Zen and The Art of Trading

I think that the best evidence for his success are the testimonials of his success by other traders of the same period. He had the respect of his fellow traders. I do not recall anyone of his period not showing some admiration for his work.

I personally do not pay much attention to his timing models. However, it is hard to argue with his advice on keeping data on the markets, understanding seasonality, trade in the direction of the trend and patiently wait for pullbacks to trade in the direction of the trend. In commodities, these suggestions work quite well.

http://www.market-analyst.com/articles/W.D._Gann_-_Market_Master

Charles
 
I am rehashing some important topics in the book for further discussions.

Sitting on one's hands and getting rid of marginal trades test one's honesty and clarity. When and how did you start doing that?

Our ego's needs can be hindrances. How do we address them?
Here are some of the stuff off the top of my head... They look related and probably are the facets of the same bug.

1) Feeling of being left out...
Is it loneliness or madness of crowd?
Or is it jealousy? Or is it the fear of feeling incompetent?
2) Feeling stupid...
"I knew it would happen... I should have caught it."
Are we trading the past and the future and ignoring the clear and present danger?
3) Fear of failure
Are we pressing to fulfill some expectation or fantasy that serves seemingly no "practical" purpose? For example: "I expect to be profitable today and make X amount..." Does it really have any correlation to the day's profitability?
4) Desire to be right
Notice I did not put "desire to make money"... Why do we want to tell the market what to do? Why should the market listen to us? Why is my opinion more special than the other's?
5) Perfectionism
Buy the bottom. Sell the top. Get that last tick...

Enough babbling... Can we add more to the list? Possibly some insights and solutions. Thanks.
 
martys,

Thanks for this great thread. Thanks to Phillips too.

I'm reading Mean markets and Lizard brains.
http://www.amazon.com/exec/obidos/t...f=sr_1_1/104-6938999-7314349?v=glance&s=books

It's the same author who wrote mean genes.

He is really personalizing it to his weakness towards financial markets and how he tries to overcome it.

One of things he says: we have anticipate our weakness and then try to come up with a plan to remove it rather than resist it.

It goes on.

In my case, I'm trying to deal with my weakness: fear of missing the market running up with gap up, and man, how many times try to chase it, Monday mornings, punished by Mr. market who does not tolerate undisciplined and unplanned ones.

So, I've left a small portion in the market through etf index now. This way, I'm hoping my mind won't get angry whenever Mr. market runs up, instead analyze risk/reward objectively for a trade.

Like the author says, we cannot stop our lizard brain (read emotion), just plan to contain it. This is the first step towards profiting from mean markets... (page 264).

Regards.
 
Quote from martys:

I am rehashing some important topics in the book for further discussions.

Sitting on one's hands and getting rid of marginal trades test one's honesty and clarity. When and how did you start doing that?

Our ego's needs can be hindrances. How do we address them?
Here are some of the stuff off the top of my head... They look related and probably are the facets of the same bug.

1) Feeling of being left out...
Is it loneliness or madness of crowd?
Or is it jealousy? Or is it the fear of feeling incompetent?
2) Feeling stupid...
"I knew it would happen... I should have caught it."
Are we trading the past and the future and ignoring the clear and present danger?
3) Fear of failure
Are we pressing to fulfill some expectation or fantasy that serves seemingly no "practical" purpose? For example: "I expect to be profitable today and make X amount..." Does it really have any correlation to the day's profitability?
4) Desire to be right
Notice I did not put "desire to make money"... Why do we want to tell the market what to do? Why should the market listen to us? Why is my opinion more special than the other's?
5) Perfectionism
Buy the bottom. Sell the top. Get that last tick...

Enough babbling... Can we add more to the list? Possibly some insights and solutions. Thanks.
More...

Perhaps a partial answer is:

Sometimes you need to hear it from someone you trust (did not ask for the money) and respect... One single piece of advice I got from my mentor friend:

"The objective is to trade the setup and not trying to make money... If your setup works, over time you will make money."

The objective is really one but when you look at it from different side:
1) THE OBJECTIVE IS NOT TRYING TO MAKE MONEY!! (trading on hopes)
2) The objective is to trade the setup!!

Focus on the correct objective... Mission impossible?


 
Quote from et_user:

martys,

Thanks for this great thread. Thanks to Phillips too.

I'm reading Mean markets and Lizard brains.
http://www.amazon.com/exec/obidos/t...f=sr_1_1/104-6938999-7314349?v=glance&s=books

It's the same author who wrote mean genes.

He is really personalizing it to his weakness towards financial markets and how he tries to overcome it.

One of things he says: we have anticipate our weakness and then try to come up with a plan to remove it rather than resist it.

It goes on.

In my case, I'm trying to deal with my weakness: fear of missing the market running up with gap up, and man, how many times try to chase it, Monday mornings, punished by Mr. market who does not tolerate undisciplined and unplanned ones.

So, I've left a small portion in the market through etf index now. This way, I'm hoping my mind won't get angry whenever Mr. market runs up, instead analyze risk/reward objectively for a trade.

