The mind of a trader

[k p]

An interesting thread title but not what I thought it was.....mmmmm
Sounds like a mind trap.....and I wonder.....when there is a plan/method, is there a need to think?.....or just follow the plan/method?.....isn't thinking contradicting directly against the plan/method?

Although I agree with you 100%, the fact of the matter is even the best traders I don't think operate like a machine. I mean if each person keeping a journal was to be doing it right (ie. not thinking and just reacting), there would be no need for discussion. The journal section would simply be a flow chart:

Do you have a trading plan? --> yes.... then execute it
Do you have a trading plan? --> no... then make one
Did you follow the plan? --> yes... then onto the next trade regardless of outcome
Did you follow the plan? --> no... then follow it

From what I have pieced together, each trader has a general idea of how they will enter a trade, what they look for, but within this is a subset of rules, almost intuition or years of experience that is actually where the being profitable part comes alive. Its what tells them when to stay out or to go in big, even though some other conditions are met.

Take for example SLA as DbPhoenix teaches. The entry is easy, its a retracement entry after a change from buyers being in control to sellers, etc. Yet nobody that I can see has made it work. Then of course you start getting into context. So you gotta be careful around areas of congestion, and of course you have to be aware of extremes, like overnight ranges or previous day ranges. He says you have to test your own method for what constitutes an exit (ie. break of a trendline, break of a swing point, a loss of a certain amount of points after entry). So what we have now is a trading plan that seems easy, with a million different set of sub rules that make you want to try to increase your win %. So really, this isn't a trading plan, any more so than saying buy low and sell high.

So now you have to ask.. what is the trading plan? Is the trading plan the RET entry after a trendline is broken and hence a change in trend from buyers in control to sellers? Or is the trading plan actually the years of experience and countless sub rules derived from context. (ie. don't take the RET entry for a long trade if you are within a few points of an overnight high, etc.)

So it seems to me that each person claims to have a trading plan, but I think the actual trading plan is simply a general idea of how a trade is entered and how much they are going to risk or what they will look for to exit. But in terms of when to put this into motion, this is where the magic happens, and this is where the thinking comes into play, or rather, where the experience comes into play. There are subtle nuances that tell the expert trader when to not be looking for a trade even though the general idea being the trade entry criteria might set up.

So I think there is a huge difference between what a trading plan might be, what is written down, and what is actually done. I would bet that if anyone who is profitable wrote out their trading plan and showed me their trades, I could find many instances of trades either being taken or not taken on their chart that don't agree with their plan. If questioned they would of course have good reason.. (ie... pace seemed sluggish) but these would be things not in the trading plan.

My point is that I think only guys designing automated systems have solid trading plans since they have to program each and every step, but most other price actions traders are going with a general idea but lots of intuition and experience, and hence thinking. It just so happens that their thought patterns are much more developed and accurate than mine.

My thought pattern might be "shit... I'm not sure here... price doesn't looking like its strong... lets wait to see what traders do with it and then get in", whereas the expert will be thinking "price doesn't looks strong, here is my best opportunity to short with the least amount of risk.. time to click the sell button and then lets see what happens".

 

[djmartin]

An interesting thread title but not what I thought it was.....mmmmm
Sounds like a mind trap.....and I wonder.....when there is a plan/method, is there a need to think?.....or just follow the plan/method?.....isn't thinking contradicting directly against the plan/method?

I have no idea what your trying to say. This is a journal on how I view and trade the market.

 

[djmartin]

I love this idea. For so long now I've struggled with the idea of "what should I be thinking".

You see price coming down to a previous day low lets say, and you're wondering, is it going to break below, is it going to bounce off and go higher? With each tick, your brain is looking for a direction. Once you have a direction, it seems the best entry is gone because now you're scared to get in because it has moved already so far. So in essence, I've always wondered what are other people thinking as they are watching it unfold. Its one thing to say that a certain price level has been rejected when looking at a hindsight chart, but its another to call it in real time, and to do something about it. (my thinking now is that you have to already be in before you can say with confidence that the level is rejected, and if you're wrong and price continues to drop after your long entry, well that's what a stop loss is for)

So if you are going to do play by play commentary as you see the ticks roll by, this would be most interesting.

In the mean time, can you summarize your trading thus far? Are you still learning? Are you somewhat profitable? Consistently profitable? Or wildly rich and hence you just want to help others?

Introduction video is coming soon. Same of your questions should get answered in the video.

