Most aspiring traders spend an inordinate amount of time studying technical indicators and strategies in search of trading success, while many of the fundamental questions about the markets and trading remain largely ignored.
Contrary to popular belief, the foundations of trading success are philosophical and psychological in nature rather than technical. With the proper philosophical underpinnings the choice/development of a trading strategy becomes a relatively easy task, but without proper psychological preparation the trading of that strategy is fraught with danger.
My intention with this thread is to share a few thoughts about these matters in the hope that the developing trader may find something that helps him/her along the way. And I believe that this may fill a gap. As trading psychologist Brett Steenbarger says:
"This is the great weakness of most efforts at 'trader education'. Such education consists of isolated Website posts, magazine articles, and conference presentations. Even books in the field fail to build a conceptual foundation for traders to help them understand what to trade and why. And, of course, few educational efforts help traders train their 'eye' to see the patterns from their conceptual integrations. That, in trading as in chess and medicine, is a process that takes years of devoted effort. "
How does one achieve such "conceptual integrations"? On this thread operating metaphors are sometimes used to that end. Operating metaphor is a term coined by Charles Faulkner of Market Wizards fame. Here is an excerpt from Jack Schwager's The New Market Wizards:
Jack Schwager:
Anything to add regarding traits that differentiate winning from losing traders?
Charles Faulkner:
A final critical characteristic distinguishing winning traders from losing traders relates to what I've termed "operating metaphors." An operating metaphor determines how we view the world, and it shapes our beliefs, actions, and life-styles. Some of the metaphors used by traders to describe the market are a woman, war, and a game, to name a few of the more common ones. As an example of the game or puzzle-solving metaphors, Richard Dennis says, "It's like playing a hundred chess games at once." Pete Steidlmayer says he's "solving the markets." Paul Tudor Jones sums it up with, "It's a game, and money is a way to keep score." Each operating metaphor will lead a trader's brain to a different set of beliefs and a different approach to the markets, with some being more effective than others.
Contrast the metaphors I just cited with some of the operating metaphors I've typically heard around the trading floor. "I got torn up today," makes the market into a beast of prey. "We took a hit" reflects thinking that the market is a war and the speaker a wounded participant. Which metaphor will result in your feeling more objective about the market--playing a game, even a high-stakes game, or defending yourself from an attacking wild animal? The answer is obvious. The difference is in what is suggested by the metaphor. In the game, there are winners and losers, but your survival isn't at stake, as it is with being attacked by a wild animal. You may respond brilliantly to save yourself from the beast, but that metaphor doesn't encourage you to learn and practice long-term strategies and tactics the way a game does. Having an operating metaphor appropriate to your trading style is fundamental to success.
For more about Charles Faulkner and operating metaphors, see this link.
An operating metaphor for the task of becoming a trader is discussed in post #96 on page 7.
Operating metaphors for your relationship with the market are discussed in post #59 on page 4, and in post #67 on page 5.
And contrary to popular belief, the Holy Grail is not a system but a mental state. This is discussed in post #26 on page 2.
Next post was first posted elsewhere in response to a question.
Contrary to popular belief, the foundations of trading success are philosophical and psychological in nature rather than technical. With the proper philosophical underpinnings the choice/development of a trading strategy becomes a relatively easy task, but without proper psychological preparation the trading of that strategy is fraught with danger.
My intention with this thread is to share a few thoughts about these matters in the hope that the developing trader may find something that helps him/her along the way. And I believe that this may fill a gap. As trading psychologist Brett Steenbarger says:
"This is the great weakness of most efforts at 'trader education'. Such education consists of isolated Website posts, magazine articles, and conference presentations. Even books in the field fail to build a conceptual foundation for traders to help them understand what to trade and why. And, of course, few educational efforts help traders train their 'eye' to see the patterns from their conceptual integrations. That, in trading as in chess and medicine, is a process that takes years of devoted effort. "
How does one achieve such "conceptual integrations"? On this thread operating metaphors are sometimes used to that end. Operating metaphor is a term coined by Charles Faulkner of Market Wizards fame. Here is an excerpt from Jack Schwager's The New Market Wizards:
Jack Schwager:
Anything to add regarding traits that differentiate winning from losing traders?
Charles Faulkner:
A final critical characteristic distinguishing winning traders from losing traders relates to what I've termed "operating metaphors." An operating metaphor determines how we view the world, and it shapes our beliefs, actions, and life-styles. Some of the metaphors used by traders to describe the market are a woman, war, and a game, to name a few of the more common ones. As an example of the game or puzzle-solving metaphors, Richard Dennis says, "It's like playing a hundred chess games at once." Pete Steidlmayer says he's "solving the markets." Paul Tudor Jones sums it up with, "It's a game, and money is a way to keep score." Each operating metaphor will lead a trader's brain to a different set of beliefs and a different approach to the markets, with some being more effective than others.
Contrast the metaphors I just cited with some of the operating metaphors I've typically heard around the trading floor. "I got torn up today," makes the market into a beast of prey. "We took a hit" reflects thinking that the market is a war and the speaker a wounded participant. Which metaphor will result in your feeling more objective about the market--playing a game, even a high-stakes game, or defending yourself from an attacking wild animal? The answer is obvious. The difference is in what is suggested by the metaphor. In the game, there are winners and losers, but your survival isn't at stake, as it is with being attacked by a wild animal. You may respond brilliantly to save yourself from the beast, but that metaphor doesn't encourage you to learn and practice long-term strategies and tactics the way a game does. Having an operating metaphor appropriate to your trading style is fundamental to success.
For more about Charles Faulkner and operating metaphors, see this link.
An operating metaphor for the task of becoming a trader is discussed in post #96 on page 7.
Operating metaphors for your relationship with the market are discussed in post #59 on page 4, and in post #67 on page 5.
And contrary to popular belief, the Holy Grail is not a system but a mental state. This is discussed in post #26 on page 2.
Next post was first posted elsewhere in response to a question.
