The Winning Trading Psychology - sure way for consistent profits

Margin call great money magement.....enough said

Heart of the thread! perfect post! Right balance between Edge + MM + Psychology

Cheers
Winston

Most of you are well tuned with this type of psychology. You must have searched for high % winning methods, even spent days and nights for Holy Grail. However there is a very big difference between an Expert trader and an amateur. Experts build not an extremely high percent winning strategy. They know that over a period of time, their odds will help them to survive. On the contract, Amateur will definitely have a very high percent winning method initially and still is a loser. The most fundamental reason for this phenomenon is amateurs and most traders try to curve fit their trading methods. The real problem is not with the method, rather within you. You carry a notion that all of your trades should be winning. You constantly optimize it whenever it fails to give the outcome you desired. The irony is you then start to look in the past for filters and come out with yet another modification of your trading method. Now you go for a live account and still suffer loses inspite of your strategy being optimized and curved fit. This is because the market conditions in “NOW” are different from what you made your filters. This process repeats indefinitely until you are frustrated and end up giving your Trading Career. The root for failure is this type of attitude which wants to avoid the dark side of trading method. I assure you there’s no method without dark side. This dark side gives loses. The only thing under your control is limiting your risk on the basis of this dark side. From now onwards, you should stop curve fitting your trading method. Stop optimizations every time you have streak of losses. Again there should be a balance between optimizing and re-optimizing.

Losses can’t be avoided. They will be there to any trading method. Those who promise you 100% winning methods are Snake oil vendors. Do not waste your time with them. The only thing you will gain with them (snake oil vendors) is 1000 things you should never do.

Trading methods are needed to be developed according to one’s own personality. If you are Day trader what a long term investing method do to you? Could it support you? However there are certain methods which only need a change in time frame and give you very good chances of winning in every market. Try to see reality of market without any biases. Your methods should be based on Market structure or market facts. When your methods are robust and successful on most of the markets and across many timeframes, they are backed with market facts and will continue to survive for the longterm with very rare optimizations.


I hope you had a great time here! I wish you the true success for taming the untamed within you. This is the only real difference between consistent profitable traders and many losers. Read and re read the Trading Psychology until it sinks into your subconscious. Have a great Trading career

Thank you all contributors and others........
keep on coming to enrich others..

I request all the posters stay away from negative statements and if you feel something is wrong ,please do correct and comment with the intention of helping others and not insulting them!

I hope we all could still learn further and further with the experiences of masters and grandmasters!!!!

With the Best Regards
Winston

why you think there is edge in James16 Group?

A quick pop quiz about randomness

You and your rich friend (Mr Market) are playing a coin tossing game with a fair coin. If its heads Mr Market gives you $1 if its tails you give Mr Market $1. You have $2 in your coin tossing account.

Q1 - What is the chance you will win the first toss?

Q2 - You play 2 times what is the chance that you will blow your account?

Q3 - You play 4 times what is the chance that you will blow your account?

Q4 - What happens to your chance of blowing your account as you play more games?

I don't know why you cannot see the connection between how the market works and trading psychology. Think about the traders that do not have an edge. What do they do? People trading with their emotions will always get in a trade when they feel it looks safest to do so. The pro's know this and use it to their advantage.

The amateurs see the market going up, nice big movement, fast and they want in for a piece of the pie. They jump in. Unfortunately they are getting in when their risk is highest and the probability of the trade working out lowest. The further they get in away from the origin of the move the higher the risk. Over the long term their accounts dwindle.

Someone has to lose otherwise their would be no market movement and it is directly related to those that trade with their emotions because they are trading when it looks the safest - buying when the market is high, selling when the market is low. The late comers to the party.

This is what trading with emotions gets you: zero edge which help fuels the cycles of buying and selling.

But also: Even those traders that have an edge, but let their emotions get the better of them, will lose simply because they got in to a trade too late or got out too late. They then become part of the same group that do not have an edge which provide profitable opportunities to those who do have an edge, pro buyers need late sellers pro sellers need late buyers.

Let me add by saying having an edge means your risk is small compared to your potential profits and so a profitable MM is half fulfilled, just by entering the market at the right time and place (rather than trading with your emotions at the wrong place).

