Winning in the EMinis

Quote from Trend Fader:

Totally false. Many things about trading can be learned from reading and outside sources... but non of them will make u a great trader.
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What I did read was that the market wizards all learned the art of trading and the fundementals of sound trading from outside sources.. but what actually made them $ was from within..
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Trend Fader,

Yes this is exactly the point I am attempting to make with this journal. My intent is not to show people what to do, or even how to do it (because that would be fruitless IMO), but rather get people thinking about what it takes to be a winner, maybe present some old ideas in a new perspective that will motivate them to making the changes necessary to get past the obstacles they are facing, because everyone has unique obstacles to overcome. To be frank I don't think trading has anything to do with originality, or finding some new or unique concept that will be the missing piece of the puzzle. That's the loser's game of finding the holy grail. I don't think any of my "unique" or "new" ideas have added much to my bottom line, nor did they turn out to be terribly unique or new. (Chances are that if you have had a new idea, many before you have had the same idea.) It is the simple concepts that seem to be of most value, and so that is what I've chosen to write about in this journal.

Trading is about executing some very simple and well known ideas a little better than we did the last time. It isn't a competition with other traders, and it isn't a competition of us against ourselves. It is all about harmonizing ourselves with what the market is doing, and then executing as the moment of truth occurs. The way we improve is to get more clear about seeing what the market is actually doing, and faster at aligning our actions with what the market is doing. Some people call this getting in the flow.

Top athletes aren't necessarily pioneers in the field of new technique, theory or equipment design, but they do execute the existing techniques, utilize the existing theories, and make use of the latest equipment as well or better than everyone else. They take the same fundamentals and develop a little more well-rounded game. That is the same challenge we as traders face day in and day out. Talent comes into play, but persistance and discipline will get you there even when talent is very limited - it just takes more time. I know that was my path. Not anything fancy, and by no means have the pearly gates opened to me, or can I say I have it made. Whenever I think that, pride shows me how to take a loss. I am faced with the same trading demons as everyone else. Nobody is any different. It is how you deal with those demons that determines whether you rise to the top or sink to the bottom. So thanks for your thoughts on this subject and the constructive discussion.
 
Quote from MaxMin:

Trend Fader,

Yes this is exactly the point I am attempting to make with this journal. My intent is not to show people what to do, or even how to do it (because that would be fruitless IMO), but rather get people thinking about what it takes to be a winner, maybe present some old ideas in a new perspective that will motivate them to making the changes necessary to get past the obstacles they are facing, because everyone has unique obstacles to overcome. To be frank I don't think trading has anything to do with originality, or finding some new or unique concept that will be the missing piece of the puzzle. That's the loser's game of finding the holy grail. I don't think any of my "unique" or "new" ideas have added much to my bottom line, nor did they turn out to be terribly unique or new. (Chances are that if you have had a new idea, many before you have had the same idea.) It is the simple concepts that seem to be of most value, and so that is what I've chosen to write about in this journal.

Trading is about executing some very simple and well known ideas a little better than we did the last time. It isn't a competition with other traders, and it isn't a competition of us against ourselves. It is all about harmonizing ourselves with what the market is doing, and then executing as the moment of truth occurs. The way we improve is to get more clear about seeing what the market is actually doing, and faster at aligning our actions with what the market is doing. Some people call this getting in the flow.

Top athletes aren't necessarily pioneers in the field of new technique, theory or equipment design, but they do execute the existing techniques, utilize the existing theories, and make use of the latest equipment as well or better than everyone else. They take the same fundamentals and develop a little more well-rounded game. That is the same challenge we as traders face day in and day out. Talent comes into play, but persistance and discipline will get you there even when talent is very limited - it just takes more time. I know that was my path. Not anything fancy, and by no means have the pearly gates opened to me, or can I say I have it made. Whenever I think that, pride shows me how to take a loss. I am faced with the same trading demons as everyone else. Nobody is any different. It is how you deal with those demons that determines whether you rise to the top or sink to the bottom. So thanks for your thoughts on this subject and the constructive discussion.
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Your welcome... that was a very honest and well stated post.



