Tips on the Mental Game

Quote from BobbiDigital:

Areas with little s/r, such as daily highs/lows or prior day highs/lows. I recall you speaking of channels/trendlines/consolidation as one and the same. Then patterns = agreed upon range for price. If it breaks we don't know how far it will go. Is there anyway to improve on observing this before it occurs or how ugly it could get - reward. Certainly not a be all, got that.
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You've now went from talking about the "mental aspect" of trading into talking about the "price action" you're trading. Simply, you started in the psychology section and have now gone into the chart (TA) section while the thread is in the psychology section. :cool:

I highly recommend you should start a different thread about the "price action" of trading and ensure there's charts being posted because without those charts...you're just going to get lost in the woods with all the generic words being thrown around about price action especially if you don't realize your having discussions with someone that trades different trading instruments, different trading style and and/or different types of price action.

Quote from BobbiDigital:

...Perhaps some kind of mental checklist throughout the day to make sure I am still thinking the same way?...

BD
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You should only be trading with a "trading plan" that includes all information involving your trade signals (entry to exit), money management rules, position size management rules, at home/work trading environment, discipline management and many other things that may or may not be directly related to trading (e.g. rest/relaxation periods). Also, don't make the classic newbie mistake in thinking that if you fix your trade signals...it will fix your mental game. In fact, there are many trade journals here about such and every one of them...the trader failed miserably because he/she continue believing that if they fix/change/tweak their trade signals...it will somehow magically fix their mental game.

My point, a good "mental game" often starts BEFORE your first trade of the day. If you don't have that trading plan in place prior to your first trade of the day...you shouldn't be trading at all in an effort you'll figure it out "while" trading.
 
Quote from BobbiDigital:

RN -

How do you feel about the following logic when price approaches a defined level of support/resistance:


S/R holds by 1 + cent(s) - dominant trend/direction continues

S/R hit exactly or tests 1 cent below - price may continue in direction or flatten out

S/R broke by 2 + cent(s) - Price exploration. Might as well flip a coin to decide on direction

I don't think of this as cues to enter or exit, rather basic market dynamics so if it's flawed I'm in bad shape.

:confused:
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BD

I don’t think your thinking is flawed, but I do think it is overly simplistic Sir…

I also think you’re attempting to make price “predictable” – it isn’t

Price can be anticipatable, but never predictable…



Btw – your scenario leaves a lot I would need to assume if I were to make any kind of intelligent response….

Can’t over emphasis the important of being specific (and saying 1 cent / 2 cents over/ under/ around S/R does not constitute specific)

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How to derive the specifics I’m referring to


How do you define the dominant trend (move) / is it also the trend (move) you’re trading (iow what’s the context)

How did price reach this S/R… What is price doing now (meaning reading price is necessary to determine both)

Where is price on higher TFs… / and on lower

What’s the volume saying

How do you define S/R held and/or broke

Lot of “key” unknowns Sir…. That would need to be know before I could say what I think about your logic… or what price may do

Btw; Even then what I “think” about what price may do – would easily change if/ as PA unfolded


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In my experience – it is very dangerous…, and highly unprofitable – to ever make, or try to make – generic/ blanket – observations/ assumptions with regard to anything trading related (especially true when we start assuming price will do this or that…, given this or that)


Our most important asset is the ability to adapt as PA unfolds…

Along with, and supporting this asset – is the necessity to build specific context around price….,the ability to read what price did to get where it is… the ability to read what price is presently doing – the willingness to go with price as it does what it does next (assuming it meets our set up criteria) – no matter how we feel / think about it


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On a separate, but similar note – those S/Rs make for darn good low risk trades


RN
 
Rallies need sellers and Sell-offs need buyers. Market corrections and price consolidations are absolutely required to continue a trend. A trend is either going to continue or fail off.

My point is that a trader making personal rationalizations against a dominant and apparent market price action is stupidity defined. Once you get over that notion and set aside the narcissism and ego and accept that the market could freaking care less about what my opinion is, the worm will turn for you. Let the deep pockets turn the market - take your little piece of heavenly pie out of it, cash out, and await for the next opportunity.

I have had the good fortune to both observe live and take on as clients some very talented traders. My observation is that most of them are consummate ambush predators, and NOT TIMERS.

Once a trader can accept and trade the price action he observes before him, and he properly receives the apparent message the market is telling him about what it values and how much it is worth, a cathartic moment happens. Price action interpretation without bias or opinionated filtering is the shortest route to consistency. Opinions are not consistent and repeatable. Nobody can apply discretion consistently over the long haul.
 
RN,

I attempt to trade the same basic entries the first half hour or so on 1 min chart switching to 5 min when there's enough formation to look at. I look back at hourly and daily for S/R, to see if price is lingering near any 'key' levels. For instance, if a stock is up on the day consolidating at its high. That's where my analysis gets murky.

Perhaps price tests and fails the shortest TF it will go back and test the longer TF level (prior), repeat, etc..I cannot find where and when price is most likely to move -

sometimes price moving towards noise is good, as it may traverse the whole range and then some (stops), but sometimes it bounces right off. Sometimes no resistance overhead is good, weekly, monthly, 52 week highs, but sometimes it is just fizzing out.

Do you like to see S/R overhead (noise/high volume, key levels=>stops) en route to profit targets or prefer a prior break of S/R and price potentially just taking a breather before continuing the trend?
 
To me, price is trending up or down on all different TF's. And the key is catching it at the beginning or if it fails and reverses.

To somewhat answer my own question it makes sense fading low volume consolidation and being more willing to go with consolidation within noisy high volume areas. Ultimately we are trying to detect who is the aggressor and why, buyers or sellers.
 
I think if you set a daily loss limit for yourself that should help you stay consistent. But within that daily loss limit also lies discipline. If you lack discipline as a trader your kind of screwed with the longevity to try to stay in these market with the account principle you first started with. You would have to keep loading up your account for of the losses you incur.

I definitely think setting a daily loss limit can be a key factor in staying focused and being consistent.

Quote from BobbiDigital:

Can anyone share ways they stay consistent in their approach?

I feel like a different person after the market opens and I begin processing tons of information. It's like one big rat race and discipline/patience may go out the window (usually if I'm not having a good day then things slow down).

Perhaps some kind of mental checklist throughout the day to make sure I am still thinking the same way?

Or some kind of rating I give to each trade BEFORE I make it and then after it is completed as a better way to hold myself accountable. Any thoughts are greatly appreciated.

BD
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In "Enhancing Trader Performance", Brett N. Steenbarger argues that most psychological problems in trading are rooted in insufficient preparation - particularly, the lack of a perfectly identified edge & trading method for it, also the lack of practice at trading that method in all kind of market conditions.

I have found for myself that it was true :)

What's your edge?
What's your trading method for it?
How much practice do you have on this method? Practice should start with setups & corresponding trades identified on static charts (several hundred of them ... anything less than 500 and you are fooling yourself), then setups identified & traded using market replay (how about at least 100, with pretty much the same win% as seen on static charts), then on real-time market but simulated account, and finally live in your account.

Doing your homework will do more for your psychology than anything else at this stage in your development.
 
I have this printed out and sitting next to my Trading PC.. Great stuff thanks Redneck.




Quote from Redneck:

Simple 3 step process….

Step 1 – Ask yourself this question

Will today;

Be different

or

More of the same

Step 2 – Answer

Step 3 – Trade like it


Interesting little phenomena occurs after a while – the answer in step 2 reverses

Obviously step 3 never does

RN
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btw schizophrenia has no place in trading - fwiw
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