Btw, does your screen name MaxMin have any meaning to it? Maximize profits, Minimize loss ? 
-Fast
-Fast
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Winning in the EMinis
- Thread starter MaxMin
- Start date
As was mentioned in the post on perfection, trading is anything but a perfect science. Trading is a messy profession. Those who aren't willing to get their hands dirty need not apply. Imagine that you are a salesman doing cold calls. Now imagine that instead of the worst thing that could happen being rejection, you actually had a chance to lose money if you said the wrong things on the phone. That's the kind of pressure we deal with every day. Each new trade could turn into a loser at any point. We never know which trade will work out and which trade will go bust until we take that leap of faith and put the trade on. At this point it all comes down to trade management.
When the trade is open, the analysis for the setup becomes moot. The thing that should capture our attention should be how the position is acting. We have two jobs. As FastTrader so astutely observed, those jobs are to Maximize profits and to Minimize losses. Each of us should have a risk/reward profile for each of our trade setups. We know how far against us the position can typically go, while still working out as a profit. This amount should be smaller than our designated initial stop. We also know how far in our favor the position will typically go for a typical profitable exit. This amount can be used to take partial profits.
These two concepts, when fitted with the matching entry signal, allow us to maximize our profits and minimize our losses. The concept of maximizing profits is all about self-preservation, both of money and mental health. I have to admit that some of my most psychologically devastating losses have started out as profits. Some of these profits have been rather sizeable. Whether it was greed, or fear or pride or some combination of the three, the result was the same: being stuck - unable to act because I was unwilling to let the memory of that open profit go, and embrace the open profit that was before me. And as time passed, I lost the ability to even capture an open profit because the position turned into an open loss of gradually increasing size. The longer I remained in denial, the longer I held onto that memory of a profit that could have been, should have been, would have been. The longer I held onto that position, the worse the monetary damage became and the more out of touch with reality I became, and the more stuck I became.
This is exactly the opposite state of mind that is needed to profitably trade in the EMinis. I don't think I'm the only one who has experienced this losing mindset. In fact, I would wager that everyone who is reading this now can relate to my experience. The thing to do is to recognize the pattern, and to break the pattern by changing the behavior.
The first problem that occurred was that I became married to a position - or to a particular open profit. I became attached to that position. I loved that position. I gloried in that position. My ego exulted in the open profit. I was having waking visions of how wonderful it would be when my ultimate profit target was reached, which was always 2 points further than where the market was currently trading. And that attachment led to denial of what was actually going on (the position going against me). That attachment distracted me from my job as market observer. If I were able to take a step back and quickly evaluate what was actually happening like a third party in an objective manner, it would quickly become clear that an exit and possibly even a reversal in course was needed.
Continued....
When the trade is open, the analysis for the setup becomes moot. The thing that should capture our attention should be how the position is acting. We have two jobs. As FastTrader so astutely observed, those jobs are to Maximize profits and to Minimize losses. Each of us should have a risk/reward profile for each of our trade setups. We know how far against us the position can typically go, while still working out as a profit. This amount should be smaller than our designated initial stop. We also know how far in our favor the position will typically go for a typical profitable exit. This amount can be used to take partial profits.
These two concepts, when fitted with the matching entry signal, allow us to maximize our profits and minimize our losses. The concept of maximizing profits is all about self-preservation, both of money and mental health. I have to admit that some of my most psychologically devastating losses have started out as profits. Some of these profits have been rather sizeable. Whether it was greed, or fear or pride or some combination of the three, the result was the same: being stuck - unable to act because I was unwilling to let the memory of that open profit go, and embrace the open profit that was before me. And as time passed, I lost the ability to even capture an open profit because the position turned into an open loss of gradually increasing size. The longer I remained in denial, the longer I held onto that memory of a profit that could have been, should have been, would have been. The longer I held onto that position, the worse the monetary damage became and the more out of touch with reality I became, and the more stuck I became.
