Strat's Long Term Stress Free Trading

.... at first when I came upon this post my scrolling ended with the first sentences or so not showing on the screen. I had noticed earlier that it was a post from Strat. So upon reading the blue section I thought : What the .... ?
When did this stuff .... Where did this stuff..... Whoa !!?? Upon scrolling up to verify that it was indeed from Strat. I saw the message written in black.

Whew !!!!

Hello folks,

First of all - THANK YOU to every single one of you and of course to you Strat! I hope you are all enjoying the festive season...

I have been getting so much value from this thread in 2009, it's amazing! Looking forward to 2010!

I'd like to share some stuff that I've been extracting from Peter Senge's book "The Fifth Discipline". It's not a book on trading, but on systems thinking, which can be applied here too - especially to those ol' 95%. The essence of systems thinking, is a shift from linear cause-effect thinking to thinking in terms of interrelations where every cause is also an effect. (i.e. very simply put: traders move price and price moves traders)

Here are a few selected quotes with my comments:

On change:

The discipline of working with mental models starts with turning the mirror inward; learning to unearth our internal pictures of the world, to bring them to the surface and hold them rigorously to scrutiny. It also includes the ability to carry on "learningful" conversations that balance inquiry and advocacy, where people expose their own thinking effectively and make that thinking open to the influence of others.

Senge refers to what in his opinion happens at the core of successful and lasting change processes - the change of mental models. The first part suggests that we need to look at our beliefs, thoughts and feelings that motivate our behaviour. Strat has said many times that traders should have a good look at the man in the mirror! I would add to this that there are different ways of looking at the man in the mirror.

The second part - being transparent about our mental processes and talking about them is similar to what some contributors practice here on the thread - sharing their thinking and feeling behind a trade and then get feedback/suggestions on what has been noticed, suggestions for improvement, probing questions etc. Subsequently, discussions takes place and everyone can learn from it.

In the next quote Senge talks about "proactiveness" in the context of organisations and leadership, but I think it's also true for successful trading:

All too often, "proactiveness" is reactiveness in disguise. If we simply become more aggressive fighting the "enemy out there," we are reacting——regardless of what we call it. True proactiveness comes from seeing how we contribute to our own problems. It is a product of our way of thinking, not our emotional state. p19


This leads to the next part -


STRUCTURE INFLUENCES BEHAVIOR
When placed in the same system, people, however different, tend to produce similar results. (p33)

If structure influences behaviours then my first question would be: what is structure in the first place? And then, what's the structure that influences my behaviour as a trader? And finally, how can I change the structure to change my behaviour? -> Although I make some of my own suggestions at the end of this post, I'd be really curious to hear what people's thinking and ideas are with regards to this...

The next quote provides some further pointers towards some possible answers:

The reason that structural explanations are so important is that only they address the underlying causes of behavior at a level that patterns of behavior can be changed. Structure produces behavior, and changing underlying structures can produce different patterns of behavior. In this sense, structural explanations are inherently generative. Moreover, since structure in human systems includes the "operating policies" of the decision makers in the system, redesigning our own decision making redesigns the system structure. For most players of the game, the deepest insight usually comes when they realize that their problems, and their hopes for improvement, are inextricably tied to how they think. p40


Together with the man in the mirror I made a drawing of my own (destructive) trading structure and it looks something like this (imagine this as a circle, where every cause is also an effect):

Perceived Gap = not enough money.
Goal: I want to have more $ -> I fill a trade -> I observe the chart -> the chart moves in a random fashion -> I get stressed -> I make "reactive" trading decisions -> I lose money -> I get frustrated -> I want to have more $ -> I fill a trade etc.

In this "vicious circle" the perceived gap (not enough money) leads to action and behaviour that ironically lead to an INCREASE of the gap, which leads to more of the same behaviour again etc.

Drawing this has been strangely insightful and empowering. You can start by defining your goal (i. e. make 1 mio. $) and then create a chain of effects/causes relevant to your own situation like I have done in the simple example.
There is much more to it (I am still quite new to it myself), and if you are interested you can learn more here:
http://www.systems-thinking.org/intst/int.htm

If this is of interest to people here on the thread I am happy to share my findings from time to time… let me know what you think… :-)

Happy new Year!
Sid

Sid, this is very good and addresses the “head games”.

Unfortunately, because it’s not the glamour side of trading (charts etc), I’m afraid not many will read it and those that do will probably flash read and get no benefit from it.

Now, addressing your trading structure/circle:

Perceived Gap = not enough money.
Goal: I want to have more $

If this is truly how you feel and think, then your fundamentals (and therefore foundation) are all wrong. Until you change this you will ALWAYS be struggling to profit in trading. These are STRESS & PRESSURE INDUCING thoughts and MUST be banished.

No matter how much money WE have, WE NEVER have enough money and therefore ALWAYS want more money.

This is common across all of us whether we are rich, poor or whatever.

Forget this, let it go, it is just one of our underlying beliefs and UNREACHABLE goals.

