Thoughts on "The A to Z of trading career - musings of a professional trader !!"

[madank]

i Agree with this point " improvement should be with respect to size "!!! screwed my existing system in swing in quest for improvement which ended in pit hole

,realizing this ,i returned to my previous method in swing !!!

Yes - this 'grass is greener on the other side' attitude can kill accounts and put us back by years.

Well i have hopped quite a bit around many systems and definitely its not good for our ledgers. I am strict follower of my system from past 3-4 years. But it is not bad either to improve your system. There should not be disruptive change in the system i.e. you discard the system altogether and bring a new system, rather it should be incremental. I got some idea, i checked it along with my system and if my system shows considerable improvement then i keep it else i discard the idea(even if there is minor improvement i discard the new idea). Believe me very soon you will find that it is hard to improve the system (saturation point) because you can not take more from markets what it gave to us.

Absolutely Copypaste. Follower of your system for 4 years is an absolutely wonderful thing. 1 in 100 can do that actually. Excellent stuff !!

Problem with this approach is 'what is considerable improvement?'. it is subjective again. Some folks want to increase the winning ratio(seems to be the popular choice , Some would want to increase the returns, some would want to reduce the DD without affecting returns much(again its a subjective term),some others would want to reduce the number of trades and some are always looking for ways to automate/sip pina colada sitting in Andaman

But, this implementing new idea is a good timepass and can give us some food for our creative brain. Still, sticking to our system will almost always would be beneficial in the long run(assuming we are trading it for more than an year without any change).

No sir !! i don't know mind reading,very much interested to know about this topic,plz present your view on mechanical system !!!

Yes - mechanical vs discretionary is one of the topics. I know am putting myself infront of a freight train when i touch this topic. But, thats how insights can be dug out of everyone's mind

From books like Market Wizards etc one learns that losing Trades are part of every system and therefore one can conclude that there will always be "fresh or repeated" mistakes in a Trading Career. All one can do is to stay on top of them with the Mgmt Techniques of RM, MM, Pysch and the rest.

Absolutely Ravi !! High winning ratio+ low RR or low winning ratio + high RR - we cant have the cake and eat it too !!

Again, you need to release yourself from the need to be right. If you constantly need to be right, you are unfortunately in the wrong business..

Well said Xray - need to be right will kick in immediately when we start posting our trades online realtime (even at EOD). It is human nature and it happens at subconscious level. So much of research has been done on this bias and this one can be brutal !! This is why i advocate against posting trades in forums or twitter(unless the person is looking for potential customers for tips service or really devoid of necessary attention needed in life). Even tipsters screw up their own trading for the same mentioned reason.

After all, we are here to make money trading and the chest-thumping act can only deteriorate our chances further. And the best part is we dont even realize that its happening as it happens in the sub-conscious level. I mentioned the same point in marketcalls webinar video as well. But 'old habits die hard' for many of us !! Like i said elsewhere, realisation is the first step towards reformation. Only if we accept that we are an alcoholic, we can take the road towards abstinence.

 

[madank]

@madan, I am trying to speak from the shoes of a new trader with no family background or access to mentor, In this case do I need to go through the usual beginner cycle where I will spend hours experimenting with different strategies,indicators etc? if yes then when to stop and conclude the system I have developed is acceptable? Is there any quicker/easier way? Can you please share your thoughts.

Actually I went through all these phases and spent countless hours of screen time before realizing that I just need a simple clean price action chart with no indicators to distract me. But I feel those number of hours I had spent analyzing the charts were not wasted and made me what I am today. But there are traders who get stuck in the viscous cycle of system hopping as they are not able to give enough time to any one system. I think it has to do with psychology & self confidence as they expect someone trustworthy to confirm to them as to which system they have to follow..just like we grew up with parents taking decisions for us.

One can stop it when you have a system making money consistently for 3 years(for swing) and 1 year (intra) in real trades. Rather, we should focus more on MM and increasing the size in a logical way. After all, thats where the real money is. Would you rather make 1000 points with 3 lots (or) 400 points with 20 lots? So, we should focus our energy towards the latter. It's easier said than done as psychological ill-effects will show up when we increase size(thats another topic to discuss for another week - mental ceiling)

Number of hours spent will never go waste as most of us have to carve our rough edges by ourselves. You will not be who you are without those hours.

Yes - System hopping is infact a vicious cycle as you mentioned and we 'need of approval of others' for lot of things in life, not only in trading. This is the framework of our society..A child needs to be accepted for every act he/she does (dont want to dwell more in this topic as it would turn philosophical)...the moment we relieve ourselves out of that invisible bond, we have emancipated ourselves

 

[toocool]

Let it go philosophical please

The true problem will be revealed only with true search for higher understanding

 

[VJAY]

Well said Xray - need to be right will kick in immediately when we start posting our trades online realtime (even at EOD). It is human nature and it happens at subconscious level. So much of research has been done on this bias and this one can be brutal !! This is why i advocate against posting trades in forums or twitter(unless the person is looking for potential customers for tips service or really devoid of necessary attention needed in life). Even tipsters screw up their own trading for the same mentioned reason.

Totally agree this points,I experienced it myself.

 

[ncube]

There is perfect standard for a trader which is objective personality,which i neglect( 6 th point ),since this psy drill is started, i'm pretty much confident that i will regain this character .Mark Douglas, author of The Disciplined Trader states there are seven characteristics of an objective person. Here they are so you can recognize it when you’ve achieved it:

1) You feel no pressure to do anything.


2) You have no feeling of fear.


3) You feel no sense of rejection.


4) There is no right or wrong.


5) You recognize that this is what the market is telling me, this is what I do.


6) You can observe the market from the perspective as if you were not in a position, even where you are.


7) You are not focused on money, but on the structure of the market.


