Objective Thinking And Trading

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Seeing as the rules are the same for all of us .... That means all of you AND me.

My suggestion to someone who wants to learn to trade would be this ...

* Usually there is no reason to join any site to be able to access the information and knowledge found on the site. Trading sites are known for changing the way people think. It's important to understand that opinions are not going to help you learn how you can trade. Only what you can do is important.

* Know that you are alone. Trading is an activity best done on you own without any influences from other people. Everything you do needs to be done independent of everyone. You need to know that no other trader cares about your trading more than you. You will need to be neutral and objective and do all the research you can to create a blueprint on...

- About Trading

- How to trade

... And it is best for you to do it as thoroughly as you can, without interference from anyone.

* It's a good idea not to follow anyone.

* It's a good idea not to get involved in all the talk from people. There's a reason why they say the crowd is wrong most of the time.

* When doing research online, remember that people online are not your friends and you need to protect yourself. When possible, do not join or participate in any site or apparent socializing as it is not real and will distract you from your research and learning.

* Most people congregate on trading sites to feel that they belong. However fake relationships won't help someone learn as you simply do not know who you are talking to and therefore will never know if the information is real and true until you do your own private research.

* Retail traders are not well respected in the financial world and this is not an accident. Most people never do quality research about the industry.

* It is your future so you need to do the work.

* Most retail traders look to their peers to help them. You need to learn they cannot teach what they do not know. And usually that is why their trading has not advanced any further.

* You need to maintain your self respect when doing your research. There will be many who will test you.

* I don't want you to follow me. You won't trade as I do. You need to find out how you see everything.

* People are easily coralled like sheep and this makes them easier to manipulate, particularly on trading sites. Your job is to be better than them and do better than them. But this won't happen if you become one of them.

Have Fun and Good Luck.


Peter


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The problem is, most people are trying to find the simplest way to get from point A to Point B in a straight line in the trading world, which is built on the principle of constant vs variable. In my experience this is a recipe for insanity. You're choosing to remove integral pieces of the situation while believing you're still observing the entire situation. It's similar to ordering a large pizza cut into 12 even pieces, then removing multiple pieces and still calling it a whole pizza. It's insane and works until it doesn't, where the operator will then try to do the same thing with something else. And so the cycle is self perpetuating.

Peter

Most people's minds can't cope with the constant vs variable concept while some of them are trying to remove some randomness by looking at different angles which can give some kind of method to analyze random madness.

While you will talk about pizza’s and lines from A to B, you are attempting to find profitability out of complication.
Trading A to B is good enough without observing the entire situation.

Clear your mind of all this crap and just focus on the chart.

Unlike many people on this planet, RickM, my memory still remains intact and works very well. So therefore, I can recall the experience of learning something for the first time, and the desire to improve myself and my work.

There is a point where the process of 'being simple' becomes redundant, complacent and overconfident. I'm sure when you started out with your trading everything was not "simple". Doubtful it was "simple" when you tried to improve on what you saw possible after you had learned some of the basics.

So your idea of 'good enough' is, to me, similar to someone 'believing' the internet is 'real life'. I have met many 'data traders' and they all basically say the same thing. But you know what I see? ........ People who think a band-aid is a solution. The realistic problem with 'good enough'. is that while you think you're 'sitting pretty' the world is changing and all you can do, just as with your trading, is react, without any means to actually understand the contexts involved. So you won't know if you're the victim of reality or just 'out of the loop'. So really, it's just an excuse to be lazy and apathetic.

And so, while I appreciate your input, I would always choose to be me instead of someone like you. Call it being more than just a cardboard cutout of a human being. Unfortunately, RickM, if you and people like you, don't grow up and grow out of being so addicted to and dependent on outside data, then your future is out of your hands. And that is the difference between someone who makes the commitment to being more than just a speculator and a person who lacks the self respect to want a healthier return on their time and effort. You can dismiss this if you choose, as I know many do and will, but I'm not sure you really have a choice, considering the state of affairs on this planet.

In some ways, data traders don't have much of a future in the real world as so few of the skills involved are transferable to real life living.

So thanks for chatting.


