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SIUYA

Difference Between Professionals and Amateurs

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This is not really a trading related article but I think much of the same lessons apply here.

dont focus on being a star focus on avoiding mistakes.

How often as traders are people trying to capture every tick, get every trend, get out or in at the top.....and yet are still making simple mistakes over and over.

We all make mistakes, but how many stupid mistakes do you make over and over.

 

 

(plus the blog often puts up interesting articles and books as well)

 

http://www.farnamstreetblog.com/2014/06/avoiding-stupidity/

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Good food for thought...

 

When first starting out, learning how not to lose is far more important than learning how to win. In my own experience: I was a break-even trader; successful at times, but the loses would eat up the profits eventually. I didn't turn the corner until I learned how not to lose. I think it would be fair to say that you need both, but the harder lesson to grasp is how not to lose.

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  SIUYA said:
.........

dont focus on being a star focus on avoiding mistakes.

How often as traders are people trying to capture every tick, get every trend, get out or in at the top.....and yet are still making simple mistakes over and over.

We all make mistakes, but how many stupid mistakes do you make over and over.

 

 

(plus the blog often puts up interesting articles and books as well)

 

Avoiding Stupidity is Easier than Seeking Brilliance

 

Here I have another thought. Dare to believe that your strategy won't work twice. It may work 10 times right, but, be careful, it might get something wrong at 11. Cheers.

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Today I have some thoughts related to mistakes. There are many types of mistakes. But if mistake related to "how to win" part, since win is not you can control in interactive system. Therefore probably it may not be very effective to correct your mistakes related to "win" part. However if the mistake related to "lost"part, since it's the one that you can control it. You probably can correct it effectively.

 

But could "zero defect" type correction can be achieved on "lost" part correction? Which means you wont' make same mistake anymore? I like the 6 sigma idea. The 6 sigma (99.99966% free of recurring mistakes) probably is the highest probability you can reach for avoiding your mistakes to be happened again. Best best probability to avoid mistakes is probably only 4.5 sigma since this is the most you can sense. A"6 sigma" process will have long-term defect rates corresponding to 4.5 sigma performance rather than actual 6 sigma performance Just for fun. :missy:

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If a Sigma is a car model then - its a bit harsh to call it a mistake. ;)

 

The whole Sigma 6 hooha and 0 defects can be well applied to engineering processes but when it comes to trading I am not so sure. Even if you are 100% automated, you can eliminate technical errors, but the rest are not mistakes as such, but part of the trade strategy....which may in its self be a mistake.

 

Mistakes will not be eliminated, accidents are accidents and black swan events by their definition cant really be anticipated.

 

However - we are often talking about either mistakes in character, or mistakes in process and most likely perfectionism, pride, stubbornness and greed etc.

yet while the simplest mistakes may have their root cause in these, they should be the easiest to fix.....and will see the biggest payoff ......and the key is often not trying to be a genius, but simply in trying avoid being stupid. This will eliminate a lot of mistakes.

 

.................

I am reading about insight at present and how it comes about. One of the factors that can help insight is making errors, making mistakes and then learning from them. I guess there are mistakes....stupidity for repeating them or not recognising them and then insanity - when you deliberately repeat them.

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I think this is a false analogy. The difference is that professionals have a lot more money and can effort to correct mistakes. The most fundamental difference is the depth of the pocket.

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so what you are suggesting is that given the same amount of money a professional will make more mistakes than an amateur? or that you have to have money at the start....cant people start small and grow.

 

Plus I think you are missing the point - how do you move from being an amateur to being a professional.....one answer is to make less stupid mistakes. The money is the end result.

 

The only thing about having more money or a larger pool of money is that in an absolute sense you can afford some more mistakes.....if you compare like for like in percentage terms then it makes no difference. A 5% loss is a 5% loss.

 

Of course this is different again from the problem of using your own money as opposed to other peoples. The best kind.

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  SIUYA said:
so what you are suggesting is that given the same amount of money a professional will make more mistakes than an amateur? or that you have to have money at the start....cant people start small and grow.

 

Plus I think you are missing the point - how do you move from being an amateur to being a professional.....one answer is to make less stupid mistakes. The money is the end result.

 

The only thing about having more money or a larger pool of money is that in an absolute sense you can afford some more mistakes.....if you compare like for like in percentage terms then it makes no difference. A 5% loss is a 5% loss.

 

Of course this is different again from the problem of using your own money as opposed to other peoples. The best kind.

 

I think he means that traders who are good enough to make a small fortune in the market, start with a big fortune.

Edited by MightyMouse

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This is a great tread about the mistakes. It also mentioned to the repeat mistakes (or errors) during trading. It is always a big issue I always tried to overcome. Here are some of my experiences. I think the repeat mistakes is magnified when you are trading using your own money. I believe that I could not find it it's because "trading sins" block my view on the during the trading results that I can not see what's right. Here "trading sins" I meant fear, greed, pride, bias....etc. It's hard to correct it based on just following rules, since it's coming from heart. So I need to adjust to my heart conditions to reduce these repeat mistakes. Outside system(coach, or mentor) are easy to see it, but it can not change it a lot except that I can change my heart, not just trying to follow the rules.

