M6 - Man, Mind, Money, Markets, Method & Madness
- Thread starter DSM
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What enables a trader to exit every trade the same way, with confidence?
http://jagotrader.com/what-enables-a-trader-to-exit-every-trade-the-same-way-with-confidence/
•Preparation: If you put yourself in the best possible position and you lose money at least you spent that money wisely. Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.
•Purpose: Acting with purpose. You prepared, you knew the risks, you executed the way you wanted to execute. In cold blooded evaluation you would do it the same with the information you had at the time.
•Protection: Losing the invisible money is how I have seen many people blow up. Invisible money is not locking in profits or losing more than your plan allowed. If you lose what you intended to risk you own the trade, if you lose more the trade owns you.
http://jagotrader.com/what-enables-a-trader-to-exit-every-trade-the-same-way-with-confidence/
•Preparation: If you put yourself in the best possible position and you lose money at least you spent that money wisely. Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.
•Purpose: Acting with purpose. You prepared, you knew the risks, you executed the way you wanted to execute. In cold blooded evaluation you would do it the same with the information you had at the time.
•Protection: Losing the invisible money is how I have seen many people blow up. Invisible money is not locking in profits or losing more than your plan allowed. If you lose what you intended to risk you own the trade, if you lose more the trade owns you.
Human beings are brilliantly creative at finding ways to pass time in unconstructive ways. At these times, a true strategist shines by finding the means to make progress, to strengthen his position and prepare for the inevitable conflict. And conflict, we cannot forget, is inevitable - Garry Kasparov
I love playing chess. It is a game where you try to outmaneuver your opponent while he/she is trying to do the same. How different is this from the markets? And then like traders, there are players with different styles. Some are disciplined. They want to test your strengths and skills, and adjusting their game from being defensive to attacking as they find necessary. These guys are not playing for action, but to win eventually. (Even if they have lost, they will analyze what they did wrong, and benefit from the experience, and come out as a better player) Then there are players with swashbuckling styles, who have learnt trick or two. They want to charge out with a fulflegded attack and want to overpower you right from the start, without understanding how weak or strong you are. These players are like a boxer who has a reputation for intimidating opponents into submission in the first few minutes. What happens if his opponent is smarter, and will wait for a few minutes till our attacking Sancho Panza is tired and out of energy? Or if the opponent is capable of withstanding the blows, but our hero though dishing out, does not have the capability of taking in a sucker punch?
The analogy of such boxer is akin to some traders come into the market with their untested ideas or strategies, but with a goal of conquering the market and dreams of making big bucks. They have an attacking game plan, and may win a few.... till the market delivers a sucker punch and throws the trader out of the game. This may happen sooner or later, unexpectedly or not, but surely and certainly.
When I came across Garry Kasparov's quote, it much reminded me about trading. For a good trader, while fully in the game, and waiting for the right opportunity, it is just as important to disassociate himself from the market and not infer meaning from every tiny move, but rather think about the market objectively, and while even being in the moment, have the ability to look it from afar or higher timeframe or perspective. Just like a good chess player does not attack on every move (Ask Magnus Carlsen), a trader has to be patient and watch the market . It is not necessary for the trader to be in the market all the time. It is said that markets are rangebound 70% of the time - may be a bit more or bit less. But trying to engage oneself and enter at every trade and every signal without evaluating it in the context it is happening, can frustrate and wear out a trader. For e.g it happens many times, that the market will be in trading in a range of 25-30 point for hours on end. How many times will it happen that there is a breakout of this range (upside or downside) by 5-10 points.? Any attempt to enter this break will result in many failures till there is a genuine signal which the trader may then ignore considering the past breakout failures, or even if the breakout is taken the net result will mean only wiping off the losses or making a marginal profit?
In this context, I find the quote from Garry Kasparov to be apt - many times we need to do nothing but just watch patiently for the right opportunity to enter a trade. Watching the charts dispassionately, without having any views and waiting for the range to break decisively is the key to being a good trader. All that we need to do is be prepared for the one side to win the conflict between the bulls and the bears. This will provide us an opportunity with a decisive break from the range. It is inevitable, as markets cannot trade in a range forever and for a vigilant, patient and disciplined trader this opportunity will be there for the taking.
I love playing chess. It is a game where you try to outmaneuver your opponent while he/she is trying to do the same. How different is this from the markets? And then like traders, there are players with different styles. Some are disciplined. They want to test your strengths and skills, and adjusting their game from being defensive to attacking as they find necessary. These guys are not playing for action, but to win eventually. (Even if they have lost, they will analyze what they did wrong, and benefit from the experience, and come out as a better player) Then there are players with swashbuckling styles, who have learnt trick or two. They want to charge out with a fulflegded attack and want to overpower you right from the start, without understanding how weak or strong you are. These players are like a boxer who has a reputation for intimidating opponents into submission in the first few minutes. What happens if his opponent is smarter, and will wait for a few minutes till our attacking Sancho Panza is tired and out of energy? Or if the opponent is capable of withstanding the blows, but our hero though dishing out, does not have the capability of taking in a sucker punch?
