Forex Trading Philosophy

WOW! That was otherworldly, absolutely breathtaking.

This is a wonderful thread and I want to say thank you to Tashkent for starting it.

Mind Laboratory :nerd:

This post is one of my special post to my diligent readers and followers

As always, I try to give you guys my best posts to help you with your trading.
Unfortunately I don't have the luxury to post a lot as I'm too busy playing

I have found an excellent and interactive educational tool (it'll take probably 30-40mins of your time)
Unfortunately as it is flash based interactive, you will need a certain computer requirement.

It is not a commercial site, nothing to sell, you don't have to enter any email.

Please go through all 4 sessions (all are important to your trading development):
1. Illusion of an uninterrupted world
2. Constructing a 3D world from 2D images
3. Visual interpretation of the physical world
4. Perception beyond sensory input (highly important to your trading): Recognition of relationships


==================================
Please note: I'm not associated (in any way/form) with the link below.

In order to view this site in its entirety,
you will need an ADSL or optical fiber
broadband connection, 1.4GHz
minimum CPU and Adobe Flash Player 9 or above.

http://jvsc.jst.go.jp/find/mindlab/english/base.html


Regards,
CrucialPoint

Hello CP, all this is very interesting, paricularily the part related to how our brain processes 2D images in the attempt to see the 3D dimension, but how do we apply those infos in practice? I mean, having the right perspective in trading is mandatory but is not only a matter of that

Hello,

Firstly, thank you very much for this very interesting thread that makes you think.

I have tried for several days to access this last link suggested by CrucialPoint, on two different computers and three different browsers, but it seems that it won't load after clicking on one of the fours sessions. ( It seems there is 404 errors according to java console ). May someone could confirm or infirm this issue ?
( I should maybe add that my plugins are up-to-date, last flash and java version, optical fiber internet connection, etc...)
If there is indeed an issue now, i would be interested if anyone may have downloaded earlier the 'flash' animation from the webpage.

Thank you for your assistance.

030985

Just to inform, in the end it was an issue on their side.
Finally I sent them an email yesterday ( I sent one before that, but it seems the mail address I used as destinatory was wrong ), and they replied to me today, by saying they fixed the issue. So everything should be working fine now.
I will take a look as soon as I have enough time.

030985

Patience, Timing & Defense

Floy Mayweather Jr.
45 Wins, 26 KO, 0 Loss


Counter-Puncher = Being a reactive trader. You react to what the market is doing.
It is not about predicting the future, but how you are going to manage the now.

Defense = The name of the game is "Hit (the opponent), but don't get hit (by the opponent)".
Take money from the market, but don't let the market take money from you.
Defense, defense, defense... protect your bank, at all times.
Pick your fights and battles. Run away, run far away. Avoid anything that will jeopardize your bank.

Patience & Timing = Always wait for the window of opportunity to open before you strike.
Be patient and always time the market.

Does forex trading also involve ducking fights against major contenders?

Probably the best post on trading philosophy I have ever seen. It explains all and the video shows how to do it.

It is not how you hard you punch the market, it is how many hits you can take

Forex trading involve ducking away from chaotic volatility. It involves ducking away from low volume. So, knowing when to trade and when not to trade, knowing when to duck and when not duck.

=============
Let's talk Boxing

And YES. Unlike your typical boxing fans. I am both a Pacquiao and Mayweather Jr fan. I followed both boxers throughout the years and was in awe with their boxing skills and talents. So I can safely conclude with a certain degree of an unbiased opinion...

.... Pacquiao will destroy the Mayweather defense. The Mayweather defense has never encountered a barrage of punches coming from different angles. And it is this angles that Pacquiao will exploit the Mayweather's defensive weakness. Mayweather sets up his opponent before he attacks. Pacquiao will always put Mayweather off-balance in order for Mayweather TO NOT be able to set up an attack or counter-punch. Unlike other boxers, Pacquiao's offensive approach is: Angles of onslaught of combination and then the Crucial Point >>> Exits after an onslaught of angled combinations. Mayweather's previous opponents are sitting ducks after an offensive attack.