Instead think, I WANT MY OWN BUSINESS. Trading is a business and like all businesses it starts out slowly, usually at a loss but with persistence, desire and determination will, over time build up profits.

The scammers,media and especially the brokers would have us think that trading, especially forex trading is a “Get Rich Scheme”. This is done to capitalize on the most liquid market ever – THEY want a piece of the action – the action being “accounts” (our money).

On a sub-conscious level, we therefore think that forex trading is our saviour, will make us untold riches and is the be all and end all answer to our problems.

Thinking this way AUTOMATICALLY hands over CONTROL to our demons, gremlins, the little man in your head and the man in the mirror.

Until we (you) get it into our heads that forex/trading is nothing other than a BUSINESS, we are doomed to failure.

This goes back to the PLAN except this is our overall PLAN.

Our overall PLAN is to create a BUSINESS which, if we run it properly, will make money for us.
Having an overall PLAN to run a BUSINESS for which the vehicle is forex trading, will keep you level headed and thinking clear.

Just like any other BUSINESS, work at it, put in the time and effort, take the rough with the smooth and stick at it through good times and bad and you should end up profitable.

Thinking of forex trading as a way to make money to solve our underlying problems and beliefs will ALWAYS doom us to failure.

Hope this helps.

re POST 8723
Strat,this is one of the best post.......at all levels of HUMAN THINKING....and really applies to all situations in our lives...
Mate,this is really a " SPIRITUAL " thinking....or HIGHER thinking....and you are on that PATH as well it seems

if anyone is intrested,than check out the works of the great American thinker ..

" VERNON HOWARD "......and also " GUY FINLEY "..

baz

hello strat and other traders.

i am facing a problem with trading. i am a newbie trader, and my problem is i am not confidence enough to make a trade.firstly, theoretically i understand about strat and other trader's pasr, fib ret, tl trading. but the problem that i face is that practically, i can't even make a buy/sell stop order(even in demo account) when i see a pasr or and fib or tl signal.my mind just telling me wait wait wait......and i waited for 5days until Saturday the market close and when on open market i lost the best entry and best pasr.

can anyone help me to improve my confidence in this trading method?

english is not good but hope the meaning i wanted to tell will be receive by you all.

hello strat and other traders.

i am facing a problem with trading. i am a newbie trader, and my problem is i am not confidence enough to make a trade.firstly, theoretically i understand about strat and other trader's pasr, fib ret, tl trading. but the problem that i face is that practically, i can't even make a buy/sell stop order(even in demo account) when i see a pasr or and fib or tl signal.my mind just telling me wait wait wait......and i waited for 5days until Saturday the market close and when on open market i lost the best entry and best pasr.

can anyone help me to improve my confidence in this trading method?

english is not good but hope the meaning i wanted to tell will be receive by you all.

Babypips your English is good enough to make your concerns understood.

From what you describe, you are severely in the vice grips of FEAR.

We need to find out what is the root cause of your FEAR.

First, do you REALLY understand the method? Do you understand and can identify SR levels? Do you understand and can recognize the PRICE REVERSAL bars?

Can you go to ANY chart and SEE where the PASR trades are?

If you answer “NO” to any of these questions, you MUST go back to the beginning of The Path of Learning and read and UNDERSTAND.

If you did answer “NO”, why are you trying to trade at this stage of your learning?

If you answer “YES” to ALL these questions then your FEAR is in your head.

The only way I know to overcome the FEAR and GREED that CONTROLS us during “live” trading is to have an irrevocable, rigid, trusted and accepted PLAN.

The only other reason would be trading “scared money” but since you cannot trade on “demo”, this cannot be the case.

Go back into the thread and read ALL my posts on trading psychology especially those where I discuss and detail the use of a PLAN.

Let us know your findings

Great post Sid, the story below was in a British Paper today, shows how wrong it can all go if we cannot control the "little men in the head"...and this chap had plenty of money to begin with...

http://www.dailymail.co.uk/news/arti...-bankrupt.html

I have found myself stuck in a similar circle...its happening less frequently thanks to this thread hopefully in 2010 it will be broken for good...thats the plan

A PERFECT example of not reading the manual BEFORE operating the machinery.

The "plonker" comment seems so appropriate!

The simple answer,
is hypnotherapy for a quick boost to your self confidence,
you know what you need & this will give you the push to achieve it

been using it myself for over a decade

If its so simple, why aren't the 95% of losing traders using it?

I'm back to the thread now. Thank you everyone for all the well wishes. Looking forward to the new year with you guys and I hope everyone enjoys their holidays.

-m

Brother, I can't put into words how pumped I am to see your trade. That has to feel good. By the textbook and everything! This is certainly encouragement for me.
-m

Sid, this was an interesting read. I've always given considerable weight to cause and effect but never considered it's implications for price movement. I'm a 'systems' guy myself.

While we are what I would term 'pure chartists', I still pay attention to some of the fundamentals (A hold over from my stock days), which play into this cause and effect. Take interest rates for example. The sustained rise in AUDUSD and NZDUSD was fairly predictable given that their interest rates pretty much held steady in relation to the US drop and their housing market didn't take the huge hit the US market did.

