Edge VS Mentality

[zdo 20]

Note: this post is for those few who are really going for high high pareto levels… it is ‘bad advice’ or for everyone else.

 

We have some posters who almost totally favor edge over mentality, some that almost totally favor mentality over edge work and we have some that marginally favor one over the other. As I have previously posted, I find it increasingly necessary to do both concurrently and diligently. I call it ‘up the middle way’, but it can also be seen as ‘consciously re-expanding to contain and balance this polarity’, etc.

 

In my experiences with self and confirmed in working with and helping other traders, it dawned on me that the side (of this ‘argument’) a trader is discounting is the one that needs an increase in priority (but don’t try to just come out and tell that to one of the extremists or know it all’s in here or elsewhere ). Balanced emphasis, even when it doesn’t seem related at all, to the mentality side opens one to discovering and implementing edges. And 'obsessing' on the mentality side spawned by the painful consequences of ‘acting out’, etc. indicates a need for more edge work.

 

Basically, beginners at all levels will progress much more rapidly if they spend equal time and energy on the mentality side as they do charts, grail seeking, edge discovery. This includes building a practice of immediately following mentality work with edge work and of immediately following edge work with mentality work…building a habit of immediately following progress in either ‘side’ with serious, value finding (not problem solving) questions about the progress’s implications to the other side. This kind of work is more arduous but it brings geometric returns. Your 'system' is found within you as much as it is objectively.

 

btw, for the target audience of this post - the ‘mentality’ side is not about psychology, new therapeutic modalities, problem solving, conflict resolution, working through fears, etc. If not those, then what is it?

 

Yours, much more humbly than this seems,

 

zdo

 

ps Have a great holiday weekend all

 

pps Yesterday sunilrohira posted this audio link over in the Trading Mind Software thread. It belongs smack up in the middle of this thread

http://club.ino.com/trading/2008/07/...aders-mindset/

[samhollander 10]

I do very well paper trading, but after a few losses in real time I am reluctant to trade live. So what am I accomplishing? A great paper trading record? Can't go to the Bank with that.

[steve46 12]

Much of what produces success trading has to do with hard work of preparation and attitude (what we call discipline).

 

If you haven't done a good job of researching, and developing a detailed trading plan, then you are "in the weeds"....that is to say, you will not be able to last through the daily stresses of trading as a profession.

 

If you haven't got sufficient "experience" or you haven't got an idea of what to expect when executing your plan, then again you are "in the weeds"...the result is that you are always dealing with uncertainty....and this eventually will beat you down.

 

Most newbies don't have a detailed plan to follow, and because of that, they start to second guess when they lose. In contrast, skilled professionals have a detailed plan...They know what to expect in terms of wins and losses. They also know what kind of experience they will have on a daily basis. Finally they know how to deal psychologically with both success and failure.

 

I hope you will take the time to think about this and apply it to your situation.

 

Good luck

Steve

[samhollander 10]

Steve, thanks for reply. You are 100% right. I had a system that seemed to work pretty well. [indicators]. But have been trying a simpler system that uses only stochastics. have not grasped it & have no confidence, so do i revert back. A lot of people say get away from indicators, so I decided to try this,Stch crossovers. Support ,Resistance, & double tops bottoms using Inside bars as setup.

[Kiwi 16]

Sam,

 

Here is something that might or might not help ... ask what the stoch is telling you.

 

A stoch is basically a measure of how close the close is to the most recent X day range (high-low). So for a 6,3,3, stoch then 100% would imply that close was at the top of the 6 days. Its smoothed (3) and smoothed again (3) which give it lag which can actually be helpful also because it removes noise.

 

So, I'd suggest studying the stochs behaviour with this in mind. You might find after a while that you figure out what price move creates the stoch behaviour you are looking for. Even why it works sometimes and not other times.

 

Just a though.

 

Note: not a substitute for a solid un-secondguessable plan but might remove one more fuzzy variable.

[shyvoodoo 10]

I do very well paper trading, but after a few losses in real time I am reluctant to trade live. So what am I accomplishing? A great paper trading record? Can't go to the Bank with that.

 

Sam was like this also, when you see your doewn a substancial amount of money, it does something to the brain like it did me. What I did was change my platform to display "pips" instead of currency, and it eased my mind a little bit and it allowed me to ride out the rough points of my positions and not get "spooked" into closing positions before they make their moves.

 

[BlowFish 10]

I do very well paper trading, but after a few losses in real time I am reluctant to trade live. So what am I accomplishing? A great paper trading record? Can't go to the Bank with that.

 

Sam you are doing better than quite a few. Some people can not execute well in sim mode. To me that indicates that the fears go beyond that of simple financial loss. In your case that does not seem so.

 

Not sure where you trade from or what you trade but if you have access to spread betting or CFD's (contracts for difference) you might want to look at those. They will allow you to trade smaller size than a full contract if you trade indexes take a look at SPY or Q's. Basically rather than going from nothing to a full contract trade pennies and just concentrate on executing flawlessly for say 50 trades. Douglas talks about this exercise in his book. Basically you have to say to yourself even if my stop is hit 50 times i am only gonna loose $100 (or whatever it is) but I will follow through to the end flawlessly.

[zdo 20]

Sam,

 

Here are a few ideas to trigger the development of your own ideas for dealing with this.

 

idea 1: If you don’t have edge(s) that you literally LOVE, then demo / screen time / grail search until you do.

 

idea 2: If you do have edge(s) acceptable to you then - All done paper trading! ‘Get real’ and stay that way! With your current edge(s), mindfully, non judgementally face and bring your best game to each new trade. In the future you can demo to develop new skills or forward test new techniques, but with your current edge(s) – stop stroking yourself, stay real, and tough it out.

 

idea 3: If you do have edge(s), but have noted 'mental' issues then for the next x number of weeks, if you are daytrading, then MonWedFri are live days and TueThu are sim/demo/papertrading days. (If you are holding positions overnight then alternate trade 2 real, 1 fake for same basic effect.) Continue this until its obvious you don’t need it anymore, then go 4:1 real:pretend for daytrading days (and 4:1 real to fake positions if position trading) etc to quickly extinguish the papertrading days.

 

idea 4: For a time, restrict your notetaking/journaling to the subjective experiences you have before during and after ‘decision times’ - especially for comparison if you are doing something like idea 3. Even though the fears arise from habits of misrepresentation and misapplied identities, your work is not to destroy, correct, of apply ‘discipline’ or willpower to the ‘losing’. The work is to continue increasing your awareness and perspectives. The behavioral changes in your trading will come on their own!

If you do note/journal on your objective decisions, create a focus on what you are doing that is working far in excess of attention to what you are doing ‘wrong’. For example, if you were applying some version of idea 3 you would pour mental energy onto what’s working on your demo days and quickly acknowledge and forgive your screw ups and losses on live days. Your ‘discipline’ is to focus on how close to excellence you are. Screw trading plan ‘discipline’! If a trader has to apply discipline (in the sense of applying willpower to overcome an impulse or conflict), more than once a month then I question the compatibility of his trading plan with his true nature.

 

idea 5: forward click them freakin amygdala at least once an hour!

 

All the best,

 

zdo