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The System II (Yes with irony)

  • #11,381
  • Nov 20, 2009 2:36pm Nov 20, 2009 2:36pm
well guys...have a nice weekend......

The smoke will clear up and we should go back to trading......Do something nice to anyone and be in peace...I am....

Good Karma!
Peace
  • #11,382
  • Nov 21, 2009 8:23am Nov 21, 2009 8:23am
dear feb,
i was demoing since i have read first two pages,today i'm reading the thread from beginning, so just seen your post #625 and think to myself "thank you God!',my english is not so good, so forgive me if any mistakes,i'm very happy for you that you are healthy again and for the thread it's going on,i wish you all the best with your health,its the only important thing in everybody's life!

best regards!
Money is made by sitting, not trading. Jesse L. Livermore
  • #11,383
  • Edited Nov 23, 2009 5:02am Nov 22, 2009 2:19pm | Edited Nov 23, 2009 5:02am

Something important hit me while I was thinking through the process of learning this philosophy this weekend - and I hope it is useful to other practitioners of this great approach.

We psychologists know that people generally feel more emotional activation (and for longer) about their losses than they do about their wins of equal or even greater size.

We know too that most people will generally prefer to take a small gain now rather than a large gain later where in doing so there is a chance of losing the certainty of the small gain they have already.


In psychological research it is clear that most people strongly avoid gambles that involve even a low probability of losing a lot. However, the same people also like the idea of winning a large amount but only provided there is no chance of losing a lot too. People for example do the lottery even though the chances of winning are virtually negligible; but the loss is virtually negligible.

Research shows clearly that it is normal human behaviour to hold onto losing strategies in all sorts of domains of life even when they repeatedly fail us. How many marriages really ought to have ended years ago??? We just hate admitting we're wrong soon enough.


Taking all of those simple truths together makes it look as if we just are not designed to trade Forex - not normal people at any rate!!!

What Feb and Fx stress is taking small losses in the certain knowledge that the big return will come. But alas when the large return is imminent - i.e. the runner begins, it looks just like any other trade that might turn into a fake-out. So what do we do? Do we look at the money clocking up from the first 8 pips and then bail as it falters? What about 15 pips? 20? 50? Well some of us do just that. Taking the gain now rather than waiting for the larger gain later - this is typical human behaviour - take it before it gets snatched away. We do after all feel our losses more than our gains of equal measure. So when the money in the form of pips goes into reverse as the runner turns around and begins starts to go down it is essential for us to wait for the pullback to shape up. But that goes against everything that normal human beings do - if it is going down GRAB IT WHILE YOU CAN.

That is normal behaviour...but be warned System II's success depends on abnormal behaviour!

We are all working towards being ABNORMAL! Normal people don't do what is necessary to win at this game.

We are all collectively working against what might be argued is our very nature here and that is not a simple matter. We have to be able to sit tight and risk a large loss of what has just come our way, something that was not there five minutes before – a profit which might (gulpo) turn into a LOSS - 40 pips might go down to 28 pips - arghhh panic. 3 pips might go to minus 7 on a 2G+, 7 pips might go down to – 10 in a #2, 60 pips might collapse to 38 in a #1 play. Watching this happen goes against everything that research shows clearly we tend to do automatically in such situations – grab it before it all goes!!!!! That doesn't work in this methodology...it's too 'normal'.


So this philosophy of trading involves training ourselves to go against everything our inner mental voices tell us about avoiding losing anything of what comes our way instantly...as if it is a lucky accident. That is what makes it so hard….and is the reason we all need help, tools, reminders, and the reason we lose nerve, confidence and calm.

Fx has said clearly that the answer is to focus on executing each strategic part of the plan to perfection forgetting the profit or loss. He says don’t count the dollars and cents, just perfect the strategic plan. The reward is the execution of the perfect trade – the perfect losing trade and the perfect profitable trade.

It just makes sense...Sticking to the plan must be and is the reward even if it results in minus pips. We have to forget about the money (“What are you insane????” Yes we do indeed!!!) Just execute the trade perfectly. HE IS SO RIGHT. This is perfect and what is more it is psychologically sound – it shifts attention from the financial loss or gain to the plan just like a martial art – If and Then. That’s why he says that #2G+ is never a break even trade – always a loss. The perfect #2 might be a BE trade in the right circumstances. #1 is not the earliest profit take possible; it’s not taken until a pullback has occurred and a re-approach of the immediately previous HH or LL has occurred – unless of course the candle comes back at you like a train in which case it might be sensible to consider bailing with something in the bank.