This is exactly the opposite state of mind that is needed to profitably trade in the EMinis. I don't think I'm the only one who has experienced this losing mindset. In fact, I would wager that everyone who is reading this now can relate to my experience. The thing to do is to recognize the pattern, and to break the pattern by changing the behavior.
The first problem that occurred was that I became married to a position - or to a particular open profit. I became attached to that position. I loved that position. I gloried in that position. My ego exulted in the open profit. I was having waking visions of how wonderful it would be when my ultimate profit target was reached, which was always 2 points further than where the market was currently trading. And that attachment led to denial of what was actually going on (the position going against me). That attachment distracted me from my job as market observer. If I were able to take a step back and quickly evaluate what was actually happening like a third party in an objective manner, it would quickly become clear that an exit and possibly even a reversal in course was needed.
Continued....
So it is clear that attachment to positions is exactly the wrong mindset. I have a difficulty conceptualizing the idea of detachment because detachment is not an active state. It is more of a passive state. I'm a man of action so I had to come up with a way to turn detachment into a proactive and constructive state that would lead to profits captured, rather than profits mourned. So I have come up with the mental picture of Maximizing. Marty Schwartz identifies this state with hearing the cash register ring.
My definition of maximizing is to make the most out of the positions that are open, or to do my best, though that doesn't quite capture the essence. The outcome of having a maximizing mindset is that I am constantly on the lookout for a good or decent profit, and am always looking to make the most of those open profits that I do have. The object isn't perfection, but rather to do the best you can. I would much rather cash in a decent profit when there is a hint that a pullback might be imminent, rather than waiting for the pullback and exiting at an inferior price.
In order to fully accept the concept of maximizing as a valid way to trade, I had to accept the concept that what the market does while I'm not in a position does not affect me. Since I am all about maximization, I accept the decisions I make in the heat of the moment, rather than looking to see what happens next (after the position is closed) as either a vindication or a rebuttal of my trade exit. This takes me out of the coulda, shoulda, woulda trap that is so easy to fall into, and that serves no constructive purpose (because in reality you can't "shoulda done" anything, or in other words you can't change the past - so why worry about it?).
I also had to accept the concept that any amount of profit or any amount of loss is a good profit or loss, and is acceptable. I had to visualize myself taking many varieties of profits and losses and accepting those outcomes as good, acceptable and OK. In other words I had to become accepting of my new "maximized" trading results, rather than viewing them through the 20/20 hindsight lens of unrealistic expectations.
Think of the alternative. If you don't accept your trading results - let's say that you reject a small profitable result. It is then likely that this rejection will lead to freezing up and not taking small profitable trades, which may lead to small profitable trades turning into losses. If you reject a loss greater than some amount, then this can cause you to freeze up or not be able to act when the market gets to your stop point, or past where you think a small loss can legitimately be taken. Bottom line is that lots of internal strife can be created by not accepting your results, whether they be losses or profits, and that internal strife will tend to sabatoge your trading at the most inopprotune moments.
And maximizing is fun. These corny, silly little profits and losses all add up to daily and weekly results that make me smile. After I started maximizing, the fun came back to trading and my P&L started improving dramatically. The market tends to retrace, so maximizing profits in the here and now makes a lot of sense, especially if it might just be going to retrace later. Minimizing losses makes sense too, because there is no sense in riding a losing position into a larger losing position. I don't like losing positions. I like getting rid of them as fast as possible. They are like the hot potato that I quickly toss to the next guy before it can burn my fingers.
So the mindset of maximizing coupled with flexibility is how I try to approach trading when a position is on.
My definition of maximizing is to make the most out of the positions that are open, or to do my best, though that doesn't quite capture the essence. The outcome of having a maximizing mindset is that I am constantly on the lookout for a good or decent profit, and am always looking to make the most of those open profits that I do have. The object isn't perfection, but rather to do the best you can. I would much rather cash in a decent profit when there is a hint that a pullback might be imminent, rather than waiting for the pullback and exiting at an inferior price.