Like the author says, we cannot stop our lizard brain (read emotion), just plan to contain it. This is the first step towards profiting from mean markets... (page 264).

Regards.
More...

I have the similar weaknesses... As I mentioned above, I think part of my problem is that I focus on the wrong thing: trying to make money... :(
 
Quote from et_user:

martys,

Thanks for this great thread. Thanks to Phillips too.

I'm reading Mean markets and Lizard brains.
http://www.amazon.com/exec/obidos/t...f=sr_1_1/104-6938999-7314349?v=glance&s=books

It's the same author who wrote mean genes.

He is really personalizing it to his weakness towards financial markets and how he tries to overcome it.

One of things he says: we have anticipate our weakness and then try to come up with a plan to remove it rather than resist it.

It goes on.

In my case, I'm trying to deal with my weakness: fear of missing the market running up with gap up, and man, how many times try to chase it, Monday mornings, punished by Mr. market who does not tolerate undisciplined and unplanned ones.

So, I've left a small portion in the market through etf index now. This way, I'm hoping my mind won't get angry whenever Mr. market runs up, instead analyze risk/reward objectively for a trade.

Like the author says, we cannot stop our lizard brain (read emotion), just plan to contain it. This is the first step towards profiting from mean markets... (page 264).

Regards.
More...

Hi et,

I saw that lizard book in the bookstore...

In regard to chasing the market running up with gap up. Certainly runaway gap can be an indicator as mentioned in Marty Schwartz's "Pit Bull". However I don't really trade morning strategies most notable put out by Kevin Haggerty but the trade logics are interesting... Most of the time the opening move in the index futures are artificially exaggerated (manipulated) so that the specialists at the receiving end can lower price risks and exposure (attracts other buyers/sellers). Say there are a lot of sellers on the book, being at the receiving end, the specialists might sell a lot of index futures pre-open so that they can buy the stocks cheaper from the sellers at the open. This emotional opening often follows by a morning reversal very roughly around 10:00 am eastern then the opening bias might or might not resume later. So actually many traders would look to fade the opening and trade on the side of the specialists. Again it does not always happen like that and I am not an expert in this...
 
Keeping the next trade in perspective of all your many many trades. Does it fit your overall strategy?

1) If you do this type of trades all day, are you gonna make money?

"Damn! I should have taken that trade!" Again maybe not, are you gonna make money over the long run by keep doing this type of trades all day?

2) You have to know who you are in the marketplace.... What is your trade? What is NOT your trade? Separate your money from other people's money. Be nice, don't try to grab food from other people's plate, otherwise they will grab yours.

Stop getting cheap thrill from the 50 cents peep show. The market can move against you quickly during low volatility (bad rhythm). Entertainment is gonna cost you in the long run.

3) Advices from my mentor: If you have no conviction, that is because you are trading on hopes and not your setup (provided your setup REALLY works). The objective is taking good trades (despite occasional losses) ... not trying to make money outside your parameters.

Remember it is the "sitting" that makes trading work like Ying and Yang. It is the "non-entity" that allows the "entity" to function.

4) When bad things happen, shift to neutral... get your objectivity back... stick with the basics.

This pretty much is how I try to approach the market. If you are still looking for setup to trade, I would think Linda Raschke's Holy Grail pattern on multiple timeframes could be a good start?? I trade my own stuff but I think the trade logic is similar to the grail.

Good trading.
 
Quote from martys:

Keeping the next trade in perspective of all your many many trades. Does it fit your overall strategy?

1) If you do this type of trades all day, are you gonna make money?

"Damn! I should have taken that trade!" Again maybe not, are you gonna make money over the long run by keep doing this type of trades all day?

2) You have to know who you are in the marketplace.... What is your trade? What is NOT your trade? Separate your money from other people's money. Be nice, don't try to grab food from other people's plate, otherwise they will grab yours.

Stop getting cheap thrill from the 50 cents peep show. The market can move against you quickly during low volatility (bad rhythm). Entertainment is gonna cost you in the long run.

3) Advices from my mentor: If you have no conviction, that is because you are trading on hopes and not your setup (provided your setup REALLY works). The objective is taking good trades (despite occasional losses) ... not trying to make money outside your parameters.

Remember it is the "sitting" that makes trading work like Ying and Yang. It is the "non-entity" that allows the "entity" to function.

4) When bad things happen, shift to neutral... get your objectivity back... stick with the basics.

This pretty much is how I try to approach the market. If you are still looking for setup to trade, I would think Linda Raschke's Holy Grail pattern on multiple timeframes could be a good start?? I trade my own stuff but I think the trade logic is similar to the grail.

Good trading.
More...

I know I have recommended Linda Raschke's Holy Grail pattern a couple of times. It's because I know someone who seems to trade it profitably as a first pullback strategy. Recently I have done some testing on setups similar to it and looks like it's accuracy is around 55-65% for the past three years provided that you take profit early but it seems to lose money on the long side. I think it is important to do your own testing at this point. Good luck.
 
hi martys

is there a description of the structure available anywhere or is it just in her book?

did you look at larry william's vix concept?

(sorry if i am offtopic here ...)


peace
 
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