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The Foundations Of Trading Success

  • #41
  • Feb 24, 2011 2:32pm Feb 24, 2011 2:32pm
Quoting medici
Mark Douglas...the guy admits he can't trade - how can he then set out on a career as a trader mentor and coach?
Well that's a bit disheartening...there I was thinking that this guy knew what he was talking about. Turns out he's drinking from the same well that the systems and EA sellers do. I guess I'll have to reevaluate what little 'wisdom' I wrote down from his books for reference.

For those in the know, is van Tharp in the same camp as Douglas? I didn't like his books because they were childish (the cartoons really made me doubt everything) and full of references to god (what is it about people that they so badly need to prove others of their faith?) and really didn't help me. I didn't think there was much to learn and didn't read past the first 30 pages. If Douglas is a fraud then comparing those two, I wouldn't be surprised to hear that Tharp is a fraud too.

<--->


It's good to see that you've brought up the topic of preparedness. Over the last 8 months or so I've paid way more attention to being prepared than I used to. This has paid off very well in terms of profits, but it has also introduced me to the 'dark' side of myself. That dark side is the uncontrolled emotional animal and I'm working on that. I have to work on my ego, sloth and greed, but that's another story.

It is interesting to think that there are so many fields in life where being prepared is the difference between success and failure but most traders never really get to the point of even thinking about it until they've spent at least a year clicking away the mouse (and losing). Firefighters, police officers, top athletes, stunt doubles, special units in the armed and civil forces....they'd all be dead or very at least complete failures without their training and preparations, mental as well as physical. Something to think about.

One part of being prepared you already mentioned, that of doing mental work to figure out why, why not, how and such. However, I'd also be interested to hear what are your daily preparedness tasks or in other words, pre-trading chores to get to ready for the day. Do you do review your rules, write down important data release times, do yoga (or something else to get your body physically ready for the challenge)? It'd be very interesting to know, maybe there's something we can all learn from you.
If you don't risk, you don't ever have to lose.
  • #42
  • Feb 24, 2011 5:39pm Feb 24, 2011 5:39pm
O yeah nice i have wondered about this many times after you left i felt so kinda jees now the info has stoped flowing in what now, so this might of been most prob a good thing i went into, lock the door and solve mode lol.

But im steamrollering forward, so now while i still have the CII on my screen i dont really use it(ill look at it maby if i need to move my SL) but wht has happend now is the CII has inspired me to look behond what its telling me but why its telling me and whats the best setups when it tells me that and i think your getting to that point here.

SO now i have done which i think you wanted to do all along on the other thread is let us view support and resistance in a diff view by letting us look behind the indi as to when the best reversal and continuation divergence happend.

You going to make this into a philisofical thread or a action thread and let the chart start rolling??

Goodluck.
  • #43
  • Feb 24, 2011 5:47pm Feb 24, 2011 5:47pm
Quoting medici
Inspired by your focus on mental factors, I wonder why most people are focused on systems, indicators, entries and exits - rather than the factors that make them all happen.

Could there be a thread/community where the focus is on the mental factors rather than technical issues?
I think most people go straight for the systems and strategies because they feel this is how money is made in the market. And like you say they do this instead of looking at the factors that lead to success.

I gues my list of factors would be-

 

  1. Create a daily trading routine, dont stare at charts if you dont need to.
  2. keep a trading journal and records
  3. monitor your own mindset and learn to stay away when your not fit to trade, you wouldnt drive a car that wasnt fit for the road, so why trade when the trader is not up to the job. know thy self.
  4. make sure you lead a healthy life style, excercise and eat good food. feeling good leads to trading good.
  5. have regular breaks off from trading throughout the year, otherwise the trader could burnout, most people hate work, and the cant wait for the holidays, yet when it comes to trading most are working 24/7 7 days a week, 365 days year.
  6. create a trading plan or rule set to work from
  7. etc etc

all these things ANYONE can do, you do not need to be a pro to keep a diary do you? yet by getting into the habbit of doing these things untill they become second nature will lead to better results and possibly success.

people should aim to achieve the little things rather than going straight for the jugular, "i must make money" is not a goal a trader should set.

simply pretending to be a professional trader in my view will help people succeed.

each week pick an aspect of your trading that you feel needs improved, like keeping flawless records, once you are in the habbit of this, pick another thing untill you put together the complete trading package.

again you dont need to be a pro to keep records!

may have gone off topic

  • #44
  • Feb 25, 2011 1:57am Feb 25, 2011 1:57am
Hi Medici,
Excellent thread as allways! very enlightening. One question, does my five losers on the trot yesterday and today qualify as coming off ones pedestal???. Hindsight tells me I should have gone trouting on such a fine day but then the dilema would have been "is that trout anticipating taking that fly or just following!!"