--MIKE
 
MaxMin,

I appreciate your contribution with this journal. Pre-programmed control mechanisms can effect how we trade. Can you provide more hints on how you where able to achieve your current
Maximizing/Minimizing psychological profile in trading?

Ciao!
EuroB
 
Thanks for your comments and question EuroB. I just had the house recarpeted so I'm still moving furniture back into the newly carpeted rooms so I will keep this brief.

Suffice it to say that I had to hit rock bottom before I could start rising. Everyone has their own maximum pain threshold. As far as I can tell, this maximum pain threshold seems to be directly related to the amount of available trading funds an individual has at their disposal, but that's only my observation. Someone with greater means will tend to lose more $$$ before they hit rock bottom than someone with smaller means. I'm not sure why it works that way, but it seems to be the case, though there are exceptions to the rule.

I think it takes a long time to actually crater and stop moving down. Well let me rephrase that, it takes a lot of PAIN to actually hit the maximum pain threshold, and in the aftermath of all that pain, it takes time for the alternatives to become clear. It is different for each individual, but that was my experience anyway. It is more pain than you think when you start out trading. The key realization that I came to, and the realization that I think everyone who is an aspiring trader has to come to grips with is the battle of the ego vs. profits.

After losing what seems like a lot of money and hitting rock bottom, the core issues become very clear. You have to make a fundamental decision either in favor of your ego, or in favor of profits. Some people conceptualize this decision in slightly different terms, but regardless of how it is termed, the issues are crystal clear. As long as an aspiring trader chooses his ego, he will remain a loser, and his ego will continue to blame outside forces for its failures. I'll try to follow up this post with more on my observations on the ego later...
 
Thanks to all the contributors in this thread.

I'm sure there are many comments that are confirming for many many Et'ers who are successful.

In particular, I admire how banjo pinpointed the origin of the emotions in trading. His pairing if IQ and EQ is priceless as is his inference that all trader monitoring efforts use the pairing of sensing and emotion without exception.

I believe the turning point for becoming successful is a maxmin suggests. Ego prevents repairing emotions that are out of control. Busted emotions always appear as they wish during monitoring sensory activity. Until all the busted emotions are repaired a person cannot have a comprehensive belief system for trading that empowers him (See the confidence stuff) to summons appropriate emotions under conditions where no busted emotions can arise by surprise.

When you see noncontributary posts made, it is not to difficult to see what and where that person's busted emotions came from and why they can't be repaired under the conditions and circumstances that person is forcing himself to endure continually all over the place.
 
Quote from Trend Fader:

A lot of it probably to do with better genetic health than others.. which is simply hereditary and can never really be altered naturally...

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Actually weight loss is more a function of nutrition than anything else. Healthy, nutritionally sound bodies are not overweight. Genetics comes into play only in regards to the bodies ability to assimilate vitamins etc. Nutrition is something that can be taught. There is a correlation between the subject of weight loss and trading.

Nutrition can be taught. Trading can be taught. At least the fundamentals. Rookies need a lot of education. The information is old hat for experienced traders. To gain it, you either have to get a degree in finance or buy tons of books. Which ones to buy is a mystery because its a case of "different strokes for different folks".

Why not a book called something like "the Rookies Guide to Trading"? Wherein all the terminology is given. How information is calibrated. What is Res/Sup, what are the various methods used to calibrate them, why are they important. What happens (usually) when the market reaches a new high/low. What happens when the market buys/sells on news. How to scalp, how to swing trade. What is Gann, Fibonacci, Turtle etc. What are chart patterns and how are they used. etc etc. How to develop a money management plan. How to find your own style. The list is endless.

Everything compiled in one E-book. Even go into the psychology of trading. Provide a recommended reading list.

Perhaps several of you could join in this since you have different trading styles.

Just a thought.
 