The analogy of such boxer is akin to some traders come into the market with their untested ideas or strategies, but with a goal of conquering the market and dreams of making big bucks. They have an attacking game plan, and may win a few.... till the market delivers a sucker punch and throws the trader out of the game. This may happen sooner or later, unexpectedly or not, but surely and certainly.
When I came across Garry Kasparov's quote, it much reminded me about trading. For a good trader, while fully in the game, and waiting for the right opportunity, it is just as important to disassociate himself from the market and not infer meaning from every tiny move, but rather think about the market objectively, and while even being in the moment, have the ability to look it from afar or higher timeframe or perspective. Just like a good chess player does not attack on every move (Ask Magnus Carlsen), a trader has to be patient and watch the market . It is not necessary for the trader to be in the market all the time. It is said that markets are rangebound 70% of the time - may be a bit more or bit less. But trying to engage oneself and enter at every trade and every signal without evaluating it in the context it is happening, can frustrate and wear out a trader. For e.g it happens many times, that the market will be in trading in a range of 25-30 point for hours on end. How many times will it happen that there is a breakout of this range (upside or downside) by 5-10 points.? Any attempt to enter this break will result in many failures till there is a genuine signal which the trader may then ignore considering the past breakout failures, or even if the breakout is taken the net result will mean only wiping off the losses or making a marginal profit?
In this context, I find the quote from Garry Kasparov to be apt - many times we need to do nothing but just watch patiently for the right opportunity to enter a trade. Watching the charts dispassionately, without having any views and waiting for the range to break decisively is the key to being a good trader. All that we need to do is be prepared for the one side to win the conflict between the bulls and the bears. This will provide us an opportunity with a decisive break from the range. It is inevitable, as markets cannot trade in a range forever and for a vigilant, patient and disciplined trader this opportunity will be there for the taking.
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- Joined
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Some insightful quotes on trading and investing :
It often seems that trend create events more than events create trends. The event itself is usually a reflection of everyone 'getting it' as to why the trend has existed - Jason Russel
There is always a part of trader's psyche that wants to make losses back tomorrow. But traders need to remember that you lose it really fast, but you make it up slowly. You may think you can make it up fast, but it does not work that way - David Druz
They say patience is a virtue. For me patience is synonymous with discipline. You must have the discipline to know that markets change and poor periods are followed by good periods. Longevity in this business - I have seen it again and again is measured by discipline - John Henry
Trading is a waiting game. You sit and wait and make a lot of money all at once in a few good trades. The profits tend to come in bunches. The secret to trading is not to loose too much between the periods that market clearly trend - Jim DiMaria
Rare events are always unexpected, otherwise they would not occur - Nassim Taleb
And finally :
In statistical terms, I figure have traded about two million contracts with an average profit o $70 per contract. This average profit is approximately 700 standard deviations away from randomness, a departure that would occur by chance alone about as frequently as spare parts in an automotive salvage lot might spontaneously assemble themselves into a McDonald's restaurant - Victor Niederhoffer (before he blew up his account by following a strategy of selling OTM options, and went personally bankrupt)
On Wednesday Niderhoffer told investors in three hedge funds he runs that their stakes had been 'wiped off' Monday by losses that culminated from three days of falling stock prices and big hits earlier this year in Thiland - News report
It often seems that trend create events more than events create trends. The event itself is usually a reflection of everyone 'getting it' as to why the trend has existed - Jason Russel
There is always a part of trader's psyche that wants to make losses back tomorrow. But traders need to remember that you lose it really fast, but you make it up slowly. You may think you can make it up fast, but it does not work that way - David Druz
They say patience is a virtue. For me patience is synonymous with discipline. You must have the discipline to know that markets change and poor periods are followed by good periods. Longevity in this business - I have seen it again and again is measured by discipline - John Henry
Trading is a waiting game. You sit and wait and make a lot of money all at once in a few good trades. The profits tend to come in bunches. The secret to trading is not to loose too much between the periods that market clearly trend - Jim DiMaria
Rare events are always unexpected, otherwise they would not occur - Nassim Taleb
And finally :
In statistical terms, I figure have traded about two million contracts with an average profit o $70 per contract. This average profit is approximately 700 standard deviations away from randomness, a departure that would occur by chance alone about as frequently as spare parts in an automotive salvage lot might spontaneously assemble themselves into a McDonald's restaurant - Victor Niederhoffer (before he blew up his account by following a strategy of selling OTM options, and went personally bankrupt)
On Wednesday Niderhoffer told investors in three hedge funds he runs that their stakes had been 'wiped off' Monday by losses that culminated from three days of falling stock prices and big hits earlier this year in Thiland - News report
Last edited:
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