Quote from jack hershey:
Your post is interesting.
In trading, the spectrum of successful methods is quite broad. The spectrum would use criteria for positioning the approaches along the spectrum.
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Finite math appears to the observer and the beginner. It is not reasonable to ask why these observations and how they are the context of the of the markets can be laid aside. It is a "why" so it is not reasonable to ask.
Your reply was equally more stimulating.
I use the 4 Agreements model based on the Toltec wisdom of Don Miguel Ruiz. I recommend the audio version, so that you can listen to it anytime in the car, mp3 player, etc. We tend to lay down printed matter for a long time and not read it. They are:
1) Be impeccable with your word - You never use the power of the word against yourself when writing your life story. The word, which are essentially symbols that we use as a means of communication. You will use this word to describe market action/reaction, your trading plan, your views on other traders, etc. You create a whole trading [virtual] reality for yourself based on your word.
When you use the word against yourself, this eventually leads to self-destruction and death. In trading terms, this is account wipeout or unplanned drawdown. We mastered this type of self rejection mainly as children when we accumulated fear of money when were taught the poverty/scarcity model of how society works. [i don't want to elaborate too much on that, but what's important is the awareness of this sickness]
2) Don't Take Anything Personally - Whatever happens in the markets has nothing to do with you and everything to do with the market. When you take anything personally, you make several assumptions, one of which is that the market somehow targeted your stop loss specifically. Or perhaps you the market somehow owed you x amount of pips. Taking things personally usually comes from a poverty mindset, or a scarcity model that there is not enough to go around for everyone. So when you don't get what you thought you should have, you want to get revenge and get even. Only to find out that you will misuse the word even more, resulting in further losses.
By not taking anything personally, it frees you from being stuck on a past trade, and you can move on to the next opportunity which is happening right now.
3) Don't Make Assumptions - The human mind has a tendency to want to justify everything it perceives. When we don't know something, we make assumptions to fulfill our desire to explain everything. The main problem with assumptions is that most assumptions are not true at all. We make assumptions about how the market should be, not what is happening now in front of our eyes. Perhaps we assume that a trend that was true an hour ago will remain true. And then it begins a snowball effect. Because then we make the assumption that other people agree with our assumptions or have made similar assumptions. So we defend our assumptions and try to make other people (including the market) WRONG. We make assumptions, leading to misunderstandings, which in turn makes us take it personally and create a whole drama that gets nothing accomplished.
One powerful method we can use to stop the mind from making assumptions is to
ask questions that may shed some light on the truth. Having the courage to ask questions does not guarantee that we will get the answer we want to hear, but it's a start. What fits each individuals mind may be different, but something as simple as "What is something that you [market] do all the time?
From my point of view, there's no need to make assumptions in financial markets. Unlike most businesses, including gambling like blackjack or poker, you have many transparent tools at your disposal: A real-time price feed, historical data, and even demo accounts for you to test your strategies. You can also create a spreadsheet to run some numbers as you practice.
The entire war of control that exists in our relationships with the markets, our brokers, personal relationships, all the way up to relationships between entire countries is rooted in making assumptions, and then taking them personally.
4) Always Do Your Best - Awareness is nothing but a concept without taking action. When you take action, there is no room anymore for assumptions because now you see in real-time what is happening, not just what you wanted to see in your mind. Doing your best keeps you busy towards the end goal and prevents self-judgements. If you do less than your best, you judge yourself as guilty and will always wish you could have done more. At the same time, if you over-do, then you will be exhausted, and then it takes you longer to accomplish the original goal. All you can do is your best at any given moment. So why take it personally? But there is always a next moment, to analyze your results honestly, to ask questions about uncertainties, and tweak until you get the desired results. There's no time to blame yourself or others, because your are continuously taking advantage of the next opportunity that comes along. This is the practice that makes the master.
In a way automated trading attempts to silence the mind from making assumptions by having a robot trade the same strategy consistently without intervention. On the flip side, the strategy implemented in the automated algorithm still has to be based on fundamental truths in order to be valid. Or put another way, it must have a basis in reality and still be profitable for it to remain automated. But by consistently making the same trades, even if they are incorrect can allow you to easily spot deficiencies and correct them.
Emotions are not bad. I know I will catch flack for this, but emotions in and of themselves are not what ruin traders. Your gut feeling or your heart telling you to stay or get out is quite objective. But when your mind (fear) makes you second, third, twenty-th guess your decision, that is what drives you to the mad house.
The goal is to increase your awareness to the point where you never use the word against yourself. Without awareness, there is not much you can do. You'll just keep making losing trades, wiping out, and usually blame the market or yourself for losing again. If we recover our awareness, then we can choose a new trading plan, even if that means stop trading altogether.
"Coincidentally", the OODA model was popularized by a USAF retired officer. The 4 agreements was awarded its book cover emblem on a USAF challenge coin.
From a mathematical and physics perspective, beyond the arithmetic i've incorporated Gabriel Oyibo's
Grand Unified Theorem (GAGUT) into my thinking as well. He was able to unify all of the forces of the universe, something Einstein was searching for but died before finding it.
Between the toltec wisdom and Ancient African wisdom of Oyibo, I have more than enough tools to switch readily from the realm of relativity, where so many people find themselves seeming hopelessly "stuck" to the absolute realm, where we mainly take an observatory stance.
To summarize,
4 agreements in action > Increase/Master Awareness > Recover power to choose/re-create our present reality > Pick the best course of action that suits the present situation [Mastery of Transformation] > 4 agreements in action, etc several cycles until you love yourself so much that the trades that are benefiting you far outweigh the losing trades.
Alternatively, you may have discovered trading is not for you. [Mastery of Love]
I don't know if the above would be categorized as the "common characteristics" or just another systematic approach (when combined with my previous posts). From my point of view, i use those steps above and they never steer me in the wrong direction. Particularly the self-judgement that occurs when you have losing trades or account wipeout on a smaller account. Especially when the rent is due.
OPPORTUNITYISNOWHERE
Wow, I have Jack Hershey complementing me. Maybe ProfLogic will find his way here also.
But regardless of the praise or criticisms, we must all know own own truths and intend a new beginning each trade cycle. Sorry if I was so long winded. But I wasn't going to throw away the text i typed after the fact. I spent all day typing it, and if it came to my mind
