Linkon,
Thank you for sharing more about you in this thread. Hopefully our dialogue will not only help you and I to become better traders but also help others who could use some inspiration.
Before I proceed to giving answers to what you wrote and what I asked you in my previous message, let's ASSUME(what, ASS U ME? no way), let's ACCEPT in our HEART, BODY and MIND that this is a business and not a hobby. So to keep it a simpler business, based on my TRADITIONAL work experience, I will divide into the following 4 categories.
1. Psychology of Awareness
2. Self Discipline
3. Methodology
4. Business Administration
If I were to go, start this business all over again, I would start from #1 first, closely followed by number 2. You can scan any thread on this forum, or anywhere else be it Indian or American or anywhere, 99% of the time, you will see people who want to trade/invest to start with a trading platform, a book about technical analysis, or worse ask tips from threads here. And most of the time, even if you try to get it in their head that 'they' are the holy grave and not a methodology, they will not get it nor will have any inclination to listen....
Someone important to me, told me a while back, that after 40 years in this business, he believes that trading success or faillure is 99% psychological and that includes self discipline.
Going back to methodology, all it takes is one, get this, one simple pattern to make a living. Find one pattern that fits your personality, go back and manually backtest it for about 10 years(if you have the data) to become one with that pattern so to speak. You must be able to feel, live and breathe it just like you brush your teeth or walk now. These days, you don't think of the mechanics of walking or brushing your teeth do you? Manually back testing it gives you self confidence. If it's not what you expect, then tweak it and do it all over again. The point is to develop a robust habit of thought and self confidence in it so that when push comes to shove, you can pull trigger anytime you want.
Psychology of Awareness: This is all about you, your awareness to what you are doing, whether you're aware and awake physically, emotionally, spiritually, ....at least during those hours you trade and do your analysis. YOU are the holy grail. There's no other holy grail.
Everything you're today in life is a perfect pattern you've weaved through your thoughts, be they voluntary or involuntary. With 100% admission of this will come total responsibility for your actions. For what are actions? How do they come about? Let's go back to the source of actions
Actions < Impulse < Thoughts < Feelings < Habits of thought < Self Image < YOU
Almost all habits of thought are ingrained in us before we even reach 11. The things what you saw(remember as an infant you're like a sponge and absorb anything, everything, fast)heard, experienced, felt, feedback from your parents, relatives, friends, teachers, all those factors important for you at that stage in your life shape your behavior through powerful beliefs, some of them empowering and some disempowering. I remember reading somewhere that it takes about 6 months to 6 years to get rid of of one habit of thought replace it with another one. What a waste!!! It could be easier than that...difficult but not impossible.
So, the key here is to work on YOU or this 'I" in us which forms the very core of our Identity. We act and behave consistently due to that image of this SELF we've built since we were born(and even before that if you're spiritual like me) Our self image is nothing but a blue print of who we think/percieve we're regardless of whether it's true or not true. And we act only within the limits and boundaries of our self image. Occassionally when we grow up, or when we're growing up, a powerful experience or in some case many, might help ur or destruct us leading to an image, in that direction. So there's no such thing as LUCK(LUCK = Labor Under Correct Knowledge). You create your luck and fortune favors the brave. This self image is in us down to the deepest detail and you will not recognize it without adequate awareness about yourself. The more you develop this part of your business the faster you will end up learning as to when to stay in the game and when to stay away....and your intuition grows accordingly....
Self Discipline: If you get your psychology right, it's easier to follow your rules. Ability to follow one's rules along with the right psychology(they seem to go hand-in-hand) amount to more than 90% of your success as a trader. Self discipline to me, includes following the rules I have set in my business plan, my trading plan(both macro and micro rules, macro meaning general rules that will allow you to trade or not, micro pertaining to the rules related to a trading plan entry, exit, staying in a position with a trailing stop, when to pass a trade, money/risk management. Some people form a separate category for money and risk management which is alright. However money/risk management is useless without adequate self discipline to follow them. You can also add mechanics of execution here.
To enhance your ability to follow your rules, you can add another section here called Routines and Rituals. We all have our our routines and rituals to do things in life. If I ask you to clasp your fingers of both hands you will always do it based on your habit. Try doing it the other way and feel the unfamiliarity. So the key here is to develop a set of routines and rituals that will become your second nature and serve you for the better. This helps you determine whether you're in a peak state to trade on any given day. Ultimately we're all a creature of our own habits. And our habits must result in a steady, consistent equity curve that makes higher highs and higher lows.
Keeping a trading journal/diary that will force you to express your thoughts about how you felt before a trade, during a trade, after the trade and during end of the day analysis is a minimum requirement. Review what you write at the end of the day and summarize in bullet points about the lessons you have learnt and the mistakes you will never commit again.
I used to hate loading the dish washer a year ago. Instead of focusing on dirty dishes in the sink, I started focusing on a sparkling kitchen. For a month or two, I started to force myself to focus on the rewards of a sparkling kitchen and follow through with doing the dishes. Now I dont feel I work when I do the dishes. It's second nature like brushing my teeth or tying my shoe lace.
Methodology: Enough said about this. You've to find something that gives you a statistical edge and fits your personality. We can explore more in detail later.