In order to fully accept the concept of maximizing as a valid way to trade, I had to accept the concept that what the market does while I'm not in a position does not affect me. Since I am all about maximization, I accept the decisions I make in the heat of the moment, rather than looking to see what happens next (after the position is closed) as either a vindication or a rebuttal of my trade exit. This takes me out of the coulda, shoulda, woulda trap that is so easy to fall into, and that serves no constructive purpose (because in reality you can't "shoulda done" anything, or in other words you can't change the past - so why worry about it?).
I also had to accept the concept that any amount of profit or any amount of loss is a good profit or loss, and is acceptable. I had to visualize myself taking many varieties of profits and losses and accepting those outcomes as good, acceptable and OK. In other words I had to become accepting of my new "maximized" trading results, rather than viewing them through the 20/20 hindsight lens of unrealistic expectations.
Think of the alternative. If you don't accept your trading results - let's say that you reject a small profitable result. It is then likely that this rejection will lead to freezing up and not taking small profitable trades, which may lead to small profitable trades turning into losses. If you reject a loss greater than some amount, then this can cause you to freeze up or not be able to act when the market gets to your stop point, or past where you think a small loss can legitimately be taken. Bottom line is that lots of internal strife can be created by not accepting your results, whether they be losses or profits, and that internal strife will tend to sabatoge your trading at the most inopprotune moments.
And maximizing is fun. These corny, silly little profits and losses all add up to daily and weekly results that make me smile. After I started maximizing, the fun came back to trading and my P&L started improving dramatically. The market tends to retrace, so maximizing profits in the here and now makes a lot of sense, especially if it might just be going to retrace later. Minimizing losses makes sense too, because there is no sense in riding a losing position into a larger losing position. I don't like losing positions. I like getting rid of them as fast as possible. They are like the hot potato that I quickly toss to the next guy before it can burn my fingers.
So the mindset of maximizing coupled with flexibility is how I try to approach trading when a position is on.
Maxmin..
The funny thing is.. that most of the best traders I know that make serious money.. dont rationalize a fraction as much as u do.
I agree trading has a lot to do with psychology but sometimes it just gets carried away to another dimension. I was speaking to a great trader a while back and he told me that u are not supposed to rationalize too much and think things over to the Nth degree.. He says instead its all just supposed to flow like an art... similar to being in a rythem.
Nothing you write or read will get you there.. no matter how much u pay for the latest guru seminar.. is just takes a lot of experience and self realization.
In my opinon all u need is esignal a decent size account.. IB Broker and just get out there and try a bunch of different methods and strategies.. at the end the strongest will survive. Nothing a trader will read or write will get them to trade successfully.. it all comes from within.
--MIKE
--MIKE
The funny thing is.. that most of the best traders I know that make serious money.. dont rationalize a fraction as much as u do.
I agree trading has a lot to do with psychology but sometimes it just gets carried away to another dimension. I was speaking to a great trader a while back and he told me that u are not supposed to rationalize too much and think things over to the Nth degree.. He says instead its all just supposed to flow like an art... similar to being in a rythem.
Nothing you write or read will get you there.. no matter how much u pay for the latest guru seminar.. is just takes a lot of experience and self realization.
In my opinon all u need is esignal a decent size account.. IB Broker and just get out there and try a bunch of different methods and strategies.. at the end the strongest will survive. Nothing a trader will read or write will get them to trade successfully.. it all comes from within.
--MIKE
--MIKE
Ask Mozart who taught him to compose.. Ask Tiger who taught him to play golf... Ask Welch who taught him how to run a company... ask Soros, Dennis, Seykota... who taught them really how to trade.. ??
It all came from practice, experience, and from within. You can teach someone how to trade.. but u cant teach someone how to become a great trader.
My point is what it all comes down to is.. experience, raw talent, and plain ol' luck.