Kindest regards

doc

back to the dungeon for a bit more.
  • #45
  • Edited Feb 26, 2011 8:00am Feb 25, 2011 9:49am | Edited Feb 26, 2011 8:00am
http://www.brettsteenbarger.com/articles.htm

Here's what I did a while ago. I created a spreadsheet with my actual results and my potential results based on my exact rules. I then created a chart to follow daily of the results with two trendlines of data. The further away they were from each other showing bigger discrepancy of results, the greater I lacked discipline in following my rules. My daily trading aim was to have these lines merge together and I could only do this by sticking to my rules regardless of whether my daily results were a win or a loss. I found it a good visual exercise and it kept me focused.
Attached File(s)
File Type: doc Why People Lack Self Discipline.doc   30 KB | 4,864 downloads
  • #46
  • Feb 25, 2011 11:45am Feb 25, 2011 11:45am
Quoting Porkpie
http://www.brettsteenbarger.com/articles.htm

Here's what I did a while ago. I created a spreadsheet with my actual results and my potential results based on my exact rules. I then created a chart to follow daily of the results with two trendlines of data. The further away they were from each other showing bigger discrepancy of results, the greater I lacked discipline in following my rules. My daily trading aim was to have these lines merge together and I could only do this by sticking to my rules regardless of wheher my daily results...
Interesting idea and thanks for sharing. I'll have to test it out.
If you don't risk, you don't ever have to lose.
  • #47
  • Edited 1:49pm Feb 25, 2011 1:18pm | Edited 1:49pm
I have done things similar to this also, what i did is run a demo account and live account side by side, any trades that are done in the live account are also placed in the demo.

also placed in the demo will be trades you dont have enough confidence to take live.

compare the results and see how you are doing.

mine were mixed, sometimes i took too many demo trades in poor market conditions, and other times i would not take enough live trades, but the general theme was that the demo account rose faster than the live one.

this will show you the difference between trading with emotion, and without. Mark Douglas(if hes to be believed) calls this the profit gap.
  • #48
  • Feb 26, 2011 1:30pm Feb 26, 2011 1:30pm
Quoting bug
One part of being prepared you already mentioned, that of doing mental work to figure out why, why not, how and such. However, I'd also be interested to hear what are your daily preparedness tasks or in other words, pre-trading chores to get to ready for the day. Do you do review your rules, write down important data release times, do yoga (or something else to get your body physically ready for the challenge)? It'd be very interesting to know, maybe there's something we can all learn from you.
My morning preparation is simple. It consists of updating myself on what has happened since last time, and then putting that into the "big picture". That big picture consists of longer tf charts together with patterns, levels and so on.

Trading full-time the "big picture" is something that grows and evolves as events happen, rather than being the result of a method of construction. For example, late Friday Aussie broke out a symmetrical triangle on H4 and D1 - something to take into consideration Monday morning.

After I have reminded myself of the news releases of the day it is time for a self-check, i.e. what is my mental and emotional state? In a sense like a brief period of meditation, but in front of the screens. That sense of self-awareness is to be maintained without effort throughout the day.

And then it's time to get started. That's all.

You asked about yoga. Yes, I do a bit of that. Physical and mental fitness is crucial, and I am in the gym almost every day of the week. I also meditate regularly. But those are life-style factors rather than morning preparation activities.

No need to repeat rules, which hinges on rules being well memorised from before and not being seen as separate from perception and instinct. Which isn't to say that there is no development of new rules and approaches, but that is again a process separate from morning preparation.
  • #49
  • Feb 26, 2011 1:33pm Feb 26, 2011 1:33pm
Quoting CoffeeDrinke
O yeah nice i have wondered about this many times after you left i felt so kinda jees now the info has stoped flowing in what now, so this might of been most prob a good thing i went into, lock the door and solve mode lol.

But im steamrollering forward, so now while i still have the CII on my screen i dont really use it(ill look at it maby if i need to move my SL) but wht has happend now is the CII has inspired me to look behond what its telling me but why its telling me and whats the best setups when it tells me that and i think your getting...
Hello CD, nice to have you here

All about the philosophical and psychological aspects is what I intended this thread to be...
  • #50
  • Feb 26, 2011 1:36pm Feb 26, 2011 1:36pm
Quoting Dr.Scalpall
Hi Medici,
Excellent thread as allways! very enlightening. One question, does my five losers on the trot yesterday and today qualify as coming off ones pedestal???. Hindsight tells me I should have gone trouting on such a fine day but then the dilema would have been "is that trout anticipating taking that fly or just following!!"