So I realise looking at this in some considerable depth that being afraid of the trade is probably ALWAYS a result of focussing on the profit/loss – the financials, and not on the strategy - THE PLAN.

Working to fulfil the plan feels different, much calmer, focussed and controlled – the profits or losses become bi-products of the strategy being fulfilled…the objective is the plan itself – the profit is just the eventual inevitable outcome – and really quite a nice bonus.

Brilliant! Never thought I'd ever say this but...here goes....Thanks Feb, Fx and all the Family for making me behave abnormally Who the f**k wants to be normal anyways? MacDaddy signing off - proud to be abnormal and richer for it!
$urvive, Pre$erve & RESPECT THE TEACHER
  • #11,384
  • Nov 22, 2009 2:35pm Nov 22, 2009 2:35pm
Quoting mac1956


[color=black][font=Verdana]Something important hit me while I was thinking through the process of learning this philosophy this weekend - and I hope it is useful to other practitioners of this great approach....
Great post Mac!

I was always "abnormal" so to speak, in terms of my tendency of taking small loses and letting winners ride. My biggest sin in trading up until now was overstaying winning positions, so #1 is my star play to master here, (I truly never had problems with #2 and G+ like situation).

By the way, glad to say we are colegues two fold here (a trader and a psychologist here, banchelor degree but never had a chance to work in the field, life had some other plans for me).

See you tommorow on a trading session mac.

greetings, Coronajazz
You wont survive without preserving!!!
  • #11,385
  • Nov 22, 2009 8:53pm Nov 22, 2009 8:53pm
Really really good post, you nailed it Mac, its good to here it in words exactly whats going on in our head while we are trading.. This is so right on and while we all know it everyday, we still do it.. I want to be abnormal too!!! and just stick to the plan, let the profits be a result of the plan.. This thread is so full of gold its to good, so thanks to all of you, my trading has really been transformed and for the first time i am actually understanding and do something that works.

Thanks you all
  • #11,386
  • Nov 23, 2009 12:11am Nov 23, 2009 12:11am
Morning guys from uk. looking forward to trading again after 4 days away from the charts. defo gunna try and be abnormal today! great post mac.

Good luck to everyone today
  • #11,387
  • Nov 23, 2009 12:53am Nov 23, 2009 12:53am
Good morning Iak

Quoting iak
Morning guys from uk. looking forward to trading again after 4 days away from the charts. defo gunna try and be abnormal today! great post mac.

Good luck to everyone today
Survive and Preserve
  • #11,388
  • Nov 23, 2009 1:12am Nov 23, 2009 1:12am
Quoting mac1956

Something important hit me while I was thinking through the process of learning this philosophy this weekend - and I hope it is useful to other practitioners of this great approach.

[color=black][font=Verdana]We psychologists know that people generally feel more emotional activation (and for longer) about their losses than they do about their wins of equal or even greater...
some sole searching over weekends will do that to you guys!!! coming up with a such excellen post.. thanks for sharing it with the family my friend.

Abnormal !!!... i personify the damn word.. lol

now to complete this just a touch, so it be ingraved in our minds and soles for good hopefully.. I'll ask one question and i would like everyone to give his/her own short answere..

so Macdaddy and all..
if i ask you: how can u be successfull it this style? you'll say by being "Abnormal".. and that be a correct answere.. then I ask another question: what you got to do to be Anormal? you say, by "sticking to the plan".. and you are correct once again.. ok very good.. nice.. ur half way there.. ok now..
this is my question to you:
how do u stick to the plan?................ . very simple..
by being making all kinds of true commitment to yourself !!!!.. heck, i know you already done that by about half dozen times.. lol.. so what am i looking for!!

dig deep guys!!!!.. we are going under the surface of this thing.. (all u psychologist out there you should know what i am talking about)
  • #11,389
  • Nov 23, 2009 1:16am Nov 23, 2009 1:16am
BB, long 1.49530.
  • #11,390
  • Nov 23, 2009 1:20am Nov 23, 2009 1:20am
Quoting fxachilies
some sole searching over weekends will do that to you guys!!! coming up with a such excellen post.. thanks for sharing it with the family my friend.

