Self-discipline = Key for Daytrading

[FXGirl 10]

The trading pundits say that to be a successful trader, you must control your emotions. The general consensus seems to be that on the road to trading profitability, your emotions are your biggest enemy. The advice these experts give is to become more disciplined, to put all emotion aside.

 

The problem is none of the trading experts can tell you how to get rid of emotions. That's because the experts are all missing a basic concept about emotions: emotions are not the enemy; emotions are information. Most of the time, say 95%, the information is about you...not about the market. But you treat is as though it is about the market. Big mistake. Really big mistake.

Why do we misinterpret this emotional data? Ambiguity. The thing about the market is its ambiguity: We don't know what the market is going to do next. Sure, we have indicators and systems that help predict market movement, but none of these can tell us with certainty what the market is going to do each and every time. When we are faced with this ambiguity, we feel uncomfortable and unsure. Not knowing what is going to happen next makes us feel out of control -- this is the perfect scenario for our emotions to run wild.

 

Whatever is going on inside of us gets projected on the market. If you feel scared because your last trade was a loser, you may hesitate to get in the next trade even though your system clearly says to enter. What’s changed? The trade set-up hasn’t changed; the risk to reward ratio hasn’t changed; the percentage of wins hasn’t changed, the market is the same old market. But you missed a great trade because your feelings changed. We have all made the mistake of acting as though what we are feeling is a reflection of what’s going on in the market.

 

There is a lot of talk about the two emotions of fear and greed, but it is really a lot more complicated than that. We can feel inadequate (I'll never learn how to do this); angry at the market (I'll show you I can trade, I'll double my lots); angry at self (How could I be so stupid? I moved my stop again.); despair (I just can't take another loss, what is my wife going to say?); elated (I'm so hot today I can trade anything!), and so on. In all of these examples, the emotion is information about the trader, not about the market.

 

So, the first step to becoming a more profitable trader is to get the emotions you are feeling up to a consciousness level where you can deal with them. One of the best ways to do this is to talk out loud. Whenever you are aware of being anxious, angry, hesitant etc., say what you are feeling. Speak out loud what you are saying to yourself internally... about the market, about your ability to trade, about the money, about what others are going to think, and so on. Remember that all feelings are acceptable; it's what you do with them that is the important part.

 

What you are now saying out loud is the raw data, the information you need, to change your behavior patterns. Ask first "What is the emotion I'm feeling?" Then ask, "What am I saying to myself that makes me feel that way?" Next, ask "Is it true?"

 

Just going through this process will put you in a different emotional state, one in which you have more conscious control over your actions. You’ll come to recognize that you emotions are more about you than about the market.

 

Now you’ll want to ask, "Is the strategy I'm using to handle my emotions working to make me profitable?" In other words, when I feel this way, how does it play out in my trading?

[DugDug 10]

The problem is none of the trading experts can tell you how to get rid of emotions. That's because the experts are all missing a basic concept about emotions: emotions are not the enemy; emotions are information. Most of the time, say 95%, the information is about you...not about the market. But you treat is as though it is about the market. Big mistake. Really big mistake.

 

Hello FX Girl, welcome (given this was your first post)

 

I think what you say is interesting and good - I agree that emotions are more about the trader, their views their reactions etc; , however - I feel the premise that you have started from actually deviates from the point or discipline somewhat.

 

Discipline is not about getting rid of emotions, but rather more about limiting the inbuilt human emotions that cause many traders to have the "wrong" highs and lows from trading.

There have been plenty of recent studies to show that humans are inherently poorly equipped to trade - if the rules of running profits, cutting losses etc are true.

So if emotions are information then you still have to control them - especially if we are hardwired to be poor traders. (which kind of does make the natural emotional responses for most people wrong - or the enemy)

 

The point of it being about our emotions is 100% correct - so long as you remember that it is still ALL about the market. Just because you have you emotions in check does not mean you can ignore the market. The market has no emotions, it does not care who you are, how you feel etc; etc; BUT the market is everything. If you dont respect it, then your ego will kill you - because while you may have the emotional fortitude to trade well, you still must have the discipline to trade well. I have seen some very emotionally controlled people blow up due to ego and ultimately poor discipline.