Cause: US credit implosion
Effect/Cause: Lowered interest rates
Effect/Cause: Investors abandon the dollar
Effect: Buyers (institutional) flocking to a higher interest rate leads to higher price (AUD and NZD) leads to more traders (non-institutional) buying leads to higher price, etc.

You answered your own question.........

My emails are bombarded today with the latest FOREX SCAM!

This time its a GARDNER who accidentally trips over the dirtiest forex secret!

AMATEUR TRADER CRACKS FOREX TRADING CODE!

" EXPOSED: How a 24 year old Gardener
accidently trips over the *dirtiest* Forex Secret
that the gurus don't want YOU to know! "

"They" don't want you to know about it... But I'll show you anyway.

Today is the day that the entire Forex World is about to change, because I am personally going to release 250 copies of the most revolutionary Forex Trading system to ever hit the market - ... all created (accidently)... by a 24 year old garden worker!


It's as I said. I am offering you a GUARANTEED method which is going to make you smaller, short term, but more importantly... CONSISTENT profits


I'm sure you want to know just HOW a Garden Worker opened the Black Box Secret to Forex...


I am going to literally teach YOU how to make other traders around the world pay for everything you want!



Do you want that LCD 50" TV? Do you want that extra holiday? Do you want your bills or your mortgage constantly paid off... directly from another source?


"... I'll show you how to LEGALLY steal from the market competition! ..."


In order to cut it in this industry, you need to have a secret that very few others have and the Scam I Have 4 U is that very secret... and I'm literally allowing 250 lucky traders in on it.


Imagine sitting at home in your pjamas, with a warm cup of coffee, making easy quick money? Sounds like a dream - I can tell you that it feels like a dream when I do it! I almost feel dirty doing it, watching that money continuously flow into my account.

When I accidently stumbled upon the original idea for the Scam I Have 4 U, I had no idea how it would impact my life.

Since then I've made so much profit that I've literally lost count of it.

I am NOT in this for the money...

If I was, I'd charge you thousands of dollars for this system. It has the potential to make you a solid second income for the rest of your life!

You've got two options. You continue to trade like you always do and probably end up losing your money or breaking even over long periods of wasted hours...

Or you get yourself a copy of the Scam I Have 4 U

Order now, at the discounted launch price of not the $297 some of my partners suggested, not the $750 the Scam I Have 4 U could generate with a single trade ... if you order now.

You can secure your copy at the launch price of ONLY $77
Remember: Only 100 customers are allowed to get a copy of the
Scam I Have 4 U. I don't want the market to become saturated
which means once I've sold 100 copies... I take down the site!


He forgot what he already wrote! At the top he was releasing 250 copies but now its 100 copies!

Going away to spend New Year with friends so I thought I'd take this opportunity to wish Strat and all contributors to this great thread a Happy and Prosperous New Year.

Cheers

N

Going over my notes from the past, it appears the secret telling continues. If this were a safer week to trade, I would take this one as a counter trend ATM.

To give away the secrets of Forex for $77 bucks, he must think he is Santa Claus!

A lot of the banks have to finalise their end of year accounts, both for the regulators and the shareholders. The next few days in the markets will be driven by balancing the trading books. (This balancing only means within the banks predetermined levels, so if the traders have over extended say oil futures they have to sell down to within the banks allowed holding level, or the regulator fines them) This does not apply to Forex as they account for this in a different way, but commodities, especially the Oil, Gas, Gold. Metals, Softs etc may very well have some very strange movements during the coming days. My source has a 1 billion dollar futures holding to sell in the next few days!

On forex I don't have the experience to know when the market may be back to normal after Xmas, I would appreciate anyone's view on this, as I have stayed away from the market during most of December.

I hope all of you have a Very Happy New Year and look forward to us all trading profitably throughout 2010.

Thanks for your comments Strat! Great stuff! In particular I like your advice on the "never having enough" as a fundamental human condition and letting it go.

Shifting the focus of our goal from thinking in terms of "having more" towards "having your own business", has the potential to not only change ones outlook in general but to also generate success in trading.

I guess a pitfall could be, that we tell ourselves and others a different story than we actually (maybe subconsciously) believe and feel. I know that I have told myself countless rather self-deluded stories about all kinds of things. That's also true for trading…

One important message in the systems approach for me is: don't just keep pushing harder when things don't go the way we would like them to go. The message is, that if we get stuck we need to ask ourselves "what could be contributing to the block?" and then work on managing, reducing or eliminating the underlying cause. The solution can sometimes seem very paradox this way, but it addresses the core rather than the symptoms…

Oh, and btw: thank you very much for your recent post on another series of fantastic trades with explanations (GBPJPY). It's a fantastic way to learn!

Yeah, that's the plan for me also! Thanks for posting the article Sinan! What a great example of the psychological challenges that trading brings. I can't begin to imagine the pain that guy must have gone through…