Peter

It's ironic that, here on Forex Factory, we are defending the speculative nature of trading the forex. Since 100% of retail forex traders are speculating, any complaint or pejoratives about speculating is clearly naive. If you don't or can't appreciate the nature of forex trading, then you are too ignorant to be taken seriously here. All this negative crap about point to point traders and data traders is specious BS.

Healthier return and 80 20 rule is something I practise. Most of the time, I am experimenting without any pre analysis or analysing any news event. No pressure for making money is my asset.

Based on observations during a two-day-prior to major data relaese events, market noise reaches a cresendo and retail traders get sucked in.
Market makers conduct more than a few rotational trades trips to bust overtrading retailers margin. Big boys get opportunities to load and unload.

Like for a snake and ladder game, I plotted a strategy to travel with them. Using a hedging broker platform that allws buy and sell in same currency I traveled in a hedged cart and using fibo unlocked positions when I realised a point beyond which traders are hesitating to move further .Such 3 vline moves got me 1.25 times of average daily range in a day..Experienced day traders needing income are willing to slog rather than use their experience acquired at a considerable cost to refine their trading methods.

A Simple, Profitable Forex Strategy

(that may challenge the way you think about trading)

Calculate the daily average range of the currency pair that you are interested in trading. If you can’t decide on a currency pair, write all the major currency pairs and major crosses onto separate pieces of paper, put them all in a box and pull one out at random.

Determine the Daily Average Range (DAR) of the currency pair that you have selected. Use a fixed percentage of the DAR for your stop loss. A stop loss of 50% DAR should give you an intraday trade that lasts on average about half a day. You can use a smaller %DAR for a shorter duration trade or a larger %DAR for a longer duration trade. Once you have chosen a %DAR to use don’t change it. In other words, stick to the same time frame for all your trades.

Once you have determined your stop loss size based on the %DAR of your chosen currency pair, calculate your position size. If you are conservative and a bit risk adverse invest 1% of your capital on each trade. If you are a bit more adventurous, risk 2% of your capital. Once you have selected your risk don’t vary it from trade to trade. If you struggle with the maths for calculating position size, use a position size calculator.

Chose your direction by tossing a coin. Heads you buy, tails you sell. Open just one trade at roughly the same time each day. If the previous trade you opened is still running, close it for either a profit or a loss before opening the next trade.

Your stop loss is only there as a safety net. Your aim is never to hit it but of course you often will, at least initially.

If your trade moves into profit hold it until it either runs out of steam or your next scheduled trade is due.
If your trade moves into a loss, close it as soon as you believe it is likely to continue moving against you and will eventually hit your stop loss.

The strategy is based on the simple principle of letting your profits run and cutting losses but if anyone tells you this is easy to do they are deluding themselves. Practice initially on a demo account until you are consistently profitable. Given enough time you are likely to become quite proficient at it.

Once profitable on a demo account, switch to a small funded account. You will probably find that it becomes much more difficult to make a profit.

I have managed to persuade quite a few forex traders and students over the years to try this exercise, if only for a few months. I have found that inexperienced traders usually perform better than more experienced ones. Is this just beginners luck? I don’t think so. I think it is more likely to be a case of beginners mind.

After a few months of trading like this I sometimes encourage people to chose their own trade direction by any means they wish rather than just tossing a coin. Most traders, particularly the more experienced ones are often delighted that they can at last exercise some discretion and control over their trading. Then to their utter dismay, they usually find that their results get worse as a result of their direction picking. Once again inexperienced traders tend to do better than more experienced ones.

This is obviously a very simple strategy structure that relies almost totally on mental skills or what I call a traders mind.

I don’t know of anyone who has persisted with this strategy for any period of time. Most people prefer something more complicated with lots of lines and indicators and perhaps even a fully automated EA or two that they hope will make their system much more profitable. I have seen no evidence that this actually works.

Experiments like this suggest to me that successful forex trading has far more to do with one’s state of mind rather than techniques or strategies. I think it also illustrates how beliefs, both latent and acquired can have an enormous affect on trading outcomes.

Regards
Tim

* What I am about to write is in no way negatively critical but merely a response to what Tim has written, described and explained.