If you can see any of the above qualities in yourself, you’re on the right road. Again, you need to release yourself from the need to be right. If you constantly need to be right, you are unfortunately in the wrong business. To be a successful trader, you don’t always need to be right, but you always need to be objective.

Exactly Xray bro, these are the very skills which differentiates professional traders from the crowd and they develop this mindset with regular focus and practice. However the good part is that anybody can learn this and does not require any special ability or intelligence. To give an analogy, it's like learning to ride bicycle, in the beginning we face many emotions such as fear of falling, constantly focusing on various moving parts...surroundings and at the same time excitement of learning something new. But once we have learnt to ride we drive subconsciously without even thinking about it. This is the mindset a trader need to achieve when trading where he can enter/exit trades subconciously without any emotions.

Though most trading psychology books talk about these points but they do not elaborate in layman's terms how one can actually build these skills and then how to evaluate if we are ready with that mindset as it is difficult to express in writing and instead need to be experienced like riding a bicycle. Maybe we can discuss on this when Madan talks about mindset. I will also share my experience and the method I follow to practice.

 

[XRAY27]

Totally agree this points,I experienced it myself.

Exactly Xray bro, these are the very skills which differentiates professional traders from the crowd and they develop this mindset with regular focus and practice. However the good part is that anybody can learn this and does not require any special ability or intelligence. To give an analogy, it's like learning to ride bicycle, in the beginning we face many emotions such as fear of falling, constantly focusing on various moving parts...surroundings and at the same time excitement of learning something new. But once we have learnt to ride we drive subconsciously without even thinking about it. This is the mindset a trader need to achieve when trading where he can enter/exit trades subconciously without any emotions.

Though most trading psychology books talk about these points but they do not elaborate in layman's terms how one can actually build these skills and then how to evaluate if we are ready with that mindset as it is difficult to express in writing and instead need to be experienced like riding a bicycle. Maybe we can discuss on this when Madan talks about mindset. I will also share my experience and the method I follow to practice.

Most importantly with in the method entry style with respective to qty you trade (all in or add on) people won’t concentrate on this many will say add on is best,empirically it failed only important factor is your risk factor which you are going to take with respect to trade , even price action has be back tested, many think it cannot be.

Chaos in one time frame is just order in another ,price shocks are common in swing/positional these are the points many neglect and they go on there ways to screw there system to avoid them

Posting trades in forum I don’t think it will effect the method or mind ,unless he/she wants to post fake trades hide/proof some thing in the name of discretionary style, In the real world of professional trading ,there is one system which is mechanical,when we enjoy the process of trading and follow a method ,rather then concentrating on the MTM,go on with this process as driving a car ( we cannot say discretionary in driving ,there is only one way ) it is a mechanical way..in short enjoying the present movement of trading on a sytem which has positive expectancy is called professional trading IMO !!!

 

[niftyoption]

Best Trading Method provide the Following Information :

1.Is the Chart " Bullish or Bearish "?
2.Is the method Identify " Consolidation of price " ?
3.If the chart is Bullish , is there momentum identification in the Trend ?
4.If the chart is Bearish , is there momentum identification in the Trend ?
5.If the chart is consolidating , how long would if be before the consolidation might get over ?
6. Is the chart Displaying "Demand and Supply " ?
7. Is the Method Identify Reentries ?
8. Is the Method Identify " Breakouts Trades & Reversal Trades " ?
9.Is the Method Identify " High Risk Trade , Moderate Risk , Low Risk Trade " ?
10.Is the Method give Profit Maximization ?
11. Is the Method give Future Projection of Price ?
12. Is the Method Back Tested in Bull , Bear , Consolidation Phases accurately ?
13. Is the Method convert Day Trading Position to Positional Trading ?
14.Is the Method give Less Draw down ?
15. Is the Method mostly depend upon your Strategy or Dependency on others Trading Data or DLL files ?

If any method full fill these requirements , i think psychology role in Trading is Reduced .....

 

[niftyoption]

Don't Leave your Basic Trading system though it is having Negative factors or In Attraction with new Trading System
Know your Strength and Weakness in Trade System .....Try to rectify your Mistakes ... This is ultimate Psychology for Trader's Success ....

Final Psychology is

ALL THE BEST

 

[madank]

5.If the chart is consolidating , how long would if be before the consolidation might get over ?
6. Is the chart Displaying "Demand and Supply " ?
11. Is the Method give Future Projection of Price ?
14.Is the Method give Less Draw down ?

If any method full fill these requirements , i think psychology role in Trading is Reduced .....

@niftyoption - 5 and 11 are trying to predict the future. Very tough to do that.Could you please explain more about 6 and 14?

BTW, kindly refrain from pasting stuff from internet...Wanted to keep this thread for discussions coming out of our thought process(based on our understanding of things). For eg: Please read posts of ncube, xray and other folks..very nice discussion.

Hope you understand !!

 

[XRAY27]

Self-esteem is another very powerful underlying factor which will be there throughout.This is basically how you feel about yourself. How do you perceive your skills and knowledge as a trader? How sure of yourself and particularly of your judgment you are? How tempted do you feel to doubt your thoughts and to reconsider your actions? Do you take too long to make a move, only to end up being too late? Your self-esteem is going to be there practically just like an underlying foundation for your decisions in the trading world. And if you do not manage to consider its presence, and its effects, you might easily end up making erroneous decisions often.

Overcoming self-esteem issues is critical if you want to be able to trade successfully. Subconsciously we estimate ourselves, by evaluating our personality, our skills and capabilities – and we may either over estimate ourselves or under estimate ourselves. This is what self-esteem is all about. As a result of this evaluation of oneself, one develops an attitude towards oneself. Hence a balanced self esteem is key if one wants to trade successfully. It is a long subject..