Kindest regards

doc

back to the dungeon for a bit more.
Hi Doc, happy to see you here Glad you like the entertainment.

Thank you for, as always, very witty comments. Can't recall that you ever put yourself on a pedestal...and that trout is definitely just following!

Very nice with an analogy from nature. Most systems in nature follow the path of least resistance, the trout being no exception I believe.

Our friend Leonhard Euler mentioned earlier has done a few things in connection with this principle, as those familiar with the Euler-Lagrange equation know. There it's about the path of least resistance being the path taken by a mechanical system in order to resolve tension.

And the analogy is very apt for what we are discussing here. Viewing the trader active in the market as a system, its fundamental structural tension is that between the wish to achieve profitability and the market's complete indifference to that wish. And one can view our job as traders to be one of resolving that fundamental tension.

On the most basic level that tension expresses itself as greed and fear. And the simplest approach to resolving it would be to obtain a profitable system to be traded while those emotions are suppressed. As many have discovered that is an approach that doesn't work, and the reason is that the structural tension has been covered up rather than resolved. Not the path of least resistance.

I believe the right approach to our job is, as said before, one of integration of all aspects of the trader-in-the-market system, and that self-awareness, as pointed out by highlander2, is the key tool for this. Porkpie expressed this insight on another thread when he said "I believe you cannot separate rule based methods and discretionary methods."

And the question of how is what I hope we can discuss on this thread.
  • #51
  • Feb 26, 2011 2:16pm Feb 26, 2011 2:16pm
Quoting medici
My morning preparation is simple. It consists of updating myself on what has happened since last time, and then putting that into the "big picture". That big picture consists of longer tf charts together with patterns, levels and so on.

Trading full-time the "big picture" is something that grows and evolves as events happen, rather than being the result of a method of construction. For example, late Friday Aussie broke out a symmetrical triangle on H4 and D1 - something to take into consideration Monday morning.

After I have reminded myself...
Thanks, medici.

By the way, please PM me if you've got any book suggestions on meditation (there are so many resources on the web and on Amazon that I really don't know which one to pick). I've been thinking about this for a long time and I think it's time to do something.
If you don't risk, you don't ever have to lose.
  • #52
  • Feb 26, 2011 2:24pm Feb 26, 2011 2:24pm
Quoting bug
Thanks, medici.

By the way, please PM me if you've got any book suggestions on meditation (there are so many resources on the web and on Amazon that I really don't know which one to pick). I've been thinking about this for a long time and I think it's time to do something.
Why not share my book suggestion with all thread followers!? See attached. That's the best place to start, I think. Also available in hard-copy on Amazon if you prefer that.

For moderators of FF: See last page of pdf file for distribution rights.
Attached File(s)
File Type: pdf mindfulness_in_plain_english.pdf   638 KB | 594 downloads
  • #53
  • Feb 26, 2011 2:28pm Feb 26, 2011 2:28pm
subscribing will read through when I get some time
Time hides Nothing
  • #54
  • Feb 26, 2011 2:34pm Feb 26, 2011 2:34pm
Quoting CindyXXXX
subscribing will read through when I get some time
Hey, long time no see! Happy to have you onboard
  • #55
  • Feb 26, 2011 5:21pm Feb 26, 2011 5:21pm
You asked about yoga. Yes, I do a bit of that. Physical and mental fitness is crucial, and I am in the gym almost every day of the week. I also meditate regularly. But those are life-style factors rather than morning preparation activities.

No need to repeat rules, which hinges on rules being well memorised from before and not being seen as separate from perception and instinct. Which isn't to say that there is no development of new rules and approaches, but that is again a process separate from morning preparation.[/quote]

I especially enjoyed your post #26 video on Neuroscience, which confirmed what I already knew as a long-term Western follower of Eastern philosophy and regular meditation practitioner.

Allow me to share some points for you & others -

1. Yoga - Sanskrit definition is to 'yoke' or 'unite'. What are we uniting ? The conscious & the subconscious self.

2. Before you can merge the conscious with the subconscious self, you must be able to tap into the subconsious to see the inner self with the mind's eye. The easiest way to tap the subconscious is through meditation.

3. As opposed to dreaming (sleep state) or use of hallucinogenic drugs, meditation is a controlled way of tapping the inner self to explore and TRANSFORM. Therein lies the beauty, since you are in control (versus drug or dream state).

