can this thinking do for you? Let me provide you with a quick practical example of integrating this concept. Now I am not advocating or promoting this trading style for anyone. You need to create your own. Itâs just what I do. I use Constant Range Bars and price action in my trading. And since I chose the fixed range of the bar, I can thereby align the bar so as to fit my personal âcomfort zone riskâ. In doing so, I have pre-built âcomfort zoneâ into my pattern signal. As a result, I already know how much Iâm likely risking on any given signal setup. Consequently, I am comfortable with consistently taking every signal that meets my criteria. More importantly, my emotions stay in check.
I believe that for the most part, all it really takes is to understand that; âConsistency really is a State of Mindâ that anyone can create for themselves. Then all you need is a genuine desire to change. Believe me, you have no idea how bad I wanted to change. But thatâs another story (smile). I think the results will be the same for anyone else who truly and honestly âdesires to changeâ. And the best part is; this change can literally take place after you finish reading this message. Fully embracing and understand this concept, resolve to be consistent. Find a way to represent your data to align your patterns and signals within your âcomfort zoneâ. This will free your mind to flawlessly execute as the Casino,â¦â¦â¦..Consistently.
Just my opinion
KDASFTG
BTW NoDoij - I must admit, I enjoy reading just about everything you pen. You truly write with the clarity and precision of an Ayn Rand. And you very much remind me of her fictional character; Dagny Taggert, from her book; Atlas Shrugged. If you havenât read the book, you really need to go visit with Dagny. I believe youâll love everything about herâ¦..Excellent Thread!
Thanks for your kind words and excellent post!
Here's something else to chew on:
I found that my comfort zone was centered around price patterns that allowed me to feel I had little at risk (small bars at extremes that allowed me to have tight stops, for example). However, I found that many of the most uncomfortable trade setups are the most profitable, and have been working hard over the months to take the uncomfortable trades.
Trend-following patterns are not easy to stomach - buying while price has been falling, or buying a new high when it seems price has gone way too high, or buying when a down channel retrace forms a bull flag that is sucking in shorts because price looks so weak. These setups usually lead to the best trades and it takes a long time to finally catch on.
Greeting NoDoji,
Hey,â¦.Iâm done âchewingâ on your last missive. And to be honest with you, it didnât work for me (smile).
My reasoning; I believe that if a trade consistently feels uncomfortable and is outside your âcomfort zoneâ, then it is very simply NOT YOUR TRADE. I think you are being drawn and compelled to execute these âuncomfortable setupsâ just as a moth is drawn into a flame. I think your fierce determination to succeed, coupled with your competitive drive and nature, is possibly tapping you into an unwitting non-constructive state of mind. I feel you are playing with fire, and youâre becoming ever more fascinated with the flame and the heat.
I believe that what you have described in your missive is compulsive thinking! Your words tell me that you are literally compelled to take these trades. And compulsion of any kind is not the ideal basis, or state of mind for a trade. In the long run, this type of behavior will not produce the kind of results I believe you seek. Ask yourself, are these trades currently producing the desired results for you right now? If not,â¦..what are they really producing?
By your words and market actions, you are telling me that you are perfectly willing to sacrifice consistency, in addition to your ideal state of mind, just to be able to take these trades. And you are also willing to risk your mental equilibrium, to give in to the irresistible urge, to attempt to consistently execute these trades. Trades that are, in your own words, ânot easy to stomachâ. Can you not see the potential danger here?
In your pursuit of greater profitability in taking these âuncomfortable trade setupsâ, I believe that you have neglected to take into consideration, one of the most fundamental tenets of Douglas. And that is:
âA trader with a mediocre method, who is consistent, will consistently produce better results, then a trader with a superior method/setup, who lacks consistencyâ.
You are very perceptive. And if I have missed something, or have not taken something into consideration, I am not afraid to learn. I want to know, because I too came to this forum to expand my thinking and grow.
So,â¦let me know what you think?
KDASFTG
Hey,â¦.Iâm done âchewingâ on your last missive. And to be honest with you, it didnât work for me (smile).
