Gun Shy Cant Pull the Trigger

[MightyMouse 12]

"The problems traders experience in trading are the same problems they have avoided in other domains of their lives."

 

The problem with this statement is that it doesn't differentiate between problems dealing with actual trading (what can be called "trading problems") and problems experienced by someone sitting in front of the screens thinking what he's doing is trading.

 

Here is the original poster's problem as he describes it:

 

 

 

What is being described is really not a "trading problem" per se. I liken it to the novice chessplayer who has no trouble at all playing casual blitz games on the computer or against his pals but when he goes to the park and plays against a stranger for $20 per game, he forgets all his preparation and goes into a panic. Is what he's experiencing a "problem of chess"? It is mental for sure, but does he need a shrink to fix it or start delving into his history and how it was full of lack and limitation? What if the stakes were 25 cents and he had been going to the park for a year playing all comers? What if the person across the board from him was a familiar patzer he had beaten many times before? Then maybe he can focus on the game itself and the problems on the board and make what he understands to be the best moves to win.

 

Some examples of trading problems are the following:

 

How do I determine the current sentiment and its strength?

How do I determine when the sentiment changes?

How do I determine a retrace from a reversal?

How do I know a breakout will fail?

How do I know a breakout will continue?

What precedes a breakout?

What is the difference between an expansion of the price boundary on the left side versus the right?

Etc.

 

Most people who sit at screens thinking they are traders are unaware of actual trading problems. How can they be expected to find workable solutions that would vastly improve their game? These people go bust without ever discovering what the game is.

 

Anything that makes you trade far too much or far too little is a problem that has to be overcome.

 

Your list of concerns have to do with market forecasting. It's not a problem if you can't forecast the market. It is a problem if you think you can.

[bonchi07 10]

"The problems traders experience in trading are the same problems they have avoided in other domains of their lives."

 

The problem with this statement is that it doesn't differentiate between problems dealing with actual trading (what can be called "trading problems") and problems experienced by someone sitting in front of the screens thinking what he's doing is trading.

 

Here is the original poster's problem as he describes it:

 

 

 

What is being described is really not a "trading problem" per se. I liken it to the novice chessplayer who has no trouble at all playing casual blitz games on the computer or against his pals but when he goes to the park and plays against a stranger for $20 per game, he forgets all his preparation and goes into a panic. Is what he's experiencing a "problem of chess"? It is mental for sure, but does he need a shrink to fix it or start delving into his history and how it was full of lack and limitation? What if the stakes were 25 cents and he had been going to the park for a year playing all comers? What if the person across the board from him was a familiar patzer he had beaten many times before? Then maybe he can focus on the game itself and the problems on the board and make what he understands to be the best moves to win.

 

Some examples of trading problems are the following:

 

How do I determine the current sentiment and its strength?

How do I determine when the sentiment changes?

How do I determine a retrace from a reversal?

How do I know a breakout will fail?

How do I know a breakout will continue?

What precedes a breakout?

What is the difference between an expansion of the price boundary on the left side versus the right?

Etc.

 

Most people who sit at screens thinking they are traders are unaware of actual trading problems. How can they be expected to find workable solutions that would vastly improve their game? These people go bust without ever discovering what the game is.

 

 

Very interesting points. I think that one possible answer is having rules. Rules will be the main guide in the market. I am a day trader, so one of my rules is: As soon as I buy a stock, I put a stop loss. This keeps me sane and without guessing. If a stock is going to work, then it needs to meet all the conditions at the time of the trade. If it doesnt work, I am out and that is the end of it. I cannot over analyze it because I will go crazy. I will, however, think about the reasons why it didnt work. Maybe the mkt is going the opposite direction, maybe it doesnt have the right volume, or maybe I am just too early.

 

I think we all have a pain tolerance in every aspect of our lives. The market is no different. As a day trader that is another one of my rules. If any given day, I am down X, then I am out. Obviously I am not doing something right and maybe it is time take a look at the big picture. The worst thing to do is to over trade, so I have this rule to keep me from doing that.

 

Rules, rules rules!!! I really think that we are disciplined to follow them, it makes life so much easier. Again, this can be applied in many aspects of our lives.

[SIUYA 11]

Rules, rules rules!!! I really think that we are disciplined to follow them, it makes life so much easier. Again, this can be applied in many aspects of our lives.

 

Suggestion - dont think in terms of rules - often these are focused on - dont do this, dont do that, you are prohibited from this and that

focus instead on checklists - what do i do if this occurs and this happens and that happens.....far easier to digest

[gosu 10]

Anything that makes you trade far too much or far too little is a problem that has to be overcome.

 

Your list of concerns have to do with market forecasting. It's not a problem if you can't forecast the market. It is a problem if you think you can.

 

Define "far too much" and "far too little." Or if you prefer, state what would be just the right amount.

 

If by "market forecasting" you mean predicting, I would avoid that and its partner, betting. I consider all the questions on the list as an orientation away from the predicting and betting paradigm that pervades the trader education industry. Extracting from the market is best done using a continuous approach of data gathering, analysis, decision-making, and taking action.

Edited July 22, 2011 by gosu

[gosu 10]

Very interesting points. I think that one possible answer is having rules. Rules will be the main guide in the market. I am a day trader, so one of my rules is: As soon as I buy a stock, I put a stop loss. This keeps me sane and without guessing. If a stock is going to work, then it needs to meet all the conditions at the time of the trade. If it doesnt work, I am out and that is the end of it. I cannot over analyze it because I will go crazy. I will, however, think about the reasons why it didnt work. Maybe the mkt is going the opposite direction, maybe it doesnt have the right volume, or maybe I am just too early.

 

I think we all have a pain tolerance in every aspect of our lives. The market is no different. As a day trader that is another one of my rules. If any given day, I am down X, then I am out. Obviously I am not doing something right and maybe it is time take a look at the big picture. The worst thing to do is to over trade, so I have this rule to keep me from doing that.

 

Rules, rules rules!!! I really think that we are disciplined to follow them, it makes life so much easier. Again, this can be applied in many aspects of our lives.

 

Making rules for yourself is fine, so long as they do not usurp the market's role in the extraction partnership. I have one that I abide by: Every Saturday I break completely from the market and consider the greater whole of my life.