As a theoretical exercise of self observation, this approach can be useful.... but only if the person takes extensive notes of everything they see, feel re: their reactions and responses to different situations - rather than mimicking a routine. As with other exercises of this nature, there is a thin line between personal introspection vs personal training. The person must be VERY careful not to confuse the two because this is how unhealthy habits are formed and how ill-informed/incomplete knowledge begins to collect in a person's mind.

Once this is properly understood, then an exercise like this can be useful. (The basic principles of thinking vs personal gain have always polluted the learning process. And this is why I point these things out. Techniques, strategies and tactics in any situation, come from proper individual operation and this includes thinking.)

For me, I see a lot of people trying to wag the dog instead of learning how to walk WITH the dog. It's the same observation I make everyday out in the real world - this virus stuff is a great example. Reacting before observing, thinking and researching to generate a real life learning curve and understanding and an overstanding perspective.

From my experience, having an edge in the markets is not about gambling or tools and resources. It's the difference between being a real person vs someone who believes thinking like everyone else is acceptable.

The approach you are describing is a good way for someone to learn and to learn to observe and become more aware.

For me, I would deem it necessary to dig deeper as I see too many people trying to 'get away with' cheap and easy approaches that are useless in the real world, by merit of their principle basics and not by the obvious connection and relevance they possess re: trading.

All the highly successful people I have ever known, understand that fouled foundations (Heart and mind) will always produce similar outcomes despite any change in venue or activity.

* The basic premise of the exercise of 'flipping a coin' to then make notes on your observations should really be all that is needed to view the assumed idea/initial theory vs the real world happenings. The assumption being - a coin has only 2 sides therefore there can be only 2 outcomes from any flip performed. This "assertion" made by people is wrong in every aspect because it is flawed at the observation stage of any understanding. The Grey Scale shows and proves this and to me, this is why 'normal' people find it difficult to transition into trading or investing without going stir crazy or going broke....... or both.

Again, this is just my response and is not to be negatively critical. Someone reading this can grab hold of whatever they need at this time.


Peter

Hi Peter,
Thank you for your commentary on my post

The exercise that I described in my previous post originated from attempts to teach students about the near random or more correctly the near pseudo random nature of financial markets. After each test period which typically lasted 6-12 weeks, I collected the MetaTrader reports for the period, weeded out those who obviously hadn’t complied with the instructions and analysed the rest. I then reported the results back to the class. Some seemed surprised while others seemed to have little understanding of what I was on about. Over time I began noticing the similarity of the results from different groups

I doubt if many of my students gained any significant insights or lasting knowledge from these exercises but I learnt a lot.

The need to keep introspection separate from training exercises is something I have never really thought much about but what you say makes sense. Obviously they are two quite different functions.
I keep a trading journal and write in it not only my trades and trade results but also my thoughts, ideas responses, in fact just about anything to do with trading all mixed up together. Separating these functions and in particular thinking of them separately is something I will keep in mind for the future.

I find it helpful to think of trading and particularly forex trading as a mind game

If you ask a person why they play a game like Chess or Go they will invariably say they do it to develop mental skills such as patience, discipline, the ability to make better decisions etc etc or perhaps just for relaxation and enjoyment. If you ask a person why they want to learn how to trade they will usually, after a bit of prompting, admit that their goal is just to make a lot of money as quickly as possible.

Therein I believe lies a major problem right from the beginning. I doubt if many people take up a sport with a view to simply becoming a professional just to earn big money. People take up activities and continue with them because they love or at least enjoy the activity or find them interesting or engaging. I suspect that money, all too often and particularly in an environment with a high level of uncertainty becomes a proxy for survival. This in turn probably triggers a primal response which is the opposite to what you need for an open minded learning experience.

Perhaps the above situation is one of many such examples. With trading, isn't money all too often the driving motivation instead of something you just collect along the way while taking this trading journey for a walk?

We all like to think of ourselves as rational human beings but my observations are that what often passes for rational thinking is more often than not just rationalisation. All normal people seem to have the innate capacity to think rationally but most of us don’t use this capacity to anywhere near its full potential. There are good biological reasons as to why this occurs but I would go so far as to suggest that a person’s ability to trade successfully over the long term is significantly correlated to their ability to think rationally.