 

I am very admiring Mr. Buffett can have both system in one person. But I am also felt very lucky since I have a great mentor using very different ways to slowly help me to change my heart to see the mistakes during trading learning.

 

That's I always appreciate Mr. Market, he not only provide me a place to make money, but also teach me to how to become a better person in daily life. Cheers.

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  wmck6167 said:
I think the repeat mistakes is magnified when you are trading using your own money. .

 

Very true - there are different factors, emotions and worries involved.

There is also the simple economic issue of time management and opportunity cost (is it even worth doing yourself)

 

Which is why the saying "dont trade with scared money" or "only trade with money you can afford to lose" is important in minimising mistakes.

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At the outset one needs to define exactly what a mistake is. A trade that results in a loss is not a mistake. True trading mistakes have been written about elsewhere on TL.

 

A trading mistake is either:

 

1 Getting into a trade that you should not have gotten into.

2 Not getting into a trade that you should have gotten into.

3 Getting out of a trade before you should have gotten out.

4 Staying in a trade that you should have gotten out.

 

So, if you take a loss, it should be a loss from a trade that you would take again and again 500 times even if it results in a loss.

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Guest OILFXPRO

In trading you are dealing with uncertainty and decisions are made on content in mindset , in tennis you are dealing with skills ,power and stamina.

 

Why can't 50 year old tennis players stop making mistakes against 24 year old tennis players?It is not just about mistakes.

 

In trading the content of the subconscious mindset is important in not making mistakes.The psyche and mindset is more important.

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"In trading the content of the subconscious mindset is important in not making mistakes."

It is very true for me. I lost money when I felt uncomfortable either in mental or physical state. It's kind of mystic. So I learned to quit the game when I felt uncomfortable. :crap:

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  SIUYA said:
.......

There is also the simple economic issue of time management and opportunity cost (is it even worth doing yourself)

 

Which is why the saying "dont trade with scared money" or "only trade with money you can afford to lose" is important in minimising mistakes.

 

economic issue of time management......Mr. Livemore?

economic issue of opportunity cost (is it even worth doing youself) Mr. Buffett?

 

Are that right?

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I think the word "mistake" should probably be substituted with the term "performance shortfall" (or, something different). A mistake is when you key in 199 instead of 100. The "mistake" doesn't become evident until you hit "enter" and the order fills. You've made a mistake that that has been revealed by a performance shortfall... you weren't paying full attention to the task at hand.

 

There are many things that can distract a trader from the task at hand. Emotions, boredom (allowing the mind to wander), thoughts concerning past performance. It may be that the mother-in-law who has always thought you should get a "real" job is in town, and she's been busting balls in that off handed manner that she's so good at.

 

Mistakes are inevitable, everyone makes mistakes; fat fingered key strokes to errors in judgement. Professionals make mistakes too, but they recover and get back in the game. Sometimes they will go down in defeat, but they don't commonly defeat themselves.

 

I think the intention of the OP was to make the point that by channeling your efforts into reducing performance shortfalls you will progress faster than by channeling your efforts to the fringes... the perfect system, the perfect mindset, the image of the perfect trader.

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[quote name=jpennybags;194187......

I think the intention of the OP was to make the point that by channeling your efforts into reducing performance shortfalls you will progress faster than by channeling your efforts to the fringes... the perfect system' date=' the perfect mindset, the image of the perfect trader.[/quote]

 

Your thoughts are reasonable. I am just a person trading in retailer trading system. There is a question always puzzled me. It looks there is a way to be a successful trader by learning. Is that meant most traders in institutions(they were trained to trade) are very good in trading and, in that case, retailer trader shall be always be on the poor performance side? Will most of traders in institutions know all of the trading skills or trading secrets? like Mr. Livermore?

I traded most of time is based on mind, not major on the method. But method is a good way to prevent the lost.

Just curious.

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  wmck6167 said:
Your thoughts are reasonable. I am just a person trading in retailer trading system. There is a question always puzzled me. It looks there is a way to be a successful trader by learning. Is that meant most traders in institutions(they were trained to trade) are very good in trading and, in that case, retailer trader shall be always be on the poor performance side? Will most of traders in institutions know all of the trading skills or trading secrets? like Mr. Livermore?

I traded most of time is based on mind, not major on the method. But method is a good way to prevent the lost.

Just curious.

 

I'm a "professional" trader, as I make my living as a trader, but that's about as far as it goes. The truth of the matter is that I'm an "amateur" that has found a niche style of trading that suits my personality, and I've dealt with my demons such that I don't have many performance shortfalls (mistakes). I would imagine that someone institutionally trained would scoff at what I do... rightfully so. I am a professional trader, but I still consider myself to be a hack... and again, rightfully so.