Can you give a computer system that trades mechanically emotions? or discipline?

[Kiwi 16]

Ignoring the question of whether the market (the sum of all humans and computers interacting on current price) has emotions. That one is too big and distracts from the OPs question.

 

The goal of discipline is not to get rid or emotions or even to limit emotions.

 

The goal of discipline is to trade ones process/plan/method/system etc etc as one would wish notwithstanding ones emotions.

 

The process of trading well despite emotions will probably reduce some of them over time (see documentation on OCD which is remarkably similar to how emotional impacted trading works - OCD, emotions, and the brain) but limiting them is a probable side effect not a necessary goal.

[natedredd10 10]

Hi Brownsfan,

 

It's pretty clear that collegetrader nor natedredd10 trade for a living and will probably have a difficult time trying.

 

Good luck guys and Happy Trading

 

Ektrader

 

Non institutional trading for a living is what dipshits/lucky and the lazy/pretenders con themselvs into thinking they are "doing"...

If you understand the risk of ruin formula, and understand within its context how bad it is to skim off a bankroll as far trading goes, then the inverse is adding to a trading bankroll from another income stream, and an obvious optimal strategy. As if anyone is smart enough to trade but too dumb to figure out another way to make money, thats just lazy.

My point was its too easy to con yourself into the belief that a losing strategy is simply not winning because you lack this magical quality of "self discipline"...Far more likely is your strategy is flawed itself. Give me any strategy that I know will make .1 YM points a day at average over 10,000 trades and I'll have all the self discipline to trade that way in the world. Thats not the problem, the problem is its impossible to know that.

[ektrader 10]

Natedredd wrote:

Non institutional trading for a living is what dipshits/lucky and the lazy/pretenders con themselvs into thinking they are "doing"...

If you understand the risk of ruin formula, and understand within its context how bad it is to skim off a bankroll as far trading goes, then the inverse is adding to a trading bankroll from another income stream, and an obvious optimal strategy. As if anyone is smart enough to trade but too dumb to figure out another way to make money, thats just lazy.

 

I'm not sure what you're trying to say by this. All I can tell you as that I trade for supplemental income and I've been doing a pretty damn good job of it. Trading as a full time occupation is more of a future/ retirement type goal for me. That being said, I happen to know institutional traders and retail day traders.Some of the retail guys are making more take home money than the institutional guys...

 

 

Natedred wrote:

My point was its too easy to con yourself into the belief that a losing strategy is simply not winning because you lack this magical quality of "self discipline"...Far more likely is your strategy is flawed itself. Give me any strategy that I know will make .1 YM points a day at average over 10,000 trades and I'll have all the self discipline to trade that way in the world. Thats not the problem, the problem is its impossible to know that.

 

I'm not sure why you chose my quote for your little rant but since you did I guess I'll comment with the truth and maybe you'll get it and maybe you won't. Discipline is very important because that's what keeps you on track to stick to a "quality" trading plan. I know a few swing traders personally that only win about 30 to 40% of their trades and still make plenty of money. Why? Because unlike most sheep, they understand that if they keep the losses small, the next big winner is right around the corner and that is where the money is made. They look at everything else, even the small profits as a cost of doing business. Instead of managing your money and trading better, undisciplined traders always say their plan sucks.

 

Now besides that, I never said anything about having a shi**y plan and still being a winner. Of course if someone could guarantee 1 YM point on average for 10000 trades, this forum may not even exist. The truth is, there are a lot of ways to trade the markets that give you a considerable edge. (I do it everyday on a consistent basis you can check me out buddy, I'm the real stuff!!). The problem is, the lack of discipline to follow such plan on a consistent enough basis to allow the probabilities to work in ones favor. And, to know when the market conditions aren't suitable for said strategy.

 

Undisciplined people will turn a good strategy bad because they run for the next holy grail the moment they have a few losing trades.

 

Undisciplined people revenge trade.

 

Undisciplined people manage their money poorly.

 

Undisciplined people don't take the time to see if market conditions are right for their particular type of trade.