Great finish Winston. I just learned this lesson last week after i blew out my live account and had the time to objectively re-evaluate. I realized that my edge/system was fine. I could have been profitable with it had it not been for my constant adjustments after a few losses. Greed! and Fear! caused me to do this. All I had to do was remain in the "sweet spot" of the market accept both the wins and losses and the probabilities would of been in my favor. Good psychology has to be a part of your edge. Discipline is psychological.

Great topic help alot. Thanks to all.

jzw
it clear your not in agreement with this thread and that's ok would you please move on let those who feel this thread is a help to them continue to get what ever they can out of it, without the unwanted interference, don't take it personal because your objective point of view has been of service but now it getting in the way of progress for others.

@jzw:I believe that the answers to these kinds of questions can be found here: http://en.wikipedia.org/wiki/Gambler's_ruin
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@jerome:You're advocating one-sided debate, then? The idea of pushing one's own views unchallenged?

There's no law against ignoring any posts that you feel are unhelpful or irrelevant.

Personally, I try to spend more time reading posts that challenge my own views. Then I weigh them up, as judiciously as I can, and modify my perspective as I feel led to. When we become completely set in our views, we stop learning.
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@Porkpie: IMO you're both correct, but coming from different angles. There are two aspects to the same psychology. The first aspect, as you point out, is that price movement is driven primarily by the psychology of traders. To whatever extent it's possible to 'read' this psychology through price charts (and/or other relevant data that you might have access to ), you can potentially gain an edge. Then the second psychological aspect comes in to play: how well you're able to maintain discipline, in order to consistently implement that edge. I think that is what the OP originally had in mind, and what jzw is talking about.

For those of us unable to read the psychology that underlies the candles, attempting to enter moves increasingly early becomes an exercise in 'top and bottom guessing'. Hence many traders will enter later into a move, as their strategy dictates. This may represent an inferior methodology, but it's not necessarily an emotionally based decision.

Dear friends and traders,

I just want to share my view on being one with the trade setup. I hope this will benefit few of you........

From last 6 years, my trading has mainly been few setups that have consistently proved their edge almost accross many markets and many time frames. I have been using my own researched setups like False Pin Breakouts, My modification on wolfe waves, Long period rectangle breakouts, Bollinger band breakouts in a unique way etc. Also from last few years i have been trading J16 setups and recently jankone 5min setups. These all setups are like different tools i use for entering trade.

But , the way i apply them makes the difference. If i have spent X time backtesting them, then i would boldly say that i am spending 10X or more time on Screen time with them. Over a period i am used to them so much that i know something just more than a setup. As if i have been riding them on " Subtle level" . This Subtle level makes a big difference. Hence I can pass over the trade even if it has all setup criteria. ( i hope many will agree this factor) What i want to tell is even if you study one setup ( with edge offcourse ) with all the passion! remmember passion and love for the setup! ( feelings make a big difference ) you can land in it's Subtle world. If you operate from this subtle level, Success is almost sure!
I remmember Yani, why his music was different from others ? think why? Why MJ rocked the world?? why? why some people can cook Best even with ordinary ingredients???? They all have passion, love and simplicity to operate from subtle levels........

Remmember Bruce Lee's quote " I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times"

what does he mean? IMHO 10,000 kicks practise with passion, dedication and devotion ..........

I wont bore you much...hehe..... the point is practice your setup ( once you find consistent edge ) to that point where you and the setup are one!
Then even with few streak of losses you can flawlessly executive your trades with Right Confidence, Clarity of Winning and Balanced Expectation...

Again plz plz plz ......Get at the Subtle levels of setup !

Any comments to help and benefit all of us are welcome!

Best Regards
Winston

Following is an extract from lifecoachesblog.......

True inspiration ( not theory folks!) from Bruce Lee for Traders who have lost hopes and deciding to quit, please read this!

http://www.brucelee.fr/index-bruce-lee.jpg
6 Things You Didn’t Know About Bruce Lee’s Success

1) He never finished university.

