Hilmy83 Trading Psychology Journal

Excellent post.

Actually its a common human behaviour, everywhere people building a 'wall' around themself for their sense of security. This trait is needed for a stability purpose. Thus in market we see a virtual 'channel', 'waves', 'correction', this is the result of it.

But I would say thousands of market crowd put their limits differently, so we may guess, but we'll never know what majority thinks until we see the result on chart and proof us right or wrong. I think thats the important of limiting losses at the point that shows our guess is wrong, because we'll be wrong from times to times.

I think forex has become a religion with many sects. Although there are some fundamental truths to it, there is no right or wrong way to do it really.

Some people hold on to their beliefs about what the forex market is and how it should be traded so strongly. I've seen some intense debates on here.

I think it just a good example reflecting how people hold on to their beliefs even when they are confronted with new ideas.

So some remain in their ignorance, and others let their ego down and learn and earn.

Man, it's been a while since i've updated this

So I am in the process of putting in all that I have learned about the market so far. Even though I'm trading a system, I write down all the things that happen when trade goes bad, and I look at any discernable patterns that I can implement in the future.

One of the things I observed is the false breakout phenomenon. A lot of times, trend trades would capitalize on the breakouts, but I notice from my trading and from what I've learn from others, that it usually retraces back to invalidate the breakout.

It's possible that this is a reflection of fear in the market psychology. I always wonder if fear is the more dominant emotion after greed.

So below I list the characteristics of the emotions 'fear' and 'greed' based on my own observations

Fear:
1. The need of security and protection
2. Comfort in something that is familiar (opposses change)
3. Seeking strength through numbers and mass behavior

Greed:
1. Requires confidence to pursue more than what it available
2. Play upon the need to be independent
3. Loves to be different from the herd and seeking to be on top

So I think, the majority of us would have characteristics under fear, and some of us (entrepreneurs, outsiders , etc.) exemplify the characteristics under greed. So I guess that's why fear is the dominant emotion since that represents the norm of the population and thus the psychological norm of the market.

So what's my conclusion? I guess I can say that trends only happen fewer times than in a ranging (choppy) market because in order to establish a trend, you must be able to stand out and create an imbalance in the market through heavy buying or selling. This takes you away from the rest of the herd. It requires that you stick with your position during market noises. But once you pass that initial stage, others would follow suit and you would have a continuous trend.

In a ranging (choppy) markets, people have created boundaries (s/r) in which they would intiate their trades. Their trades are short term with respective target profits. So that is why I think ranging markets is the way it is, the market would most oftem times bounce off s/r rather than go through it because traders don't like to go beyond uncharted waters (beyond s/r). Even when there are times when the market would pierce the s/r, it would usually bounce back into the boundry limits. Thus this reflects the comfort in what is familiar (s/r zones).

So with this, I will take advantage of the prevalent behavior of ranging markets than I will in a trending markets. I would assume a rebound everytime price is close to the s/r or even peirce it. I would say a trend is establish once price is siginificantly away from the s/r rather than just hanging beyond the s/r.

till next time

Time for reflection

I have recently completed my first year trading live. It was the most memorable journey. I definitely had A LOT of help. All the books, the forums, the websites that I have gone through and all the people that have so generously contributed their methods and thinking on this one-of-a-kind website.

I have tried a lot of the systems on here when I started out, but it wasn't until the mid year that I decided to take a piece of paper and write down my 'business' plan. My system is definitely a combination of the concepts you can find here at the factory as well as my own ideas. My system is traded on the daily chart while analyzing S/R on the monthly. Last month, I finished the year with about 60% return.

Aside from the return which I am humbled to experience, I also realize that trading is more than just making money. You learn how to focus and you have to learn to self motivate. I think these things are important in order to keep you on the right way. Especially during the drawdown periods and when you account just keep jumping up and down for some time.

I like to think my trading as a business. I remember the time when I was overly excited to look at a chart, to open trades, and 'hoping' for the big win. But now, those feelings have subside (though not completely). I have come to expect a lot like losses and wins, and as the time go by, I would say that I am becoming more in tune with the market

Wow, 2007 is nearing its end and 2008 is ready to bloom. It's a great circle of life

Been in this for a year and a half, and business is doing pretty good. Close friends and family are noticing what I am doing and asking for me to go open a fund. I wonder if it's a good idea or not. Something to think about.

I think the most important thing I learn about trading is patience. It's almost a building block for success. You need patience to build Rome, you need patience to lose weight (the right way by eating healthy and excercising ) and you definitely need patience to let your system does its magic.

After all this time, my method is finalized. My theme is "trade with the trend, and go with the herd" It's funny how we behave as a group in real life and in the financial markets. That behavior (fear and greed) is so regular that it's easy to profit from it. I think sometimes we forget that under those indicators, numbers, prices, etc. a market is simply..."people"

So my new trading resolution for 2008:

1. Be Patient, the trade will come

2. Let the trend dominate and let the people decide

Happy new year and let the profits roll!!

Thank you. Please keep posting. Love your articles.