Lessons by Joe Ross

That's sage advise Joe.

It seems like that's really the key to so many things. We're all so excited about getting "there" that we forget "there" is just "here" +1.

Thanks again!

Good Stuff, Joe!
I've always believe, it is more profitable to take the road less traveled. In out case, start small and grow over time. All too many rookies follow the same dirt-filled, broken road only to end up in the same place where all the other failure stand. And the start of my trading career, I too walked that popular road to nowhere ... amd realised all too quickly that this journey on this particular road was a failure.

Now I travel with GPS and an updated map. Since, I've never been lost. I keep things very simple and easy to follow. I stay away from indicators or the so call "professional" trading theories and strategies.

This is some of the best advice I have read here at the factory to date, and something I can personally identify with...... whenever I talk about my trades it seems to turn everything around and the market bites me in the butt.....

I’m not sure I can describe it in terms of importance. The creative process is somewhat of a mystery, even to scientists who study it. There are a few common characteristics that all creative persons possess (such as an openness to a variety of internal and external experiences and a driving need to express one's sense of individualism), but for the most part, exactly how the creative mind makes earthshaking discoveries is unknown. A few prerequisites are necessary, though. The mind must be focused, for example. New ideas must flow through the mind freely, and there must be a wide range of ideas, so that they can be combined and re-combined in new ways. New and creative trading ideas are necessary to stay ahead of the crowd, so doing whatever you can to prepare your mind to brainstorm new ideas will help you develop creative trading strategies that are the foundation of profitable trading.

Many great scientific discoveries were made almost by accident, through a serendipitous observation. Had an untrained eye made the observation, it would have been missed. But because the scientist's mind was continuously running through a wealth of ideas, he or she saw a new discovery in a seemingly ordinary event. Discovering new trading ideas is also a creative, intellectual endeavor. You must get your creative juices flowing in order to see the next new idea. It's essential that you "prime" your thinking processes, get your mind ready to make a creative observation.
In some ways, your mind is like a well. You prime a well to get the water flowing, and once it's started, it flows continuously. You must similarly prime your mind to get ideas flowing. Various ideas in your mind are stored in a hierarchical structure. Information is stored together in a clump, depending on its meaning. When you aren't thinking of a particular topic, it's hard to bring information about that topic into consciousness; it lies their stagnant and hidden. However, when you make a concerted effort to think carefully about a specific topic, or a closely related topic, and start running through a bunch of possibilities, all kinds of new possibilities become apparent. Your mind quickly scans various concepts and ideas, almost unconsciously. Suddenly this wealth of information combines and you see something new. For example, suppose you develop a vague trading idea about how a set of indicators may forecast the price of a particular stock. Once you get the basic idea in your mind, you can prime your mind to get the creative juices flowing. For example, you can scan a set of charts to backtest and find support for your hypothesis. As you look through the charts, the information you see will prime other related information. Soon idea after idea will coalesce, and you'll make a new discovery that will serve as a basis for a new trading strategy. The main point is that you must set your thinking processes in motion to come up with a creative new idea. Some traders even suggest putting on a small trade based on a hunch in order to set your creative processes in motion. When you put on a trade, your adrenalin starts to rush, your attention starts to focus, your senses are heightened, and you suddenly change your perspective until you see new ideas. The more your mind is active, the more likely you'll make creative new discoveries. Knowing about the creative process and how to set it in motion gives you power. Some people are down on themselves because they can't seem to think creatively. But they can. They just need to know how to do it. It's vital to be relaxed and free of anxiety. But it's also essential to prime your mind in order to start the process. So when it's time to think of a new trading idea, think creatively. Set your creative processes in motion. You may come up with a big idea that will make you huge profits.

The creative process is somewhat of a mystery, even to scientists who study it. There are a few common characteristics that all creative persons possess (such as an openness to a variety of internal and external experiences and a driving need to express one's sense of individualism), but for the most part, exactly how the creative mind makes earthshaking discoveries is unknown. A few prerequisites are necessary, though. The mind must be focused, for example. New ideas must flow through the mind freely, and there must be a wide range of ideas, so that they can be combined and re-combined in new ways. New and creative trading ideas are necessary to stay ahead of the crowd, so doing whatever you can to prepare your mind to brainstorm new ideas will help you develop creative trading strategies that are the foundation of profitable trading.

