A Strong Trading Mind

[amitrandive]

 

[amitrandive]

From personal notes on trading by Vadym Graifer
Shared by DSM
http://www.traderji.com/general-tra...money-markets-method-madness.html#post1069808

There is a great paradox in the trading market. Trading can be simple, which many experienced traders refer to their trading approach as very simple - such as connecting two dots with a line to know the HH or LL to understand the trend. However there is a catch to it, as what is simple, does not mean its easy.

Psychology is a part of traders education which is usually put off until later. It is only after a certain amount of struggle and losses that traders realize the importance of psychology in trading. There are two sides to the psychological aspects. First is defensive, which is avoiding incorrect mindset and putting oneself in the right state of mind necessary for successful trading. The second side, is offensive, which comes into play with experience when a trader is moving to a more advanced level when he can act with certainity in uncertain environment, be able to think in terms of probabilities, be able to accept risk, and reverse many of the reactions habitual for human beings including suppressing the ego.

In other aspects of our life, we are taught to influence the way things go. We convince the people around us, we argue and defend our position. In the external world, to be successful, we try to change the things around us, to make things work and to lead. In trading however, it does not work that way. Any attempt to impose our opinion on the market will lead to destruction. The key to successful trading is listening to, and following the market. Thinking and acting in this manner, we forfeit our ego, accepting that if the market does something opposite to what we expect, we are wrong.

When we accept the thesis that the market is always right, we accept the idea that there is no place for emotional response in trading. We simply need to internalize the thought of necessity to follow the market's lead and execute decisions accordingly.

We are accustomed to having a certain safety net in many areas of our life, such as health insurance, and warranty for purchases. This environment is friendly. However in the market, we face an environment with no mechanism for protection when we are wrong (other then our SL) No one is going to stop you from making an error or compensate you for poor judgement. So being humble towards the market, fully in control of yourself, taking full responsibility for your action is the psychological profile for an ideal trader.

In order to win, a trader has to learn how to correctly lose. A good trader loses gracefully with an understanding that losses are a part of trading. He has to take losses before they get large. A stop loss taken correctly is not a loss for him - it is a way to stop the loss from growing. It is his protection, his safety net.

One of the ingrained human belief is that the more harder we work, the more you will be rewarded. In trading this direct connection is not true. What many trader however do is try to trade all the time. Sitting, watching the screen all the time feels like waste of time. This results in a trader taking unnecessary trades and poor setups. Sitting on the sidelines when there are no trades matching your criteria is one of the most important skills you can learn. A good trader will take only the best trades and avoid marginal ones, keeping his probability for winning as high as possible.

Our entire education and in our profession we are told to gather as much information possible to be able to predict the outcome of our action. E.g an engineer designing the bridge has to know the load it would hold, traffic patterns etc. It does not work this way in trading. There is no way to know what is going to happen after we put the trade. We can only expect a few scenarios and prepare our response to them. A chess player does not know his opponents move. However, a skilled player will anticipate his opponents moves and prepare for If-Then scenario. It works exactly this way in trading too. The ability to work in an uncertain environment is essential trait of a trader.

Hope and fear are two inseparable human instincts. The successful trader has to fight these two deep seated instincts and hold back his natural impulse - unless it works in his favor. A trader must fear that his losses will get bigger and must hope that his profits may become a bigger profit as well.

 

[candle]

If people can tell by looking at you whether you're having a good or bad day in the markets, your positions are too big.

 

[Catch22]

I always like to look on the optimistic side of life, but I am realistic enough to know that life is a complex matter.

Walt Disney

In order to carry a positive action we must develop here a positive vision.

Dalai Lama


“Live as if you were to die tomorrow. Learn as if you were to live forever.”
― Mahatma Gandhi

 

[amitrandive]

SLOW DANCE
Source:Internet

Have you ever watched kids on a merry-go-round?
Or listened to the rain slapping on the ground?

Ever followed a butterfly's erratic flight?

Or gazed at the sun into the fading night?

You better slow down.
Don't dance so fast.
Time is short.
The music won't last.

Do you run through each day on the fly?
When you ask, “How are you?”
Do you hear the reply?

When the day is done, do you lie in your bed,
with the next hundred chores running through your head?

You'd better slow down
Don't dance so fast.

Time is short
The music won't last.

Ever told your child,
We'll do it tomorrow?
And in your haste,
Not see his sorrow?

Ever lost touch, let a good friendship die
Cause you never had time
To call and say,'Hi'
You'd better slow down.
Don't dance so fast.

Time is short.
The music won't last..
When you run so fast to get somewhere,
You miss half the fun of getting there.
When you worry and hurry through your day,
It is like an unopened gift....

Thrown away.
Life is not a race.
Do take it slower
Hear the music
Before the song is over.

 

[amitrandive]

 

[amitrandive]

 

[amitrandive]

 

[Catch22]

The following is true about trading ,as well as of Life...

Every mind has a bias, because everyone’s beliefs and worldview are shaped by their own unique experiences within a particular environment.

So no single person has a perfect view of reality. Instead, we each have our own window into reality. And everyone’s view is going to be a little bit different.

Therefore, every person you meet knows something that you don’t know. And you know something that they don’t know. That’s a powerful insight to keep in mind.

When you accept your bias, it actually puts you in a better position to learn new things and expand your perspective.

You recognize that everyone has something to teach you, so you should be willing to listen to all perspectives, and try to find a grain of truth.

This doesn’t necessarily mean that all truth is subjective, or just a matter of opinion. It’s the acceptance that your knowledge is limited – you know some things, and you’re ignorant about others.

Intelligent people recognize that they are always coming from a particular perspective or bias, and that they never have all the answers to everything.

In a healthy mind, every belief is flexible and subject to change, as long as you are open to new information that may contradict those old beliefs.


Balancing your bias in the real world

Accept your bias. – First, you have to at least recognize that you have your own biases, just like everyone else. This isn’t necessarily a bad thing, it just means your worldview is dependent on your particular experiences and environment.

Explain yourself. – One way to get at the root of your biases is to practice explaining your beliefs and why you believe them. This is why I recommend the healthy challenge of explaining your own beliefs.

Seek diverse sources of information. – We often reinforce our biases by only consuming news and information that confirms those biases. You can counteract this by exposing yourself to new sources of information, especially ones that represent views you often disagree with.

Engage in healthy debates. – One of the best ways to sharpen your beliefs is to engage in conversations with intelligent people of different ideologies who are also willing to debate you in a healthy and polite way. That can be hard to find, but when you do it’s invaluable.

Admit it when you’re wrong. – The hardest thing for many people is to simply admit it when we are wrong. It shouldn’t be, because of course we are all going to be wrong sometimes. But very few of us can accept this, because we are often too worried about protecting our egos.

Be willing to say, “I don’t know.” – You don’t need to have an opinion about every single subject. If you’re not familiar with something, or your completely ignorant about it, just be willing to say, “I don’t know.” There’s a great power in the wisdom of ignorance.


Remember, you’re never going to completely get rid of your bias – it’s part of being human. But these are helpful tips and advice to help balance your bias and keep it in check.

The most important thing is that you keep your mind open to new perspectives, and you’re always willing to adjust your beliefs in the face of new information.

source - internet.www.theemotionmachine.com/accepting-your-bias

 

[amitrandive]