My reasoning; I believe that if a trade consistently feels uncomfortable and is outside your âcomfort zoneâ, then it is very simply NOT YOUR TRADE. I think you are being drawn and compelled to execute these âuncomfortable setupsâ just as a moth is drawn into a flame. I think your fierce determination to succeed, coupled with your competitive drive and nature, is possibly tapping you into an unwitting non-constructive state of mind. I feel you are playing with fire, and youâre becoming ever more fascinated with the flame and the heat.
I believe that what you have described in your missive is compulsive thinking! Your words tell me that you are literally compelled to take these trades. And compulsion of any kind is not the ideal basis, or state of mind for a trade. In the long run, this type of behavior will not produce the kind of results I believe you seek. Ask yourself, are these trades currently producing the desired results for you right now? If not,â¦..what are they really producing?
By your words and market actions, you are telling me that you are perfectly willing to sacrifice consistency, in addition to your ideal state of mind, just to be able to take these trades. And you are also willing to risk your mental equilibrium, to give in to the irresistible urge, to attempt to consistently execute these trades. Trades that are, in your own words, ânot easy to stomachâ. Can you not see the potential danger here?
In your pursuit of greater profitability in taking these âuncomfortable trade setupsâ, I believe that you have neglected to take into consideration, one of the most fundamental tenets of Douglas. And that is:
âA trader with a mediocre method, who is consistent, will consistently produce better results, then a trader with a superior method/setup, who lacks consistencyâ.
You are very perceptive. And if I have missed something, or have not taken something into consideration, I am not afraid to learn. I want to know, because I too came to this forum to expand my thinking and grow.
So,â¦let me know what you think?
KDASFTG
I agree with Douglas totally on that one. I taught my trading method to someone who simply couldn't trade it. It wasn't comfortable for him and he didn't trade all the setups and didn't manage the ones he traded according to the rules.
I realized, though, that I had to learn to trust certain setups and methods if I was going to generate consistent profits, and I did post-market analysis in great detail to prove to myself that it works consistently. After enough uncomfortable trading, it gradually became comfortable and eventually became totally stress-free.
what is consistency, I do not understand what you guys are talking about?
you mean a mecahnical trading strategy? that will create consistent loss if a fixed dollar stop loss,but not consistent profit or if your method is how much enough (a fixed R/R ratio, you will get out of many big trend moves prematurely) , then maybe consistent profit.
it is impossible to gain consistency, trading is not a regualr job,
your earning is consistent,just do the multiply math.
or your psychology consistency? it is hard to maintain a consistent psychology.
what I will say is balance, not consistency since consistency does not exist.
balance means: trade under your means. balance your methods: some are aggressive such as buy high and sell higher, some are more defensive with limit order, such as sell rally exhustion and buy pullback,.....every meothod has its own merits. balance your size or stop loss accurancy: when in larger size, tight stop loss; when in samll size, widen stop loss, trade in major direction....
balance is easy said difficult to do, but it is doable. not like consistency.
you mean a mecahnical trading strategy? that will create consistent loss if a fixed dollar stop loss,but not consistent profit or if your method is how much enough (a fixed R/R ratio, you will get out of many big trend moves prematurely) , then maybe consistent profit.
it is impossible to gain consistency, trading is not a regualr job,
your earning is consistent,just do the multiply math.
or your psychology consistency? it is hard to maintain a consistent psychology.
what I will say is balance, not consistency since consistency does not exist.
balance means: trade under your means. balance your methods: some are aggressive such as buy high and sell higher, some are more defensive with limit order, such as sell rally exhustion and buy pullback,.....every meothod has its own merits. balance your size or stop loss accurancy: when in larger size, tight stop loss; when in samll size, widen stop loss, trade in major direction....
balance is easy said difficult to do, but it is doable. not like consistency.
I agree 100% I believe this happened to me 2 Fridays ago trading oil. I saw a setups but next thing I know my entry wouldn't have been optimal. The opposite is also true, I trade often between 3 and 6 am est and I see super sweet setups but with thin markets things seem to go to crap for no reason.