Many great scientific discoveries were made almost by accident, through a serendipitous observation. Had an untrained eye made the observation, it would have been missed. But because the scientist's mind was continuously running through a wealth of ideas, he or she saw a new discovery in a seemingly ordinary event. Discovering new trading ideas is also a creative, intellectual endeavor. You must get your creative juices flowing in order to see the next new idea. It's essential that you "prime" your thinking processes, get your mind ready to make a creative observation.

In some ways, your mind is like a well. You prime a well to get the water flowing, and once it's started, it flows continuously. You must similarly prime your mind to get ideas flowing. Various ideas in your mind are stored in a hierarchical structure. Information is stored together in a clump, depending on its meaning. When you aren't thinking of a particular topic, it's hard to bring information about that topic into consciousness; it lies their stagnant and hidden. However, when you make a concerted effort to think carefully about a specific topic, or a closely related topic, and start running through a bunch of possibilities, all kinds of new possibilities become apparent. Your mind quickly scans various concepts and ideas, almost unconsciously. Suddenly this wealth of information combines and you see something new. For example, suppose you develop a vague trading idea about how a set of indicators may forecast the price of a particular stock. Once you get the basic idea in your mind, you can prime your mind to get the creative juices flowing. For example, you can scan a set of charts to backtest and find support for your hypothesis. As you look through the charts, the information you see will prime other related information. Soon idea after idea will coalesce, and you'll make a new discovery that will serve as a basis for a new trading strategy. The main point is that you must set your thinking processes in motion to come up with a creative new idea. Some traders even suggest putting on a small trade based on a hunch in order to set your creative processes in motion. When you put on a trade, your adrenalin starts to rush, your attention starts to focus, your senses are heightened, and you suddenly change your perspective until you see new ideas. The more your mind is active, the more likely you'll make creative new discoveries. Knowing about the creative process and how to set it in motion gives you power. Some people are down on themselves because they can't seem to think creatively. But they can. They just need to know how to do it. It's vital to be relaxed and free of anxiety. But it's also essential to prime your mind in order to start the process. So when it's time to think of a new trading idea, think creatively. Set your creative processes in motion. You may come up with a big idea that will make you huge profits.

...which would be strictly separate from the actual trading process. Free-flowing creativity'd harm trades, because you'd be sidetracked on the latest 'improvement'; to me, it's more for the longterm change in one's everchanging understanding of mm/charts/news. A strong decisionmaker may be able to handle thinking-on-your-feet type of creativity, ideas that each adjust the direction of understanding each trade's context before committing to that trade; otherwise, strict rules one occasionally updates, or another less-often introduction of new ideas into one's actual trading time, work also.

edit: This kind of reminds me of Csikszentmihalyi's pair of books on flow and creativity.

I don't see a place for creativity in retail trading.

1) Compute position size based on risk and stop loss.

2) Buy/Sell or Short/Cover.

3) Exit with profit or loss.

The reason for entry makes no difference on the outcome.

Did I leave something out?





.

Reason for entry defines risk. That's where creativity belongs.

to those that takes trading as an art , creativity is everything ...

http://www.ted.com/talks/ken_robinso...reativity.html

Creativity does help us to think differently and find newer ways of trading; therefore it is good for trading strategy development. However, it could blow your account, if you let your creative juices flow at the time of trading. “Mean Markets and Lizard Brains” by Terry Burnham explained cognitive flaws of human brain that will help you to make mistakes in the financial markets.

Great post Joe.

1. It is no mystery. It is in one's nature.
2. It is in looking at the things differently
3. All major discoveries were not coincidences, but because of observing things differently. Many apples fell on people before Newton, but they just ate them.

ps. The first and foremost "creativity" (as defined above) is to accept the fact that trading is gambling. Then apply all the gambling rules. If one is not willing to think differently and accept this fact, screw the creativity in trading.