I just read through an interesting quote on the problems that can be associated with "knowing" the outcome of a future event. It is akin to a stock broker who, after preaching XYZ stock to so many clients, starts to believe his own advice, trades it, and loses.

I guess this comes back to flexibility or not becoming attached to a position. I can't tell you how many times when I have made up my mind that price will go to X, that when the market starts sending me different signals I am unable to react, because I already "know" what is going to happen. The key breakdown comes in closing the mind off to alternatives. Whenever it "has to do" X, then this is where the pride trap has been set and it is just a matter of time before it is sprung.

So a certain neutrality must be maintained towards your trades. On the one hand you have to be committed enough and confident enough in your trade to initiate the position, and patient enough to ride with it while it is acting correctly. On the other hand, you have to be aware of what is actually happening so that you can then determine when the position starts to act in such a manner that would trigger an exit based on your method. Because when your mind is open, it is able to identify favorable action points, and it makes executing the order a non-freeze experience (because there is no unresolved conflict between what you expect, and what you are seeing). When the mind is closed, it is like trading from a meat locker.


"When forecasters have too much information, they often become even more inaccurate than when there is too little. Research on horse handicappers and other studies indicate that only early information affects one's decisions. Once the decision is made, additional information, even when contradictory, will not cause the person to change his mind. In fact, as more and more information becomes available, it only reinforces his belief. Additional information does not increase the quality of decision-making, only the certainty of conviction. It only adds a false sense of security."
-The Tao Jones Averages, by Bennett W. Goodspeed, p.64-65
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When someone says "I don't know" it usually means they are expressing their own lack of knowledge or ignorance about a subject or about the answer to a question. Ignorance is generally looked down upon by society, while appearing to "know" is typically a response that engenders confidence in other people. When you hear a politician speak, you will rarely hear them say, "I don't know" because this would lead others to believe that the politician is either uneducated on the subject at best or downright ignorant or uncaring at worst.

But what about in the markets? Does saying "I don't know" mean that you are ignorant when you are talking about the markets? Is this necessarily bad? If you "know" the market is going up, does this knowledge really lead you to bigger profits? Or does the "knowing" fill the mind, shutting out the ongoing signals of the market from your perception? Is a mind full of "knowledge" regarding what may happen, able to perceive what is actually going on? Is there a difference between the following?

I know the market is going up.

I think the market is going up.

The market has to go up now.

I want the market to go up.

Why isn't this market going up?

It looks like the market is going up.

I would submit to you that the most valuable statement above that will help the mind to stay in the proper detached state is the one that starts with "it looks like". This is the only statement that refers to actual price action, above knowing, thinking, wanting, needing and questioning. The "it looks like" statement is very powerful in centering the mind where it needs to be centered - on reality rather than on internal needs or desires. A trader who is in this right frame of mind will often answer the question, "which way is the market going?", with following:

I don't know, but it looks like it is going up.

Not only is the trader who makes the above statement able to see what is actually going on, he is open to new market stimuli, and rather than being committed to a statement about the market going up or down, the trader is committed to what he is seeing without becoming closed off from what is actually going on. The statement, "I don't know" is a way of telling the ego to butt out. When you are in an "I don't know" state of mind, it is difficult to become emotionally attached - and that is a state of mind that can prove profitable to traders. The "it looks like" statement is a way to focus on what is actually being observed. Granted, observation can be mistaken, but unattached observation lends itself to clearer pictures and quicker reversal, which is key when following the markets.

So those who don't know, know, while those who know, don't know.

"When forecasters have too much information, they often become even more inaccurate than when there is too little. Research on horse handicappers and other studies indicate that only early information affects one's decisions. Once the decision is made, additional information, even when contradictory, will not cause the person to change his mind. In fact, as more and more information becomes available, it only reinforces his belief. Additional information does not increase the quality of decision-making, only the certainty of conviction. It only adds a false sense of security."
-The Tao Jones Averages, by Bennett W. Goodspeed, p.64-65
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