I can not dispute that one of Mayweather's greatest talent is to adjust to any situation. But any adjustments from Mayweather is not enough to compensate for the speed, power and stamina of Paquiao. Don't get me wrong, Mayweather is damn fast, but not enough with this bout. There is really only one weakness I can see that Mayweather can exploit from Paquiao>>> A full brute force of a counter-punch (just like from Marquez/Pacquiao fight #4). But that is too much of a risk, for an undefeated "0 Loss".

Both fighters have an uncanny talent for "freezing" the opponent; these includes the uncanny use of fakes, hesitations, faints, etc... Mayweather has never encountered a boxer who is at par (with Mayweather) with these skills. I would say Pacquiao is as equally talented with these skills as Mayweather. Add Paquiao's speed and power and offensive approach, Pacquiao has destroyed the same opponents in a devastating fashion. Compared to Mayweather, of a slow and subtle way of destroying his opponent.

I'd like to see that. Keep us posted if it gets up. There is alot of pressure for Mayweather to face Pacquiao but, if what you say is correct, this is one fight he would be best to avoid. As traders it is our job to avoid fights with low odds and only fight the weakest opponents. Big difference

Really excellent post, and excellent thread here. Pure GOLD.

The principles of trading far outweigh the strategies. Principles like patience and discipline are often overlooked and undervalued. And yet, they are the fundamentals, the rock which our buildings stand upon. Strategies, on the other hand, are always receiving the attention, and yet are by far less important.

I am looking forward to more opinion and trading truths here

“You want to know how to paint a perfect painting? It's easy. Make yourself perfect and then just paint naturally.”
― Robert M. Pirsig, Zen And The Art Of Motorcycle Maintenance: An Inquiry Into Values

And also, The Three Stages of Cultivation (Bruce Lee):

"The primitive stage:
A stage of original ignorance in which a person knows nothing about the art of combat. In a fight, he simply blocks and strikes instinctively without a concern for what is right and wrong. Of course, he may not be so-called scientific, but, nevertheless, being himself, his attacks or defenses are fluid.

The stage of sophistication (or mechanical stage): Begins when a person starts his training. He is taught the different ways of blocking, striking, kicking, standing, breathing, and thinking — unquestionably, he has gained the scientific knowledge of combat, but unfortunately his original self and sense of freedom are lost, and his action no longer flows by itself. His mind tends to freeze at different movements for calculations and analysis, and even worse, he might be called “intellectually bound” and maintain himself outside of the actual reality.

The stage of artlessness (or spontaneous stage): Occurs when, after years of serious and hard practice, the student realizes that after all, gung fu is nothing special. And instead of trying to impose on his mind, he adjusts himself to his opponent like water pressing on an earthen wall. It flows through the slightest crack. There is nothing to try to do but try to be purposeless and formless, like water. All of his classical techniques and standard styles are minimized, if not wiped out, and nothingness prevails. He is no longer confined."

Coffee-Talks with CrucialPoint: chit chat


Round 1
I was talking to someone this week and the conversation went as follow....

Person: "Teamwork is 50/50."
CrucialPoint: "No it's not."
Person: "Yes it is. Teamwork is about sharing the work load equally... its 50/50."
CrucialPoint: "Errr... No it's not."
Person: "You're an idiot!"

You know, some people will be reading this and will have a good laugh. Some will laugh for the right reasons and others will laugh for the wrong reasons. Some people will not recognize what just happened and no clue of what's going on. So what's the point here? The point is that "You are limited by your life experiences." hehehe, yeah it's kind of a mundane statement, but here is the CrucialPoint: Your life experiences are directly correlated to your trading success. And this doesn't necessarily mean having a Phd or a degree. It just means that you are life smart, street smart or that you've simply been around the block to know the difference. By the way... Michael Jordan doesn't say, "That's it guys, I've done half of the work and you guys finish the other half."