Definetely. There is nothing wrong with what you said...that is if you are a mechanical trader as the majority of traders are. However there are a few individuals out there who look beyond the mechanics of trading and into the psychology of the whole bussiness. The old saying "curiosity killed the cat" does not apply to such people who interpret the markets not as a "what" is happening but more of a "why" is it happening.

Here is an example of creativity. The Eur/Jpy (which I currently trade) has had massive bull rallies in the recent week. As pinpointing reversals is crucial to my strategy, candlesticks play a pivotal role (no indicator will tell you when a trend will reverse as all indicators are lagging). So how do I pinpoint such levels?..well a crucial new part in my trading that I noticed only this week (after 2 years in the markets) is WAITING for 5 to 8 bearish candlesticks in a row on the 5minute charts. Now that may not provide entry...it is not designed to..it is simply designed to portray that sentiment is changing. At that point I would look at the last tapped strong historical resistance and would most likely place a sell (if that level is reached of course). At that point if we get 5 -8 bearish candlesticks on the 15minute charts...then I know my entry is good and worth keeping..until a significant support.

Now how many people do you think would make such observations if there wasnt a creative side to them? Ill tell you..NONE.

Great post Joe Ross, you are a true master.

Psi, you are a master, joe is grand master.

I fully agree with what you said about candles, I have a similar way of finding direction. The objective is the same ........... which is greater Demand or Supply. Your 5-8 bearish candle tell you supply exceeds demand.

Forex is not based mathematical calculation 1+1=2,forex and economical situation in world keep changing so strategies and calculations keep changing so i agree a good artistic mind and brain can survive better in forex trading.

I think for the newcomer to trading, creativity is very dangerous indeed. Human's have a fantastic ability to make something very simple into something very complex. Indicaters are often used to complicate the process of trading but more than often they create the illusion of something happening. This usually happens when the basics of the market dynamics (supply and demand) are completely ignored in favour of an indicator that will get you in late into a move, exposing you to higher risk and lower probability than if you had entered based on the basic of market dynamics. In this sense, creativity kills (your account).

The logic rules to follow;

Observation--->Curiosity--->Creativity--->Analysis--->Synthesis--->Hypothesis--->Theory

Where we are?

Newcomers to any business or profession need to develop the necessary understanding and skills before they can expect to be proficient at what they do. Most professions require years of studying followed by practical experience under expert supervision.

For some reason forex traders think they can be proficient straight out of the gate, without any understanding of the market and without having developed any of the required skills, it beggars belief sometimes!

You're probably right creativity can be dangerous for the newcomer but in time, and once he's thoroughly learned the business, he'll appreciate the value and necessity to be creative and adaptable in an ever-changing market. If/when that time comes, then he can open a live trading account.

"trade what you see."

that is realy good!

Back to square one, otherwise trading would have been a most boring task and "zero sum game" would have evolved itself into a "infinite sum game"

I think this post is one of the better articles on FF. You can find a hundred different lists of trader "do's and don'ts" but rarely will you find a post that will help equip a trader to think outside the box.

I personally find I am more creative when I withdraw from all the public voices in Forex and it's me and the charts. I make much better decisions and with that I am able to find systems that are so simple and effective. Systems that I would have never discovered with all the noise surrounding trading.

Naturally I have my personal hard and fast rules (RR ratio of never less than 1:1.5, wait for the market to come to me, never use lagging indicators) and once I think I have found a system that I want to use I then double check it with my rules and if it doesn't fit then I head back to the drawing board. It's a never ending process but quite rewarding when you find those few systems that fit just right. The systems/strategies/methods you create yourself are the most rewarding all around.

New traders probably spend the least amount of time in this area as is right. If they don't understand how to apply someone else's strategy then they definitely won't be able to apply their own. I don't by any means claim to have trading down pat, but I will say once you understand the basics firmly then you can spend more time in this area of trading.