 

Undisciplined people allow greed to cloud their judgement.

 

Undisciplined traders are like alcoholics they never admit they have a prooblem with discipline.:haha: Good luck with your trading.

 

Ektrader

[zdo 20]

op, et al,

Needing to apply discipline more than ~ once a month is a sign of big trouble and the whole trading operation is in jeopardy . Use the sign as sufficient stimulus to start re-looking for the major and serious 'structural' changes needed to make with self and / or system... hth and merry christmas and happy holidays to all.

[FXGirl 10]

Dear DugDug:

 

“You said that Discipline is not about getting grid of emotions, but rather more about limiting the inbuilt human emotions that cause many traders to have the “wrong” highs and from trading.” I’m not sure how “getting rid of emotions” and “Limiting the inbuilt human emotions” are two different things.

 

As a clinical psychologist (and a Forex trader), I know that there is no such thing as getting rid of human emotions. They are part of who we are. For traders, the problem is not that we have emotions; the problem is what we do when we experience our emotions.

 

The call to discipline is really a call to learning how to process and manage our emotions so that our resultant behavior supports our trading goals. It is not a call to “control” emotions by pretending they don’t exist or trying to “limit” emotions. If that worked, we wouldn’t be having this conversation. Everyone would just exert a little will power and trade like a machine. Obviously, it doesn’t happen that way.

 

Kiwi had an interesting idea in the post above. He suggested that the process of dealing with emotions might be similar to the successful cognitive-behavioral strategy for dealing with Obsessive Compulsive Disorder. In this strategy, OCD patients are encouraged to recognize their feelings and then say to themselves “It’s not me; it’s my OCD”. For traders, the mantra would be, “It’s not the market; it’s me” – actually, it is more like: “It’s not the market, it is my emotional response as a result of how my brain experiences threat.” Just as the caudate nucleus high jacks the normal functioning of the brain in OCD patients, for the trader the amigdala and other parts of the brain do the same in the face of the perceived threat of a loss.

 

The strategy that you use to manage your emotions in the face of the perceived threat of a loss is the difference between a failure and success. (Please note that I am assuming that you have a trading system that actually works.)

 

A strategy is the behavior we use to get what we want and need – in this case, deal with our emotions during trading. A revenge trade is a strategy to reduce the anger and anguish we feel at a loss. It’s the adult equivalent of a child saying, “I’ll going to hold my breath until I get what I want.” If you get lucky, a successful revenge trade might make you feel better for a while… until the next loss. But more likely, your revenge trade was ill considered and you lost more money and now feel even worse.

 

Other strategies such moving stops, increasing lot size (or reducing lot size), all serve a similar purpose: to reduce emotional pain and anxiety. These strategies sabotage our trading. And often if a strategy doesn’t work, the first thing that people do is to try it harder. In trading, that can mean taking a revenge trade with even more lots. I’m sure you get the idea.

 

What would a better strategy look like? That’s different for each one of us because we all have a different psychology makeup. But here are some suggestions that can move us in the direction of better trading decisions:

 

1. Anything that puts a little time between the urgent feeling of needing to take action and the action itself is good. Emotions are constantly changing; their intensity fades if they aren’t reinforced. So look away from the charts, get a cup of coffee, do something that focuses your attention elsewhere for a while.

 

2. Employ a different part of the brain by analyzing your feelings. Ask yourself these questions: “What am I saying to myself when I have a losing trade?” “Have I heard those words before?” “Is it my voice I’m hearing or is it someone else’s voice?” “Is it true?” Once you have worked through these questions, ask, “What could I say to myself that would result in a different feeling?”

 

3. Keep your hand away from that mouse. Unplug it. Put a piece of paper on top of it that says, “Is that feeling accurate?” or “Think!” Breathe. Breathe. Breathe. Deeply. Think about the last time you kissed someone you loved, or anything else that was a truly happy experience. Get your body to relax and allow your perspective on life to reemerge. Then take a look at that trade again. Can you stick to your trading plan now?

 

Remember, it’s about controlling behavior, not controlling emotions.