I find it strange that many people are not the least bit interested in discovering how things work so building a theory of trading on a solid foundation is something that doesn't even occur to them. "As long as it works, I don't care why" seems to be a common attitude found everywhere including this forum. Is this just the prevalent consumer mentality that most of the western world seem to have adopted or is it something deeper?

While the act, not the decision, to buy or sell is clearly a binary one, once that act has been executed the problem immediately switches to a probabilistic one or “shades of grey” if you prefer. The decision to close a trade either as a win or a loss is to my mind one of the most difficult problems a trader has to learn to deal with. I have struggled for years to come up with a good model for this problem without much success. It certainly doesn’t seem to lend itself to any binary or rule based approach. With practice and experience our minds seem to be capable of solving this problem reasonably well, presumably through some set of heuristics. The foundations for this decision making process however remains a mystery to me.

My understanding is that this all has to do with beliefs. We can easily see this happening in a political or religious context but I believe the same psychological mechanism will happen with any belief. If you “touch” a belief it will inevitably cause a reaction, often a very hostile one. People will sacrifice their lives to protect their beliefs. With trading I would suggest that beliefs about money (read proxy for survival here) are where most trading problems start. These beliefs need to be carefully and very gently prised up from the depths of the subconscious mind and modified. Handle them carelessly and they explode and you go "crazy, broke or both" Most people are terrified by the thought of trying to change a deep seated belief, even when it is highly and obviously dysfunctional. I have no issues or problems with taking money from financial markets but as long as our ideas or beliefs about money remain in their crude and “normal” form , the potential for doing so remains, in my opinion, very limited.

Regards
Tim

I think those who have no concept of white or black become open minded learners and succeed in any endeavour they pursue. It includes trading.

In other words, they as such don't have any beliefs other than what the eyes and ears take them to.

Thank you to both TraderTim and simnz for your input here.

One of the real life practical, physical and mental points that all people need to acknowledge is - you live. But what I am seeing is most people just 'going through the motions/routine' without even a single thought towards what comes first in any particular process. Certain processes are present in everything we do, as both of you have spotted and acknowledged in you own way.

Another facet regarding money.... It is not a natural construct of Life. It is in fact a mental construct, again, as both of you have spotted. But what most are not realizing, is that it plays NO PART in any real life process. And truthfully, has never really been needed for a process to be completed/concluded. So one must question its merit WITHIN any process, irrespective of its allure or attachments. "Modern people" need to learn that trading has very, very little to do with money and more to do with control over the past, present and future of a moment. A person can begin to see this in action for eg, on this site, when you mention money or profits. If you press the neutral button on everything within you for a moment, it is easy to see how a 1K currency trade order can be just as anticipative as a 100K trade order in the correct context.

It is not taught to people in school curriculum to improve their basic personal development, as far as it being "natural". From what I have observed, over the years, most people will only extend far enough to 'get what they want' but go no further, until the next 'want' appears in their view. (As both of you have also observed and acknowledged in your own dealings.) This is a VERY immature and unevolved way to approach anything in Life. If tomorrow, it came over the airways and TV, that ALL private citizen trading was banned, most would simply walk away having learned little to nothing about themselves and what they are capable of doing and achieving. And because of this their concept building capabilities are truly lacking as are their results in their trading and this will translate into their future adventures. If this wasn't the case, then many would not be so immature and hypersensitive (snarly) toward simple truths being laid out for their benefit.

Two very specific elements that I see are absent from people's awareness are - full contextual understanding and the need to learn in and of its own merit. People have a lot of spare time, apart from those people who work 3-4 jobs just to pay the bills. So really, the joke's on them. Instead of watching tv and playing games and using substances 'to forget' or 'have fun' etc, people could do better for themselves if they stopped feeling so helpless or hopeless. Many of the so-called experienced people I've ever come across in life have assumptions for premises and this is toxic.

Core motivation and full contextual awareness. These are very natural and VERY important.

The problem I have encountered so often on this site and elsewhere, is - "I need to be-come a trader and have a trader's thinking". So what IS a trader? A person with a specific set of knowledge, experience and a skill set based on those mentioned. There's nothing there to suggest a label is required. So a person can remain just a person, only now, they have absorbed a new skill set.