Growing up a teenage in Hong Kong, Bruce would get into fights. After a particularly bloody one involving a trip to the police station, Bruce’s family decided to send him back to America where he was born.
In 1964, at the end of his junior year, Bruce decided to drop out of university to head the Seattle branch of his Jun Fan Gung Fu Institute, and dedicate himself to expanding his martial arts schools, joining the ranks of people like Steve Jobs and Bill Gates, people who never finished university and became massive successes later on in life.
Not to say that Bruce was an idiot! In fact, he had been a philosophy major before he left the University of Washington. And not to say you shouldn’t go to university either! But Bruce never let the lack of a degree stop him from achieving his heart’s desires.
2) He almost never practiced martial arts again.

In 1970, with The Green Hornet series in which he co-starred in cancelled and finances tight, Bruce failed to warm up properly during one of his weight-training routines and severly injured his back.
The doctors told him to rest in bed, and to forget kung fu: he would never kick again.
To someone whom once said that everything he learned, he learned from martial art, this would be a devastating blow. With financial worries bearing down on him, Bruce could only lay flat on his bed for the next three months, and for another three months be confined indoors.
But even then, he refused to let this stop him. If he couldn’t work out his body, he could work out his mind. In those six months he wrote furiously, penning down his own thoughts and methods of the martial arts which he so loved.
In six months’ time, he had written eight, two-inch volumes of notes. And in all that time, with evidence to the contrary, he refused to believe that he wouldn’t heal; he was an avid believer that our thoughts create our reality.
After those six months he started working out again, moderately at first, and resumed teaching afterwards.
And even though his back would remain a source of pain throughout his entire life, you wouldn’t think it to see the man blazing faster in his movies than any able-bodied person.
3) His greatest achievement came from a less than perfect victory.

Bruce Lee’s greatest contribution to the martial arts world was his philosophy and martial system of Jeet Kune Do. But he didn’t make up this martial art from thin air.
In fact, the catalyst that gave birth to one of the most efficient martial arts in the world came from a less than efficient fight.
In the 1960s, Bruce Lee was challenged for daring to reveal the secrets of Chinese martial arts to non-Chinese. He won the fight, but found himself unusually winded afterwards, and was disturbed in thinking back that even though he could have ended it in one, the fight had taken three minutes instead.
Before that time, Bruce had been content with modifying the traditional martial art of Wing Chun. But because of that less-than-perfect experience, he pursued more sophisticated training methods and rigourously dissected the martial arts for the very best that he could find, and in time his own profound and deadly expression of the martial arts was born.
4) He had his opportunities stolen from him.

Did Bruce have it easy from the get-go, especially with someone that had such astounding skills you’d think Hollywood would have been banging down his door to sign him on?
Hardly.
After the cancellation of The Green Hornet series, Bruce couldn’t find much more television work. In 1969, a movie project called The Silent Flute, which he had put in massive effort and pinned high hopes on, fell through.
With his back still hurting, and financial disaster on the horizon, his wife Linda had to work, while Bruce stayed at home to watch the kids and rest his back.
During that time, Warner Brothers contacted him with what looked like a glimmer of hope; they wanted his help to develop a TV series based on the martial arts. He was deeply involved and gave them numerous ideas…many of which were used in the ensuring TV series Kung Fu, starring not Bruce Lee, but David Carradine.
Later on, Warner Brothers admitted that despite his heavy involvement, they had never even considered him for the role.
Ironically, this was the final straw that pushed Bruce to accept an offer by a Hong Kong film producer named Raymond Chow to make the movie that would propel him into superstardom; The Big Boss.
Bruce turned setback into success, when he met Raymond for the very first time Bruce told him; ‘You just wait, I’m going to be the biggest Chinese star in the world.’
5) He practiced incessantly.

What do you think was the price of his eye-popping feats and unbeatable athletism? Exercising two times a week and a bottle of beer in front of the TV after?
Bruce Lee trained religiously every single day, there are training records that suggest he practiced kicks…upward to a thousand times a day!
6) He was an avid reader.

He had a vast library of books and loved scouring the bookshops for more. He not only had a appetite for books on martial arts, but he also devoured books on the personal growth writers of his day, pioneers like Napoleon Hill, Norman Vincent Peale and Clement Stone.
He believed in personal development so much so he once penned down this prophetic personal affirmation in 1969, 2 years before his first hit movie The Big Boss:

I, Bruce Lee, will be the highest paid Oriental superstar in the United States. In return, I will give the most exciting performances and render the best quality in the capacity of an actor. Starting in 1970, I will achieve world fame and from then onward till the end of 1989 I will have in my possession $10,000,000. Then I will live the way I please and achieve inner harmony and happiness.