Edited December 22, 2009 by FXGirl

[DugDug 10]

Dear DugDug:

 

“You said that Discipline is not about getting grid of emotions, but rather more about limiting the inbuilt human emotions that cause many traders to have the “wrong” highs and from trading.” I’m not sure how “getting rid of emotions” and “Limiting the inbuilt human emotions” are two different things.

 

Remember, it’s about controlling behavior, not controlling emotions.

 

Hi FX Girl, I think that we are talking the same thing, and that its actually a good point to distinguish between the idea of the emotions v discipline. They are related but they are also different.

The last part of your quote says it all. That discipline is about controlling the behaviour - but then does not our behaviour largely stem from our emotions?????

Hence my belief that self discipline is largely in limiting/controlling the emotions that affect our behaviour.

As Kiwi summed up perfectly - in the quote "The goal of discipline is to trade ones process/plan/method/system etc etc as one would wish notwithstanding ones emotions"

 

I do think there is a difference - all the little tips and tricks you suggest are about controlling the emotions, but if you dont have the discipline to even follow those tips then they are largely pointless.

A friend of mine was and is a very large currency trader, he was a very emotional trader (less so now he tells me) - he had huge highs and lows - he had his fellow traders get him to cut his position when ever he had a big win and used to stand up at the desk with arms raised screaming about how good the market is - it worked for him.

 

Glad to hear you are a clinical psychologist, I am a profitable trader (one small loosing year in the last 17 - it was the markets fault not mine) my mother and my girlfriend tell me I am not emotional enough, maybe I need help in other areas of my life.:haha:

[FXGirl 10]

Hi, DugDug: Close, but no cigar. No, my suggestions aren’t about controlling emotion. They are about controlling behavior. Your currency trader friend is a great example. He expressed his emotion by standing up and screaming. This can be a great tactic, good trade, or bad, as long as when you stop vocalizing, you DO the right thing – which your friend did. Discipline happens when you are able to process your emotions in the context of your goals and control your behavior.

 

Interestingly, neuro-psychologists have determined that people who don’t have emotions (due to brain injury) can’t make decisions. So, yes, emotions seem to be a key force in our ability to act. But we also have an analytical, evaluative process that we bring to bear in decision-making. Self-discipline largely comes when we find a way to process our emotions (express them, experience them, identify the pertinent data in them), and then allow our analytical part to decide what to do with the data. If you skip the first part of this process, it’s hard to do a good job with the second part.

 

Since you have been trading successfully for 17 years (Congratulations), you have developed self-discipline. In other words, you have developed a way to process your emotions effectively, so that your behavior serves your trading goals. At this point, trading may not evoke the strong emotions that it probably did in the beginning of your trading career. After all, we do develop a different response to events if we have seen them a number of times. But if you can remember back to when you started to trade, you may be able to identify what strategies you used to become disciplined. Won’t you share them with us?

 

About your girlfriend, all women want love and respect. I'm sure you respect her and feel lots of love for her. So, just let it out, Honey.

Edited December 23, 2009 by FXGirl

[DugDug 10]

Damn I thought I was going to win a prize - A cigar....however I dont smoke and I thought this was a discussion not a Q and A?

 

Hell...., while we are going down this path lets make it one as part of the discussion to expand on it.

Question from : "my suggestions aren’t about controlling emotion. They are about controlling behavior."

Chicken or Egg - do emotions control/direct/influence behaviour?

Is it easier to try and limit your emotions and hence require less behaviour control, OR let your emotions run wild and control your behaviour via other methods?

Do your emotions become desensitised over time and hence need less behavioural controls? If so how can you fast track this?

As an aside - I thought "people who don’t have emotions (due to brain injury) can’t make decisions", was more along the lines of they can make decisions (they are not necessarily in a vegetative state) but they are usually poor ones as they cant process the information in a manner most people would consider normal?

Can a computer with no emotions still make decisions based on a set of rules?

Can hypnotism really help out?

Because we all know that everyone has different emotional responses to different things (and different degrees of reactions), and so clearly different controls work for different people........