If a person is willing to spend say, 6 mths, just dealing with themself and their issues, then they would be surprised what would happen next. To face the truth of it and ask "What CAN I do about this?" and seek solutions to gain mental and emotional momentum to LEARN instead of retracting from the problem. The human being works in stages of constant contact so the person needs to be aware of what they feed themselves each day.

To shape any perspective, one must see that some versions are deadends dressed up as 'viable' ideas. I'm sure both of you have observed this for yourself. But many have not.

The root of people's failings/limited performance in trading is their point of view and what it lacks. If someone is too intellectual then they will veer for same/similar circumstances and areas of involvement and vice versa for those who are too emotive/emotional. The balance is not in the absence of something but a view that welcomes and includes all aspects. People who cannot differentiate between a 'philosophy' and basic life skills, will always struggle to witness the honesty of who they are and what they can achieve with their trading or any other activity, really.

I hope this doesn't sound too 'preachy', it wasn't intended to be so. I feel all of this we are discussing is VERY VERY important for each and every person, trader or not.


Peter

Who are you as a trader?

Why are you in the world of trading?

What should you do?

How do you observe yourself?

And then how do you discover yourself as a trader?

.....To then surpass yourself.

Most people are "too busy chasing money" to consider who is behind the wheel.

I will keep this one quick so people can decide for themselves where they stand.

Trading is an activity, like any other .... in certain contexts, but different in some ways.

Here is something a person COULD get some use out of, if they are willing to put aside their attitude for a day or two.

I didn't write it and am not responsible for its content. But I have observed that it COULD be useful if a person is serious enough to learn. I suppose it'll be new for some but not for others. Perhaps a feasible refresher to brush out those cobwebs.

Have fun with it and I hope it helps.


Peter


As per usual, clean DL .....

https://drive.google.com/file/d/1rD57E1SLNsgz3TLckMnOKKVgP-CrTj2J/view?usp=sharing

People can be at times so fickle.

And the constant swaying of conflicts vs desires is something that any decent trader must face and eventually delve into, face and deal with.

It definitely reminds me of a story most of us/we all know. The Wizard Of Oz.

What has this got to do with trading Peter? .... I hear you ask.

Therein sits the problem with most people's thinking. If it's not obvious in the moment then it's unimportant. However my travels in trading the markets have shown and proven this to be rather unhealthy thinking. What's just on the surface is usually just a morsel to get you started, to get you involved.

Below is a couple of links for something that I sense is very relevant to people's learning, in certain contexts.

Enjoy.

https://gointothestory.blcklst.com/archetypes-the-wizard-of-oz-part-one-5f4c0012d111

https://gointothestory.blcklst.com/archetypes-the-wizard-of-oz-part-two-c45dbbe4b7ec


Peter

Attached Image (click to enlarge)

Here's a useful situation to look into so you can further understand why people spend so long on learning the basics, being taken for a ride by what others say or do and get to a point where they feel like giving up. And why having your own mind when both learning to trade AND doing your trading is so important.

Enjoy and I hope you learn something. You will first need to get past your minds' interest in 'being entertained'.

Before...

https://www.youtube.com/watch?v=1IHeMeSmZbo

After...

https://www.youtube.com/watch?v=nPJPgT3OAlw


Peter

A problem I see with many people today ....

Many believe that everyone else only has an opinion and that no one actually knows anything that is real and true. This is problem number 1.

And the extending problem that follows from the first ... When that person meets someone who defies or goes counter to their belief of problem number 1. This person thinks and operates in ways they don't understand or maybe they're afraid of them or feel threatened by them, because they're different and they show up their own insecurities and/or ignorance.

When it comes to trading, I see it amplified 10 or even 100 fold. They want "proof" of something being real/true BEFORE they either, go and begin their own research or, so they can basically steal that person's input/idea/strategy etc. If not anything else, it shows the true human character of the person.

Now you add problem number 1 into the mix.

And what do you have ?