Powerful insights are very hard to come by. Experiences are not counted by age and years, but by the quality of information you hold. I mean, you can pick up 100 books on Time Management; you will learn routines, setting appointments, organizing, prioritizing, how to focus, planning, etc... but will completely miss the CrucialPoint. It would only take 1 sentence, from one book (out of 100), that would say "No amount of organizing, scheduling, routines and planning will help if you don't have the energy to execute it." And this would not get elaborated. It would quietly slip from the reader. It will slip away from the teachers to students quietly and unnoticed. And it's what separate the successful vs non-successful.

The CrucialPoint is not Time Management... the CrucialPoint is Energy Management.
The CrucialPoint is not overcoming Procrastination... the CrucialPoint is establishing your Priorities.
The CrucialPoint is not getting Motivated... the CrucialPoint is about Perspective.
The CrucialPoint is not bigger Muscles... the CrucialPoint is right Leverage.

People talk about Technicals, Fundaments, TF, money management, candlestick patterns, price action, etc... Sadly to say, these are NOT the CrucialPoints of trading.


Round 2
There is a psychological/cognitive experiment; They would give a person a simple puzzle to solve. They divided this into 2 study group. Group 1 was given 10 simple puzzles to solve before the final original simple puzzle was given to them. Group 2 was given just the one simple puzzle, without any other puzzle prior. The results were very interesting.

Group 1 took significantly longer to solve the last puzzle compared to group 2. And surprisingly, a number of people in Group 1 couldn't solve the puzzle. The research supported the current science; that the brain is habitual and an efficient brain. To think outside the box requires energy and to think from previous experience takes less energy. Thus, the brain would take the less energy approach. Group 1 experiment, the first 10 puzzles were designed to make the brain familiarizes with a certain puzzle train-of-thought. And when a different puzzles was given, the brain found it hard to resist familiarity and conformity from its original way of thinking.

Here is a simple illustration of this experiment:



You need to be aware of this when it comes to trading. Is your thinking and knowledge limited to a small box? >>>> "Fairness is equality. Team Members are people. Thus, we must treat people fair. Thus, fair is equal. Equal is 50/50. Thus, a conclusion is that Teamwork is equally sharing the workload."


Round 3
If you have followed my posts, you would be aware by now that I usually say very mundane things at times. I try to highlight it in red as much as I can to put emphasis on it because there are a lot of things to learn from them. I usually post at times with some video and questions in bold red, "What does this have to do with trading?" of course with my sick sense of humor I hardly explain myself. I have a policy that says "You either get it or you don't. And if don't, that's not my problem and you are not ready to receive what I have to say." Of course I get a lot of negative reaction from this. But I don't mind, I pretty have my emotions under control. If not, I wouldn't call myself a professional trader. And if you are one of this type of person who gets offended and write emotional responses, then let me be bold to say that trading is not for you. You are best to spend your money on your love ones or for yourself.

So here are some more "ambiguous" mental diarrhea (according to some who eloquently put it) .

What does this have to do with trading?


Ok, just for this time (as I have some spare time) let me invite you inside my head and lets analyze the video.

A number of people will think and have the following insights:

1. This has nothing to do with trading.
2. Trading has spreads, this game has none.
3. In trading there is up and down; positive gains and negative losses. This has game has none.
4. This is a random game, FOREX/Trading is not random
5. Don't be stupid and let your emotions control you. You must have a trading plan/strategy/system.
6. Don't trust your gut instinct.

CrucialPoint's insights:
1. Yes, he's an idiot, you might say and condemn him. Oh stop being so righteous... trust me, you have made this mistake more than he has in trading. Here is the CrucialPoint: Intelligence accounts for nothing when emotion holds sway.

2. Risk Aversion: Don't focus on winnings. Focus of what you have to lose. You have no say/control what the market will give you, but you have all control to exit. Don't pray and hope.

3. Familiarity: You've been brainwashed by watching Hollywood feel good films, that there is a happy ending. Welcome to the real world; not all ending are a happy ending. Realize this now!