Regardless of all of the above (either controlling emotions, controlling behaviour, let the little buggers run wild and free only to be corralled by a bloody big fence - or controller :rofl:) Isn't it the issue of -----how do you get and maintain trading discipline to even try and control a,b,c or all of the above?

 

Otherwise - have a good break, and see you in the new year.

[thalestrader 14]

Discipline is sticking to your plan and strategy. In order to be able to define discipline, you must have a thoroughly defined strategy which allows for consistent application. Then, discipline means doing what you planned to do and not doing what you didn't plan for ... So my advice on how to "get" discipline is to develop a precisely defined strategy which allows for consistent, reproducible application in order to be able to even define the discipline.

 

Therein lies the problem for most. All this talk of discipline, but what is required is something to be disciplined at.

 

Exactly.

 

Best Wishes,

 

Thales

[FXGirl 10]

Well, DugDug, the most recent research seems to show that we feel before we act. And this is certainly true about anything we perceive as a threat…like a losing trade.

 

You may think that you are limiting “your emotions and hence require less behavioural controls” but more likely, you have found a way to process them effectively. Certainly, if you have seen a particular set of circumstances (such as having your stop hit) a number of times and have survived to trade another day, your emotional reaction may be diminished because you don’t see the same level of threat in it as the first time.

 

Yes, people do have differently emotional responses to different things (and different degrees of reactions). Thank goodness! I certainly wouldn’t expect my husband to have the same I-just-have-to-have-them reaction to the new pair of red high-heel shoes I bought yesterday.

 

Some of these differences in emotional responsiveness seem to be an innate level of physiological reactivity, but most have to do with our past experience, how we have evaluated it, and the strategies we have adopted to deal with out emotions. So your observation “so clearly different controls work for different people…” is accurate (if you substitute the word strategy for the word control), and the real question is what works for each trader? And that is what I was getting at when I asked what you did to become a disciplined trader.

 

I’m sorry if my previous post sounded like a Q&A. It just seemed to me that you have probably developed a fair amount of trading discipline, and was interested in the strategies you use to deal with the emotional stress of trading.

[FXGirl 10]

Thales, I agree that having a precisely defined strategy is absolutely essential to successful trading. However, having a strategy gives you a behavioral goal, but unfortunately, it doesn’t tell you how to “get” discipline.

[thalestrader 14]

Thales, I agree that having a precisely defined strategy is absolutely essential to successful trading. However, having a strategy gives you a behavioral goal, but unfortunately, it doesn’t tell you how to “get” discipline.

 

Hi FXGirl,

 

I am not sure what you mean by a "behavioral goal." But I agree that having a defined trading plan does not give you the discipline to execute that plan.

 

You don't "get" discipline. You develop it by forcing yourself to continue even through pain. Some make it, some don't. Most never really have the chance to develop said discipline bacause form what I have seen, most never really have a comprehensive plan.

 

I see you are in Oceanside. Would that be Oceanside, NY? We have a house in Long Beach.

 

Best Wishes,

 

Thales

[FXGirl 10]

Hi, Thales:

 

It's Oceanside, California. I didn't know there was an Oceanside, NY - is it nice?

 

How do you force yourself to continue - that's the question I'm trying to get at (although I probably wouldn't use the word 'force'). Obviously, some people can't do it, or don't do it well, even it they have a comprehensive plan. Somewhere along the line, you learned how to do that. I believe that this is the question that is at the heart of trading psychology.

[thalestrader 14]

Somewhere along the line, you learned how to do that. I believe that this is the question that is at the heart of trading psychology.

 

Somewhere along the line I learned an approach to trading based upon price action that allows me to be right a bit more often than I am wrong when I bet on the most likely immediate next directional movement of price; and when I am wrong, it allows me to take losses that are much smaller than the profits I take when I am right.

 

Somewhere along the way, I came to trust my approach, and to accept the fact that any one trade means nothing in the scheme of a great many trades so long as the approach is sound.

 

Somewhere along the line, I came to trust myself and my ability to execute my approach, which, as I said, I had already come to trust.