Business Adminstration: This includes sub categories of the capital you can use to take risk, finance, purchasing, and anything else you want to add. All this must be included in a business plan. A business plan must be refined at the end of the year every year. Typical activities include defining your vision which is broken down into long term, intermediate and daily goals, record keeping your expenses and income, recording your daily profit and loss, updating your equity curve for use in the top three sections of your business stated above, maintaining a clean, distraction/confusion free office area. We can go back to our four categories and summarize the points so that you will have a folder for each subcategory. (If you're into day trading either you must be full time or be able to spend at least 2 to 4 hours of your full time dedicated to trading during peak trading hours; if you can't do this you must stick to swing and/or position trading).
Now to review and reply to what you wrote:
Habit of thought = belief; That's so true.
I believe that in order the plan a trade and then trade the plan, I have to have the plan developed. Once i discover my own holy grail, then the problem will be on implementation. You are your own holy grail. You must be able to define clearly as to who YOU are. A trading plan is an external factor that will influence you internally. And YOU are the CREATOR of your trading plan.
I had compartmentalized my progress schedule and set tentative deadlines. like, June 30th'2009 was my deadline to find out about as many systems as possible. Find out about various indicators and the strength and weakness of a system. read about various fundamental and technical data and how that is interpreted. 20th'July '2009 was my deadline to start finding which system suits me most. My comfort factor with entry and exit. whether i am happy riding or taking short profits. carry positions for the next day or square off EOD n start afresh. The more systems you keep looking for the more distracted you will be; try to find something simple and easy, with not more than 4 parameters to develop an entry or exit. Personally for day trading I don't care whats' going on in fundamentals. The only rule here is to not have a trade on when a big business news related to the market is coming out. You can always monitor other fundamental aspects for longer term version of the game. Sometimes I keep bloomberg tv on, audio only while a news is expected but it's been years since I have seen cnbc or go to any news channel. It's good to become thorough with technical analysis for any time frame. We can chat about the best books....and everything else later. We can also discuss about rules related to a trading plan and rules related to trading and not trading.....not trading is also taking a position....right?
i spend the 2 hours, basically searching for my own comfort factor with various trading systems. Its like choosing a wife. and i spend 2 hours everyday kissing frogs and hoping one of them will become the fairy princess, i can live with for the rest of my trading life. Now here's something you and I differ. When you mentioned 2 hours every day for self improvement, I felt you were talking about improving your own SELF. The one you are mentioning pertains to the third category viz., methodology. My concept of self improvement daily which is a part of my ritual is meditation(to still my thoughts; religiousness has nothing to do with it here although it isnt a bad idea), visualization and imagination sessions, about 30 minute study of a self motivation book, breathing exercises, physical exercise including jogging and yoga, moderation in diet including fruit only breakfast, a salad before lunch and dinner, etc..More on this later.(basically natural water rich food)
you can understand where i am messing up with implementation. I am not targeting money yet. That will come only after i have perfected my own mental setupDefine your own identity and begin right now seeing yourself already feeling it, doing it, and being it. As long as you keep saying 'after I've.......', you will attract more and more of those events that will involve 'after I've .completed....this/that' and it will never happen. The secret to attracting what you want is to feel good in the NOW, and more of those NOWs will begin to come into your own experience. Imagination creates reality.. My target is to learn at least one thing new. The amount of information is mind boggling and then everyday, there is a small modification or a paradigm shift.
The biggest problem i faced so far was a lack of companionship in this path to system development.I would begin to carve my own path if I were you. YOu can always study books and read some outstanding people here on this forum or elsewhere and make part of what they teach your own. Most people i meet dont like to think in terms of "points" gained. Money seems to be the main motivation. "end justifying the means" syndrome.This is good. Focusing on points made a day will take your focus away from money. First decide your yearly OUTCOMES, break them down to arrive at your weekly/daily targets, translate them into POINTS earned. For example one point move in s&P emini is $50. The reasoning here is simple. Money in our society appears to be linked to LACK with almost 95% of people. So as long as one thinks in terms of money, this lack appears to go along with it. Money, in non economical terms is nothing but energy. It's a physical manifestation and is proportional to how you flow your energy. Remember our main goal in life is the triad of Joy, Freedom and Growth. Money to me is only a MEANS to an END which could be Freedom, security, etc. So decide what your outcomes are and then translate them into points per day/week/month or whatever. Take the focus away from lack and focus on abundance of energy that's everywhere. Our attitude and feeling towards money should be similar to the air we breathe. When you think of the air we breathe do you feel like, there isnt enough of air around so I will suck in as much as I can right now? To me, the "means" is very important. Its time consuming, frustrating and painful process. Thankfully, i found you and i can feel the positive vibes. I hope to gain as much as possible from you.
Thanks again for taking the trouble to pen down your thoughts.[/QUOTE]
No problem in spending time here because fundamentals have to be practised daily. Knowing something is easier than implementing it daily. 'Knowledge Not Lived Is Real Sin(Edgar Cayce). The more I share what I have learnt and experienced, the more I will improve as a human being and also a trader in this regard. Anything you focus/observe/muse/imagine/visualize/feel.....expands. Ultimately all boils down to one's motto or mission in life. Mine is to 'learn, grow, improve and have fun daily and help others to do the same(it's in Sanskrit but trying to simplify it in english here). What's yours?
I knew this would take long and there's more to come. We can start taking them in bite size.....maybe category by category. But the key is doing what you learn....day in day out.
I was thinking of starting a thread on Psychology and Self Discipline. Maybe one of us can convert this thread to match that header.
Hope you had an outstanding day!
Regards
Shreenath
Warning: Not checked for spelling and grammer.