 

[djmartin]

 

[djmartin]

 

[k p]

Quick little summary/comments (the summary is for the guys who perhaps don't get a chance to go through the whole videos as 20 mins is a bit long). I was waiting for the 3rd video, but it seems like you didn't get around it today.

So I see these first 2 videos provides a great background. You quit a job that provided ample income to follow your passion that you just discovered. Your first trade was in 2009 after working with a mentor who said that you needed to SIM for 6 months and have at least 2 profitable months. I like that you said you were taught to trade without indicators.

Then after 3-4 good months with the mentor, he left, and a bunch of you guys in the trading room were left alone. I paid particular attention to the point where you said your mentor was available to you and you could pick up the phone and call him. This reminds me of a post made on here by a gentleman named Monoid who sounds quite knowledgeable and he mentioned that learning to trade can be done in 2 ways. Doing it yourself is the crazy way, and having a mentor is the faster way (the original quote is much more eloquent).

I found it interesting that after the mentor took off, you lost 30-35% in one week that took you 3-4 months make. What was the change? I mean was the mentor telling you to take the trades or were you taking them yourself? It sounds like at the time you had a good idea of what you were doing, and so the impression I got was that you were just doing it day after day, so I don't understand what influence the mentor leaving could have had if it was mostly you doing the trading.

You say then that you wanted to go at it alone, to do your own thing. Why was this when you mentioned that the mentor was consistently profitable? You mentioned something about the trading style... did this not suit your personality? It sounded like the mentor taught you to trade less, more of a swing style perhaps, holding for bigger profits, which I guess is somewhat different than what you got into next.

Then in early 2010 you went to NY to trade prop, and what really helped you there was that they encouraged you to trade a lot (stocks, not futures here), and that this gave you more screen time, "more times at bat", and you'd be doing hundreds of trades a day.

After having to go back home because of family issues, and after having to take on a job as a financial adviser and trying to trade on the side, you were missing the trading and in 2012 became even more focused.

Thanks for outlining your journey so far.

 

[djmartin]

Quick little summary/comments (the summary is for the guys who perhaps don't get a chance to go through the whole videos as 20 mins is a bit long). I was waiting for the 3rd video, but it seems like you didn't get around it today.

So I see these first 2 videos provides a great background. You quit a job that provided ample income to follow your passion that you just discovered. Your first trade was in 2009 after working with a mentor who said that you needed to SIM for 6 months and have at least 2 profitable months. I like that you said you were taught to trade without indicators.

Then after 3-4 good months with the mentor, he left, and a bunch of you guys in the trading room were left alone. I paid particular attention to the point where you said your mentor was available to you and you could pick up the phone and call him. This reminds me of a post made on here by a gentleman named Monoid who sounds quite knowledgeable and he mentioned that learning to trade can be done in 2 ways. Doing it yourself is the crazy way, and having a mentor is the faster way (the original quote is much more eloquent).

I found it interesting that after the mentor took off, you lost 30-35% in one week that took you 3-4 months make. What was the change? I mean was the mentor telling you to take the trades or were you taking them yourself? It sounds like at the time you had a good idea of what you were doing, and so the impression I got was that you were just doing it day after day, so I don't understand what influence the mentor leaving could have had if it was mostly you doing the trading.

You say then that you wanted to go at it alone, to do your own thing. Why was this when you mentioned that the mentor was consistently profitable? You mentioned something about the trading style... did this not suit your personality? It sounded like the mentor taught you to trade less, more of a swing style perhaps, holding for bigger profits, which I guess is somewhat different than what you got into next.

Then in early 2010 you went to NY to trade prop, and what really helped you there was that they encouraged you to trade a lot (stocks, not futures here), and that this gave you more screen time, "more times at bat", and you'd be doing hundreds of trades a day.

After having to go back home because of family issues, and after having to take on a job as a financial adviser and trying to trade on the side, you were missing the trading and in 2012 became even more focused.

Thanks for outlining your journey so far.

Thanks for following, I really appreciate it. I'll answer your questions in a video in a few, all very great questions.

 

[djmartin]

 

[Redneck]

DJM

Watched your 3 vids - it is a journey

So far I applaud your effort..., any additional you post - I will watch


Question;

What is your goal here (not baiting you, just curious as it provides a level set for the readers)


=================

Also a word of caution

Till a trader has experienced a couple of mkt cycles - and traded through them successfully - be real judicious of claiming; "I got this"

Just sayin Sir - nothing more

RN

 

[formica]

The mind of a trader is a very complex machine. It requires a lot of training and devotion to its work, only then he becomes able to trade well.