For me, it appears to be a deep mixing bowl of neurotic self destruction. To me, it's the same as grown ups who have children, saying they don't have any interest in the big wide world and what's going on in it, THEN, in the same breath, saying how much they love their children. To anyone with half a brain, this is ludicrous thinking. If you, the adult, the parent, are vastly ignorant of the world around you and what is happening, then HOW can you teach your children ANYTHING? How can you protect them...... both from the world at large AND from you and your chosen ignorance?

So which is the lie and which is the truth ?

In trading just as in Life, you find out very quickly which is which, although the cost varies from situation to situation.

The following is a little test to see who is the scab and who actually understands their own trading and therefore, appreciates something before they try and use it for their own benefit ....

* 80% of the time the market you trade is likely to be moving along with some kind of underlying directional bias.

* 70%+ of the time, the market will present an initial reversal move, followed on by a continuation or follow through move then conclude with a final reversal.

* More than 50% of the time, proper use of lower time frames will aid in best use of momentum

There you go. There's a few to get you started. But I warn you, it would be very unwise to just 'hit and run' with these stats based on face value alone. I never said they would be "true" I simply said that they would get you started.

Trading is about measuring the state of things (completely true / half true-half untrue / completely untrue) within the context of what you are doing. This is actually MORE important than "making money" because it's a skill set that is 100% transferable to your usual real life. I doubt that you could say the same for whatever you're doing in your trading to "make money".

People don't need prowess, they need common sense and need to know how to use it. This only happens when you use an all-inclusive objective approach with your observations. Otherwise your opinions dictate everything you do. And you cannot blame the cliff if you walk off the edge "believing" that your opinion of your phone's GPS mapping is 'true, accurate and timely'. Hehehehehe.

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Peter

PC, you wrote 2 parts in your post. I address the first part.

The bolded statement of ignorance and insecurities.
Seen this behaviour so many times on FF.

First off I'm a retiree to give context to my post.

I joined Forex trading forums about 10 years ago. With the intention to discuss and chat about forex trading. So I have to present what I think about how to go about trading Forex. I was expecting open robust on point dialogue to examine in detail what is correct and what is incorrect as a goal. I took a no bias position always willing to change my point of view if there's proof to show they are wrong. There are no sacred cows. My intention was to bounce thoughts with other traders to improve myself.

My experience after 1 decade of active participation on forex forums.

People are ignorant. People are insecure. People hold on to their sacred cows. They hold on to things they know are inferior, not good enough. They will not budge no matter what. People go on forum to shout what they believe. They need their opinion to be heard. They look for validation not scrutiny. They hate you if you tell them they might not be so correct than their belief. They hate you because you questioned. They indulge in strawman loop arguments. They hate you because you know more. They hate you more if you won't share. They feel entitled. They spend zero time to listen to the details you posted on forum.

If you read the above para, it applies to me too. I was guilty of the same things. UNTIL I realise what was going on in Forex forums. Denying our ignorance and living our insecurities, looking for validation. The uncertainties of this Forex market turned on the screws of our insecurities. That pushed us to this mad house type of behaviour on forum.

The difference is I recognise and realise this now. Yup took me 10years experience to learn, think then resign to accept what was going on on forex forums which is so unlike reasonable expectation. Adults living their childlike behaviour on forum while supposedly discussing adult finance matters. (I am talking about active participation posting on forum. Not about forex trading itself.)

I did a bit of investigation behind the psychology why this strong reactive behaviour to our posts. Something I couldn't care less before. This video may not sum up everything but it gives you the idea - read the comments. This is what happens with Forex trading where money is involved. This is human nature. Forum is a waste of time for discussion. Lesson learnt.

I speak for myself. I don't seek validation. I carry no insecurities. I couldn't care less what you think about me. I couldn't care less whether you're good or bad at trading Forex. Newbie, veteran, professional, winner, millionaire pro, loser, marketer, scammer, devotee, hater. Make no difference to me. Just another human being. I have learnt and will continue to learn from EVERYONE as I sharpen my sword in trading Forex. Interestingly my best breakthrough lessons came from the losers and ignorant big egos - both extremes. Given this attitude on FF I am tight fisted in giving back.

PC, my contribution to your thread.

If it's ok with you I have another on point post about forex trading that's relevant to your thread.

Cheers.

https://youtu.be/FPxVULKhqCc