4. This video apply for exits. This situation is one insight on what to do when you are in positive territory. Have you noticed that every contestants in "Deal or no deal" has never lost any of their money? They may go home with $1 or nothing. By any accounts, that is way better than any negative accounts. And you may have been in the forums and you hear it all the time that you can't win this game if you cut your winnings short. People arguing over whether "you can't go broke taking small winnings."
Successful traders wouldn't easily give the secret away. I don't know who said "You can't go broke taking small winnings." but they didn't finish the sentence. So let me finish the sentence of this kept secret just for you, "You can't go broke taking small winnings, as long as you cut your losses which shouldn't be bigger than your average gains." ROFL, now that is also such a mundane statement.


Peace,
CrucialPoint

Nice post. Deserves a more detailed response than this, but I hope to come back to it.

Mikhail Kalashnikov
(10 Nov 1919 – 23 Dec 2013)

"Each designer seem to have his own day, his own successes and failures.
But one thing is clear;
Before attempting to create something new,
it is vital to have a good appreciation of everything
that already exist in his field."

:nerd:

The 7 LAWS of EVERYTHING

1. Law of Mentalism. The All is Mind. The Universe is Mental.
2. Law of Correspondence. As above, so below; as within, so without; Everything exists in every dimension. Everything is interconnected.
3. Law of Vibration. Everything is in motion. Everything is energy and vibrates. Everything flows in and flows out again. Everything rises and falls. Everything is vibration, nothing is static - everything is moving.
4. Principle of Rhythm and Harmony. Rhythm equalizes. There is rhythm to the universe and to every aspect of it. For every action there is a corresponding reaction. Harmony is the flow of life. Everything strives for harmony, for balance. Overcome rigidity, be flexible. Whatever is rigid must break apart.
5. Law of Cause and Effect. Each cause has an effect - each effect has its cause. Each action has a certain energy which requires that the like energy returns to its source. The effect equals the cause in quality and quantity. Equal creates equal. Action = Reaction. Everything happens in accordance to the LAW. There is no "chance" and/or "luck" - only cause and effect.
6. Law of Polarity. There are two great polarities in the COSMOS, this concept applies strictly to EVERYTHING. It composes everything in existence; the dance of life is an interplay between these two polarities. The masculine is the positive/energy/force aspect and the feminine is the negative/form aspect.
7. Law of Gender. Everything has male and female elements. Everything is male and female in ONE.

After I recommended one of the fellow traders to have a look at TRT's posts, I had a thought, probably I should share with you one his posts, a real gem, which is buried under infinite number of "great" posts in this forum.
Enjoy.

----------

Can this forum handle some truth? Note: this is not a negative post.

I've been trading for a living for many years. Using robust methods that have worked for decades, and I trust will continue for more decades. I've had good years and slow years, while very successful over the long haul, thought I better tell those who think that trading can replace their job have the better odds winning the Powerball. Really! There are hundreds more who have won big in the Powerball than actually earn their money from private trading.

Thinking otherwise is denying reality and the facts. It is easy to ignore because the facts about trading are difficult to dig out, and only the determined care to find out anything or succeed at anything worthwhile.

After reading many posts in these threads, I decided I had to weigh in on a couple of things. I would have to agree with -Isotonic- that a very small subset of posters are actually trading for a living.

Most of my friends are traders, many of whom I helped bring into the winning fraternity. We all have to keep on our game every day, 100% , or some mistake could eradicate months or years of progress.

"Making a living" is very much a similar question as of what "is" is.

All of the professional traders I know, whether they trade forex or futures markets, do not make "so much per day". That is a phrase used by marketers, because they know what beginners are looking for, and that is a steady income so they can get rid of their jobs. Money from the market that you can count on does not come steady or nicely "so much per day". Real traders make profits, budget their expenses, save some profits, add some profits to their accounts for further building of the account, etc. Just like any business, which is what real trading is.

Most of the trading setups that you see bandied about are "tricks". Most "tricks" have small edges, and trading them continually teaches little about the big picture, and the big picture is where the big money is made. When a marketer is trying to separate you from your money, he is likely promoting a "trick".

Nothing wrong with trading these "tricks", if you know that they have a strong, provable edge. But, to know that a "trick" has a definable edge, you already have to have an underlying construct or context to compare and/or use that edge.

Almost like the chicken and the egg. To know something has an edge you have to know what an edge is.