Abnormal !!!... i personify the damn word.. lol

now to complete this just a touch, so it be ingraved in our minds and soles for good hopefully.. I'll ask one question and i would like everyone to give his/her own short answere..

so Macdaddy and all..
if i ask you: how can u be successfull it this style? you'll say by being "Abnormal".. and that be a correct answere.. then I ask another question:...
deviate from the plan and lose loads of money!! then back to the plan. lol
  • #11,391
  • Nov 23, 2009 1:23am Nov 23, 2009 1:23am
Attached Image
  • #11,392
  • Nov 23, 2009 1:25am Nov 23, 2009 1:25am
Quoting fxachilies
how do u stick to the plan?................ . very simple..
Hi Guys

I have been away the past week, working on a remote coal mine....

Mac great post...

Now Fx i am an automation engineer so I have decided to build the following "stick to the plan" machine

- First write an ea to detect any deviation from the plan.
- Port the ea to an external power supply which I will wire to my special trading pants
- so whenever i deviate from the plan I will recieve a shock to my genitals

Anybody interested in my custom made trading pants PM me . Special price for System 2 traders
"Save your ass, then go for profit"
  • #11,393
  • Nov 23, 2009 1:27am Nov 23, 2009 1:27am
Quoting Paul M
Hi Guys

I have been away the past week, working on remote coal mine....

Mac great post...

Now Fx i am an automation engineer so I have decided to build the following "stick to the plan" machine

- First write an ea to detect any deviation from the plan.
- Port the ea to an external power supply which I will wire to my special trading pants
- so whenever i deviate from the plan I will recieve a shock to my genitals

Anybody interested in my custom made trading pants PM me . Special price for System 2 traders
best put me down for a couple of pairs!
  • #11,394
  • Nov 23, 2009 1:28am Nov 23, 2009 1:28am
Quoting iak
deviate from the plan and lose loads of money!! then back to the plan. lol
lol...
  • #11,395
  • Nov 23, 2009 1:38am Nov 23, 2009 1:38am
I will take one please..
Quoting iak
best put me down for a couple of pairs!
Survive and Preserve
  • #11,396
  • Nov 23, 2009 1:51am Nov 23, 2009 1:51am
Good morning everyone! Looking to go short at 1.4950
You wont survive without preserving!!!
  • #11,397
  • Nov 23, 2009 2:00am Nov 23, 2009 2:00am
MacDaddy, you make my "very important posts" list go longer by the day!

Thanks for your contribution to this thread...


Quoting mac1956

Something important hit me while I was thinking through the process of learning this philosophy this weekend - and I hope it is useful to other practitioners of this great approach.

[color=black][font=Verdana]We psychologists know that people generally feel more emotional activation (and for longer) about their losses than they do about their wins of equal or even greater...
I follow THE PLAN to Survive & Preserve..
  • #11,398
  • Nov 23, 2009 2:00am Nov 23, 2009 2:00am
Quoting fxachilies
this is my question to you:
how do u stick to the plan?................ . very simple..
Buon giorno!!

MacDaddy.
Amazing post, simply amazing........
"what do you wanna be when you grow up?".... I wanna be abnormal, dad..." lol

Fx.
........Testing, suviving and preserving, cutting the losers short, and taking all the runner's juice....
  • #11,399
  • Nov 23, 2009 2:01am Nov 23, 2009 2:01am
i bet you won't find it as amusing in your monthly statement as you are at the moment.. of course if last even the whole month.. heheheh..

40+ people online and one can not come up with the answere or any close to it.
it makes no differnce to me what so ever guys.. lol..
I maybe check back at my quiet time.


ps) by the way i just preserved +18 on the tignney long there.. it was alllllllllll inside info..
  • #11,400
  • Nov 23, 2009 2:09am Nov 23, 2009 2:09am
Quoting fxachilies
how do u stick to the plan?................ . very simple..
Practice and practice untill it is a habit
Dance with the market .. I have two left feet
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