4. While I have not explored all the various types of meditation, zen appears to be one of the easiest to perform without the necessity or pressure to convert one's religioun. In fact, when I began practicing zen meditation in the mid-90s, I was strongly discouraged from reading Buddhist texts in order to achive maximum benefit. I can personally attest to the fact that regular practice of meditation can dampen or smooth one's emotional state, and that is powerful.

5. Although I've obviously advocated zen meditation as a good starting point, I highly discourage any interested parties from attempting this by themselves or merely through reading. A certain posture and technique must be taught & maintained, and that is best done by a qualified teacher who can observe you. After all, meditation isn't a naturally existing pose.

6. I currently practice another type of meditation which involves visualization techniques and is a bit more involved, but this is irrelevant. My post is for others to explore the possibilities of using meditation as another tool.

P.S. Using post #26 'Neuroscience' as a point of reference, we should want to emulate the machine which was able to discern the subject's decision BEFORE he made it. The goal is to reduce the time involved on entry/exits & possibly avoidance of less propbable trades.
  • #56
  • Feb 26, 2011 6:41pm Feb 26, 2011 6:41pm
Quoting medici
Why not share my book suggestion with all thread followers!? See attached. That's the best place to start, I think. Also available in hard-copy on Amazon if you prefer that.

For moderators of FF: See last page of pdf file for distribution rights.
Thank you, medici.
If you don't risk, you don't ever have to lose.
  • #57
  • Feb 26, 2011 7:07pm Feb 26, 2011 7:07pm
I especially enjoyed your post #26 video on Neuroscience, which confirmed what I already knew as a long-term Western follower of Eastern philosophy and regular meditation practitioner.

Allow me to share some points for you & others -



Ah, welcome and thank you for valuable contribution

Very interesting points. I wonder whether the thread should have been called The Yoga Of Trading instead?
  • #58
  • Edited 3:10pm Feb 28, 2011 2:59pm | Edited 3:10pm
Quoting medici
So why is everybody talking about indicators and systems?
If you look at the monthly searches on google its obvious that most people just dont get it!

search term --------------------Number of searches per month on google

trading system--------------------------135,000
trading strategies-----------------------74,000
forex robot------------------------------60,500
forex trading systems--------------------40,500
forex trading strategies-------------------22,200


trading psychology----------------------3,600
forex trading psychology-----------------170
trader psychology-----------------------390
  • #59
  • Edited 2:14pm Mar 5, 2011 1:58pm | Edited 2:14pm
In his later years, when interviewed by a reporter, Albert Einstein's response to the question "What is in your opinion the most important question facing humanity today?" was "I think the most important question facing humanity is, 'Is the universe a friendly place?' This is the first and most basic question all people must answer for themselves."

Similarly, the most important question facing the trader is whether the market is a friendly place, and that is a question that the trader must answer for himself.

To understand why this is the most important question, consider some of the consequences of not being sure of the answer or of considering the market a hostile place.

If you believe the market is a hostile place, then you are likely to experience stress while trading. Even if you are able to trade profitably, the odds are that you won't last long. And you are likely to develop stress-related illnesses or addictions as means of coping with the stress. I have seen first hand the health of traders deteriorate in their battle with the market.

If you are uncertain whether the market is a friendly place, you cannot believe deep down that you will be able to have a successful long-term career as a trader. Without such a belief, how could you possibly make it?

And not being totally convinced of a positive answer, you are likely to be less confident than you need to be, and your motivation for trading may be in danger of deteriorating.

So what does it takes to come to a positive answer to this question? For a start, think of your closest friend and what it has taken to get the two of you to where you are.

Likely you have known each other for years. You are likely to understand each other without too much explanation or theorising, and you are likely to be completely familiar with each other's quirks and eccentricities, even those that are less appealing, without being the least put off. And you are totally convinced that you will be friends and enjoy each other's company for as long as you live.

So you need to get to know the market as well as you know your best friend, and you must feel as good in each other's company. This is for most people likely to take years with plenty of time spent together.

Apart from watching the screens, how does one get to know the market? To begin with read up on the market micro-structure literature as mentioned above. For further thoughts on making friends with the market, see my post on another thread:

http://www.forexfactory.com/showpost...6&postcount=14
  • #60
  • Mar 6, 2011 8:13am Mar 6, 2011 8:13am
I wasn't aware of it, but somebody else has made the same point as my most recent post here.

See the words of Charles Faulkner in this post:

http://www.forexfactory.com/showpost...1&postcount=36
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