Quickly, name all your friends who have that going for them. A couple of great trades, or a month of great trades, or a year of great trades is nowhere near enough. To make 50 thousand-plus trades and be ahead, to be able to survive years of changing markets, politicians, governments, wives, ex-wives, good health, bad health--- while trading profitably is what you need from an edge.

Private, profitable traders (those who've done the above) can tell you their edge immediately, and can prove it. Unfortunately, this set of traders is very small, estimated a few years ago by a research company at less than 800 in America--- and most of you reading this will never among them. And that is not a bad thing. That doesn't mean that you won't make money from your trading. You might even have more richness in your life by doing something else than trade.

I will tell the only way a trader is able to make $1,000,000 from trading.

Here's an example of 10 thousand trades. Of these trades, you might lose on 6000 of them for small losses, win on 3800 of them for moderate profits, and win fairly big on 200 of them. You make your million from this series of trades by losing only $9 million on your total of losing trades while making $10 million dollars on your total of profitable trades. This means averaging $50 a trade per lot or contract (in the case of futures), which is really good after expenses. Very doable with robust methods. And, you have to stay on your game or you won't do this well.

But this is nothing like you've been promised by the "gurus" and promoters of the "money per day" foolishness.

Trading for a living is demanding mistress. Read on if you can stand it.

99% of my success has come from trading and working breakouts. Primarily larger breakouts. Why? They work!

When you learn that breakouts "work" as a trading concept, over the years you continually seek the best breakouts like seasoned surfers all continually seek the best waves. The best breakouts use and highly reward your acquired skills better than lesser ones. Then you stay trading in the zone where the greatest edge is and trade the best breakouts and ignore less useful ones.

For, example, I know that the Vegas material (I have no personal connection with him whatsoever) dealing with the one hour tunnel has a firm statistical edge. A rock-solid statistical edge.

But it takes a professional to trade it. And the method's breakouts are small in expectation relative to others available. But, as in most tradeoff situations, there are more of them.

I wouldn't have any problem encouraging someone to follow the concept for trading. But, I would be willing to bet that less than 1 percent of the people who have downloaded his material are trading it, and probably an equally small percentage of them will profit long term from trading with it.

Trading as a lifestyle is like being a fireman who gets paid per fire. You don't make any money until a fire happens, and you don't make any money if you die in the fire or quit before the fire is over.

I know that posting this may not encourage trading as a career, but if I can shine a little light on the reality of trading, I'm happy to do it. I wish someone had illuminated for me what I was in for 25 years ago when I got serious. It wouldn't have stopped me for a second, but it would have helped me prepare for the future differently.

I know that anything I could say would never discourage someone who is meant to be a trader, because nothing can dissuade a real trader, which is as it should be.

I personally love trading, and believe that it is the one thing I am best suited to do on earth. There are times trading is fun, but mostly it is details, details, and risk management. The best times are after a long trading campaign (fire) and you are relatively flat for a while. You can take time to get perspective. And get mentally prepared for the next one.

Most people think that communities like this forum make it easier to learn how to trade, but I am certain the opposite is true. If most of the posts are from non-winners the only logical reaction for an individual who wishes to win is fade the advice you see in these forums.

Everyone posting has a motive, even me. Most motives are simple self promotion, aspiring traders trying to make themselves feel good, look smart. A few posters have the motive to help others. Many figure that if they can't win, maybe they can help someone else and that makes them a winner somehow. Maybe so. But likely it is a case of the blind leading the blind.

I'd bet you'd rather make money from trading the markets the way things really are, not the way some very literate, but non-winner says they are. Think of that the next time you read a "helpful" post. 99.9% odds the post is from a non-winner.

Trading is a solitary business, with few peer get-togethers except by phone. And when you get discovered by people hoping to accomplish what you've done with extreme care and trial by fire (amazing fireman analogy again!) they demand your help and time (hard won by now) but don't want to compensate you because they think you should just give to them because you've been so fortunate.

Perhaps this missive will be useful to someone. If no one believes it, that is ok too.

I'm off to tend a fire in the metals, the other currencies.

Best wishes on the NFP report in an hour.


-TheRealThing-