 

So, for me, at least, step 1) Find an approach that you suspect will allow you to anticipate next move price is going to make, 2) Study and practice the approach until you are able to confirm and to become convinced that the approach does deliver what you suspected, thus allowing you to trust the approach, and 3) Continue to practice, practice, practice so that you come to trust that you yourself are able to execute the approach and win more money than you lose over time.

 

In short hand:

 

1) Pick you method

2) Build trust in your method

3) Build trust in yourself

 

How? Practice, practice, practice ... or, start as a nine year old girl (or boy) with a teacher in whom you have implicit trust and so you will have steps 1 & 2 taken care of for you from the get go, and then it is a merely a matter of learning trading as you learn any game or skill and thus quickly develop the confidence in yourself that is necessary to trade well.

 

What do you know? I have just had an "a ha" moment. Thank you for that, FXGirl.

 

Best Wishes to you and yours for the New Year,

 

Thales

[DugDug 10]

Hi Fx Girl - enjoy the red shoes.

Re the QandA quote - I added it given that you clearly have some knowledge in the subject I would open it right up thats all.....

As this whole question of discipline, emotions, how to get, how to handle etc; really does open up a can of worms and can be applied to the whole gammit of life's experiences eg; sports, work, trading.....

 

regards the question - " was interested in the strategies you use to deal with the emotional stress of trading."

 

I have traded a few styles to see what suits - from pure option market making, trend trading - short term scalping, fading breakouts, taking breakouts.

Ultimately the conclusion I found is the obvious one - match the style to the personality of the trader. That makes dealing with the emotional issues far simpler and more natural to handle - as the style that makes sense and is easier to trust is the one that will be easiest to stick to when there a re inevitable losses.

Remember (no matter what people say otherwise) the only way to make money trading is to be long the instruments that go up, and short the ones that go down.

 

Then....

 

Much the same as Thalestrader - Practice, practice, practice.

There was a great book about success by Malcolm Gladwell that summed it up nicely - to be successful at something practice at it. Clearly certain some innate inherited talent makes certain things easier/quicker but practice makes perfect.

 

Certain other things that I think you need to have, and these can definitely be practised as well to reduce the stress of trading. ( I am sure FX girl might have some exercises for these - for me it just kind of seems natural, but I still sometimes need to remind myself, which is an exercise in itself.)

 

1) You have to love what you do. You need to be constantly looking to improve what you do, and view it as a challenge. If not reassess why you are doing it, and possibly change the aspects of the job that you hate. You might go to bed pissed off at your self, but you need to wake up every day thinking today is a new day - how can I make some good trades.

2) You have to be able to admit when you are wrong. You will make mistakes, accept it. Plan for what to do in your trading when this occurs. eg; get up walk away for a while, trade smaller, get drunk. whatever works.

3) If there is nothing to do as a trade, dont trade (or find some other outlet for your gambling tendencies - eg reading forums, or pick a liquid low volatility speculative instrument to get your fix, get drunk, play monopoly).

4) Get understanding - not just knowledge. Knowledge is found in a book, understanding is found through your own thoughts and processes - copying others just wont work. If you dont understand something then dont participate - first learn, then understand, then participate.

[MightyMouse 12]

I'm not quite sure why or how the need for trader discipline is debatable. Even if you have never traded, intuitively, you should know that being disciplined is going to make a huge difference. Somehow, somewhere in your life, you must have experienced or learned that the difference between successful execution of a plan and failed execution of a plan is the ability to execute the plan.

 

No matter what you claim to be your "edge", you can only have one real edge and that is your ability take larger profits than you do losses and that takes an incredible amount of discipline/mental stability. Any other perceived "edge", will be quickly whisked away by the market when you start trading it.

[FXGirl 10]

Hi, MightyMouse: This debate has never been about the need for trader discipline - I think we all agree that it is an essential part of being a successful trader (or a success in any other profession). The discussion is about how do you deal with emotions so that you can act in a disciplined way.

 

As you said, "...somewhere in your life, you must have experienced or learned.." That is what we are talking about. How you learn to deal with the emotional fallout of trading in a way that makes it possible for you to do what you know you should do.

 

How did you become a disciplined trader?