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  jpennybags said:
I'm a "professional" trader, as I make my living as a trader, but that's about as far as it goes. The truth of the matter is that I'm an "amateur" that has found a niche style of trading that suits my personality, and I've dealt with my demons such that I don't have many performance shortfalls (mistakes). I would imagine that someone institutionally trained would scoff at what I do... rightfully so. I am a professional trader, but I still consider myself to be a hack... and again, rightfully so.

 

They would see bags full of mistakes , if compared to the optimum way of trading.

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  OILFXPRO said:
They would see bags full of mistakes , if compared to the optimum way of trading.

 

Let them scoff. I do alright...

 

It would be nice to sit with someone (a professional) for a day. I recall a time when I went to see a PGA tour event. I went to watch the professionals hitting balls and warming up into their assigned tee time. There was nothing rushed... nice smooth passes at the ball... no struggle. I played a better game for a couple of weeks after, but then my usual bullshit crept back in. Anyone can have a good day, or a good month. It's about the aggregate and how you deal with the struggle.

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Jpenny,

 

Ignore the crap that oily posts. The concept of "optimum" when it comes to trading is hindsight talk and oily does that sort of talk better than most.

 

Professionals make mistakes all the time and often are not as professional as we are led to believe. How many banks and hedge funds have been decimated over the years due to "professionals".....many.

 

With kind regards,

MK

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  MidKnight said:
Jpenny,

 

Ignore the crap that oily posts. The concept of "optimum" when it comes to trading is hindsight talk and oily does that sort of talk better than most.

 

Professionals make mistakes all the time and often are not as professional as we are led to believe. How many banks and hedge funds have been decimated over the years due to "professionals".....many.

 

With kind regards,

MK

 

I would think myself to be a veteran of this game that we play... I have no illusions. What 'oily" has said is of some validity... no problem what so ever. I'm good enough at this game that I recognize my own faults (no need for someone to point them out). My strength is... and this is important to note... that I play within myself.

 

One can try and make the distinction between amateur and professional. Where one draws that line is subjective at best. I think the distinction lies in the original post... "professionals don't defeat themselves".

 

Am I an "elite" trader? No, absolutely not, and would venture that I never will be (doesn't mean that I will stop trying). I am successful because I know my place in the market. I know what I can get away with. I know what my limits are... and how to exploit my strengths. Is that professional? I think so...

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  jpennybags said:
I'm a "professional" trader, as I make my living as a trader, but that's about as far as it goes.........

 

You shall be a successful trader since it's not easy to "make living as a trader." from my point of view. (although I did not know the time frame) You shall need to overcome your mental weakness first before you achieve this level? Am I right?

 

I like trading since it involving a lot of thinking in mental with endless ways. It's very fancy and I never have this kind of feeling in my career or life. I enjoy the game a lot.

 

I am dreaming to be a greatest trader (just dreaming) with a righteous purpose(still seeking). It shall be a lot of fun in this unexpected journey. Cheers.

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  wmck6167 said:
You shall be a successful trader since it's not easy to "make living as a trader." from my point of view. (although I did not know the time frame) You shall need to overcome your mental weakness first before you achieve this level? Am I right?

 

I like trading since it involving a lot of thinking in mental with endless ways. It's very fancy and I never have this kind of feeling in my career or life. I enjoy the game a lot.

 

I am dreaming to be a greatest trader (just dreaming) with a righteous purpose(still seeking). It shall be a lot of fun in this unexpected journey. Cheers.

 

Actually this business is quite simple. Once you get over yourself, and all the bullshit that everyone else brings, it can become quite simple. It's about making money... do that... focus on that.

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  jpennybags said:
Actually this business is quite simple. Once you get over yourself, and all the bullshit that everyone else brings, it can become quite simple. It's about making money... do that... focus on that.

 

Well, I got your points. Here is my view. I tried to interact with the truths people bring to me, not interact with the "bullshit" you mentioned. In that case, I can focus on the new thing I can dig it out. I also enjoy and learn something new more in addition the "making money", something hidden behind the game. Indeed, when I focus on something above "making money" ,which in the past helped me many times to reduce the risk of lost. Just share my experience. Best to you to have great trades!

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  wmck6167 said:
Well, I got your points. Here is my view. I tried to interact with the truths people bring to me, not interact with the "bullshit" you mentioned. In that case, I can focus on the new thing I can dig it out. I also enjoy and learn something new more in addition the "making money", something hidden behind the game. Indeed, when I focus on something above "making money" ,which in the past helped me many times to reduce the risk of lost. Just share my experience. Best to you to have great trades!

 

Well, an approach where you focus on some particular trading point is already incorrect. My trading analysis consist of several factors - price, market history, trader's general sentiments, money management, my broker Hotforex trading conditions (spreads, slippage, etc.) Seeing only money in the field of sight is the direct way to losses.

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