Let me pose an iteresting question. Lets assume someone like a yoga master or anyone that has full control of their mind properly disciplined, reasonably intelect with a solid background in finance .. Do you think if that person decided to trade they would actually be a great trader. I dont think so.. because where they are strong in one area they might be weak in another. The yoga master might have amazing self control.. but poor decision making skills...
Bottom line.. trading is much deeper than simply reading Mark Douglass's book.. There will never be a complete book or any form of written manual that will explain what is really needed.
--MIKE
It all came from practice, experience, and from within. You can teach someone how to trade.. but u cant teach someone how to become a great trader.
My point is what it all comes down to is.. experience, raw talent, and plain ol' luck.
Let me pose an iteresting question. Lets assume someone like a yoga master or anyone that has full control of their mind properly disciplined, reasonably intelect with a solid background in finance .. Do you think if that person decided to trade they would actually be a great trader. I dont think so.. because where they are strong in one area they might be weak in another. The yoga master might have amazing self control.. but poor decision making skills...
Bottom line.. trading is much deeper than simply reading Mark Douglass's book.. There will never be a complete book or any form of written manual that will explain what is really needed.
--MIKE
His posts may be the same thing written in Trading In The Zone, but it's better than 99% of the other BS people post on this forum. MaxMin, carry on man!
-Fast
-Fast
Quote from Fast_Trader:
His posts may be the same thing written in Trading In The Zone, but it's better than 99% of the other BS people post on this forum. MaxMin, carry on man!
-Fast
Nothing wrong with sharing ideas and having discussions. But a lot of it is in the presentation. MaxMin claims as if he is doing the trading community a favor.. he claims he is giving back to the community. His light bulb turned on and now he is a successful trader.
Problem is.. that his posts are recycled ideas and phrases from Douglass, Van Tharp and others. Any one that comes to ET and claims that they have something to share.. should acknowledge the proper sources where 99% of their information comes from.
--MIKE
It seems to be a requirement at ET that when a thread is going in a peaceful and calm manner someone needs to stand up and yell fraud, liar or some other label.
I am thoroughly enjoying this thread and I could care less if he is plagiarizing the Pope. I appreciate Maxmin's perception's about his trading experiences.
Please continue with your observations Maxmin, I and many others appreciate them.
regards,
Bruce
p.s. I would like to apologize to all of the people I may have plagiarized in writing this response.
p.s.s. I would like to state that I am over 18 and I fully understand that anything I read on ET maybe be someone's interpretation of someone else's interpretation, of someone else's interpretation, of someone else's interpretation of someone else's original idea.
I am thoroughly enjoying this thread and I could care less if he is plagiarizing the Pope. I appreciate Maxmin's perception's about his trading experiences.
Please continue with your observations Maxmin, I and many others appreciate them.
regards,
Bruce
p.s. I would like to apologize to all of the people I may have plagiarized in writing this response.
p.s.s. I would like to state that I am over 18 and I fully understand that anything I read on ET maybe be someone's interpretation of someone else's interpretation, of someone else's interpretation, of someone else's interpretation of someone else's original idea.
Quote from Tonkadad:
I am thoroughly enjoying this thread and I could care less if he is plagiarizing the Pope. I appreciate Maxmin's perception's about his trading experiences.
Please continue with your observations Maxmin, I and many others appreciate them.
p.s.s. I would like to state that I am over 18 and I fully understand that anything I read on ET maybe be someone's interpretation of someone else's interpretation, of someone else's interpretation, of someone else's interpretation of someone else's original idea.
Hi Tonkadad,
Thank-you - I'd like to second that - include me in the many others - and btw it's good to see you again.
Best,
plumlazy
Quote from Trend Fader:
Nothing wrong with sharing ideas and having discussions. ....
....... Any one that comes to ET and claims that they have something to share.. should acknowledge the proper sources where 99% of their information comes from.
--MIKE
Exactly. Nothing wrong with sharing ideas.
Take things for what they are.
If you don't get something out of a journal, or anything in the world for that matter, CHANGE THE CHANNEL.