[MightyMouse 12]

Hi, MightyMouse: This debate has never been about the need for trader discipline - I think we all agree that it is an essential part of being a successful trader (or a success in any other profession). The discussion is about how do you deal with emotions so that you can act in a disciplined way.

 

As you said, "...somewhere in your life, you must have experienced or learned.." That is what we are talking about. How you learn to deal with the emotional fallout of trading in a way that makes it possible for you to do what you know you should do.

 

How did you become a disciplined trader?

 

Personally, I have committed to flawlessly trading my plan. Since the end of October, there is 1 instance of a trade that I would not have done if given a second chance; otherwise, every single other trade, winner or loser, I would do again if it presented itself.

 

To deal with the emotions, I made myself aware of what my mind was going to begin to make me think under different circumstances. For example, if after i entered a trade, and price moved in my favor but didn't reach my target and began to come back to my entry, I used to panic. At first that panic would happen and I would be afraid that my trade, which was winning, was going to turn into a loser. I would generally get out of the trade right then. I learned that that behavior was just my mind trying to protect me from potential pain and that the danger that my mind was trying to protect me from existed only in my mind. So instead of reacting to the emotion by clicking the mouse taking myself out of the trade or moving my stop to BE, I released the need to react by taking deep breaths, walking around my office, etc.

 

At this point I am nearly numb to my old typical reactions. It's probably similar to the way a kids gets used to sleeping in his room with the potential of a monster being in his closet.

[BlowFish 10]

Personally, I have committed to flawlessly trading my plan. Since the end of October, there is 1 instance of a trade that I would not have done if given a second chance; otherwise, every single other trade, winner or loser, I would do again if it presented itself.

.

 

Thats a remarkable achievement, good job.

[FXGirl 10]

Hi, MightyMouse: Great accomplishment! And nice strategy to deal with emotions.

 

We developed a device called the Mindful Trader that monitored the level of physiological arousal while trading using variable heart rate and displayed that information on the computer screen. When a trader got too emotional (mirrored in increasing arousal), he was alerted. He could then do something to reduce the physiological arousal, such as rhythmic deep breathing, which is similar to what you did. When the body is calm, the intensity of the emotion abates. With practice, a trader could move to a state of calmness simply by establishing the correct breathing pattern for a few moments.

 

You're right, too, about the fact that after awhile, if a strategy works, it becomes second nature and we aren't bothered by the emotional pull we felt before, or at least, not as much.

[MightyMouse 12]

Hi, MightyMouse: Great accomplishment! And nice strategy to deal with emotions.

 

We developed a device called the Mindful Trader that monitored the level of physiological arousal while trading using variable heart rate and displayed that information on the computer screen. When a trader got too emotional (mirrored in increasing arousal), he was alerted. He could then do something to reduce the physiological arousal, such as rhythmic deep breathing, which is similar to what you did. When the body is calm, the intensity of the emotion abates. With practice, a trader could move to a state of calmness simply by establishing the correct breathing pattern for a few moments.

 

You're right, too, about the fact that after awhile, if a strategy works, it becomes second nature and we aren't bothered by the emotional pull we felt before, or at least, not as much.

 

 

TY. there is a lot more to it than I stated but, that's the basic idea and good luck with your device. Seems interesting and also like it might be good for other applications.

 

 

MM

[TheRumpledOne 14]

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"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

 

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."

 

P64 HOW WE DECIDE

[MightyMouse 12]

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"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

 

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."

 

P64 HOW WE DECIDE

 

The experiment probably never happened, but if it did it was incredibly flawed. Rats in a cage are in survival mode. Yale undergrads are not so its not a good comparison. Try the experiment in a real world situation. Substitute morsels of food with the need for energy, and sustitute the t-shaped maze with a maze that has 12 arms instead (OPEC?). Rats would probably die off but the few that would survive would probably enslave themselves to the closest source of energy. On the other hand, Yale undergrads would gain control of the source of energy to remove any possibility of having the energy be randomly distributed to them and prevent the enslavement of future generations of yale graduates. Thier only true obstacle would be a partisan congress of non-Yale undergrads who think like rats.