Can we learn something?
It depends on YOu! you and you!

All the Best
Winston

Oneuniverse,

Thank you for sharing this truly excellent article on Bruce Lee. The same qualities that resulted in his phenomenal success are applicable to trading or any other pursuit that we may choose.

Once again, the power of the mind.. the power of positive thinking can be used to overcome any obstacle and mow down any resistance to success. Great article!

fxpilot

There is a chinese proverb Bruce forgot to take into consideration
"Life is uncertain, eat dessert first!"

Bruce made the most common and disastrous mistake of all. He placed his inner harmony and happiness in the future, a time based concept that doesent even exist. There is only one moment in which peace and happiness can be experienced and that is now. If you place your joy, your peace, your freedom in the future, based on some level of achievement as a trader, you are chasing a carrot which will prevent you from experiencing anything except disappointment, a complete waste of your life.

You must be these things first, happy, peaceful, wealthy, successful and then trading success will follow as a natural consequence of your inner qualities. No matter who you are or where, these attributes of being are possible. There are happy people in even the worst of conditions and unhappy people in the best of material conditions. The upside of realizing this is, that you already have everything you want for peace and happiness. Trading results have no impact and cannot take anything away from you. From this position you are able to trade without fear. The process of trading itself is an enjoyable game as is everything you do from a peacefull and happy state of mind. That is the all important psychological aspect of trading that is usually completely overlooked. It is in this way that a trader aquires the necessary psychological edge.

Not only was Bruce dead long before his chosen date for happiness, He died before the release of Enter the Dragon and never knew he achieved his goal of being the highest paid Asian superstar in the U.S. Sure, write down your goals and work hard on your plans, these are helpful tools but remember dont take your peace and happiness and place them in the future. Your happiness and peace must be realised in the present and your results will fall into line with your state of mind.
Im starting to rant now so Im going to leave it there. I expect this post to be torn to shreds by the quants and Im not going to argue with anybody about this. Thank you oneuniverse for the opportunity to express my viewpoint

Great post M.A.C.Doug.

It is so easy to get caught up in the 'future' and neglect the 'NOW'.

Hi MAC,

I completely agree with you in this regard, but still there are many things we can imbibe......sure in our own way......like the best things abt him was passion and he never gave up inspite of almost permanent failure..

Regards
Winston

@jerome:You're advocating one-sided debate, then? The idea of pushing one's own views unchallenged?

There's no law against ignoring any posts that you feel are unhelpful or irrelevant.

Personally, I try to spend more time reading posts that challenge my own views. Then I weigh them up, as judiciously as I can, and modify my perspective as I feel led to. When we become completely set in our views, we stop learning.
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I completely agree, no pund intended.

M.A.C.Doug, Supurb post (a few days back, your last post). Thanks. I agree 100%.

I don't think too many folk will be in a position to argue with a trader who's made a 242% return across 1200+ trades in the last 5 months.

Amazing performance, congrats.

What an excellent thread.

I think one thing that really stood out to me in this was this statement in post 19.

"You can have and will have at some point of time in your trading career 10 or more consecutive losses"

If everyone trialling a new system or edge took this in to account then i doubt that new traders would skip from one system to the next as much as we do, when I like most people i'm sure use to give up on a system when I had 2 - 3 losses in a row. It kind of makes 1% risk per trade a little to much stomach.... and 0.1-0.5% sound like a far more attractive option.

I am personally learning to trade james16 methods an am now considering demo trading this until I actually see 10+ consecutive losses in a row and then can have the psychological strength to get back on my feet and continue trading my system.

All the best and keep up the good work.

James.

This is an excellent thread and I truly do believe that psychology plays a huge part in trading. You need to discover yourself and who you really are. You cannot address your psychological issues if you do not know what they are.

There are many psychological tests on the Internet, but a good starting place is www.tharptradertest.com

Once you know you weaknesses and strengths, as least then you can try to do something about it.

Winston, if you don't come back soon, I might start putting my own stuff on here with regards to trading psychology to see if I can get it going again! So far this thread has some excellent posts from you as well as some excellent responses. There are things we can do to address our psychological weaknesses but the solutions will be different for each person even when trying to address the same weaknesses.