Edge First - Integration First - Both First ??

[zdo 20]

Edge first?

Integration first?

Both at the same time?

 

Let’s beat this living horse a little bit in 2010.

The roots for this iteration are over in What Psychologists? thread http://www.traderslaboratory.com/forums/f37/what-psychologists-7422.html

 

A couple of days ago I posted

One guy comes in and states emphatically – no need to even bother with the mental stuff unless you have an edge.

Another counters – even with an edge, you’re going no where unless you have the mental side mastered.

Then a third (supremely dumas poaster) pops up with the idea that one needs to give equal emphasis to both at all times

Real time examples weren’t long in coming

KeyToTheCastle succinctly picks up the banner for the first point of view “Edge first then the psychology can fall into place.”

RandeHowell props the second position “…real driver is whether people want to re-organize their psychology so that they can trade effectively. Few people come into trading equipped…”

zdo, (that’s me) has periodically posited herein that the optimum, and most difficult, approach is ‘up the middle’ – where every edge advance is utilized to inner Q&A its simultaneous integration issue, and vice versa…

 

Anecdotally, I would guess any poll stats for traders would heavily favor the first, a small percentage would be drawn to the second way, and I’m probably all by myself on the third. Across trading forums, anytime someone even hints at the second, 3 or 4 posters will slam it as quickly as is postingly possible. Published literature also heavily favors the first way. I can think of only one work that structurally takes a 'trading virtues first' approach... But, particularly in trading, it’s always a good idea to at least question the majority view, so…

 

Gettin' flat, gettin outa here, ya'll have a great weekend !

 

zdo

 

PS

“If you don’t have any of these problems, they don’t exist”

I guarantee some “I don’t have any of these problems so they don’t exist” posts will show up … Hopefully we can just ignore them

[KeyToTheCastle 10]

Edge first?

Integration first?

Both at the same time?

 

Let’s beat this living horse a little bit in 2010.

The roots for this iteration are over in What Psychologists? thread http://www.traderslaboratory.com/forums/f37/what-psychologists-7422.html

 

A couple of days ago I posted

 

Real time examples weren’t long in coming

KeyToTheCastle succinctly picks up the banner for the first point of view “Edge first then the psychology can fall into place.”

RandeHowell props the second position “…real driver is whether people want to re-organize their psychology so that they can trade effectively. Few people come into trading equipped…”

zdo, (that’s me) has periodically posited herein that the optimum, and most difficult, approach is ‘up the middle’ – where every edge advance is utilized to inner Q&A its simultaneous integration issue, and vice versa…

 

Anecdotally, I would guess any poll stats for traders would heavily favor the first, a small percentage would be drawn to the second way, and I’m probably all by myself on the third. Across trading forums, anytime someone even hints at the second, 3 or 4 posters will slam it as quickly as is postingly possible. Published literature also heavily favors the first way. I can think of only one work that structurally takes a 'trading virtues first' approach... But, particularly in trading, it’s always a good idea to at least question the majority view, so…

 

Gettin' flat, gettin outa here, ya'll have a great weekend !

 

zdo

 

PS

“If you don’t have any of these problems, they don’t exist”

I guarantee some “I don’t have any of these problems so they don’t exist” posts will show up … Hopefully we can just ignore them

 

Hmm...where do I begin sir?

 

” up the middle’ – where every edge advance is utilized to inner Q&A its simultaneous integration issue, and vice versa…

 

So basically you agree that edge comes first but take it further by saying that ....wait a minute what exactly are you saying?

It seems like you are agreeing with me on some level by saying that edge does come first. Then you state that edge advancement comes by asking proper questions....yes I think that would be logical, after recognizing and utilizing your edge, improvement on that edge is always the preferable option.

 

"Published literature also heavily favors the first way. I can think of only one work that structurally takes a 'trading virtues first' approach... But, particularly in trading, it’s always a good idea to at least question the majority view, so…"

 

I don'k know that published literature agrees with my viewt. But whether the majority of traders agree with my view or not it doesn't change the fact that as motivated as most people are in finding their edge 1)they still aren't trading with a viable edge and 2) and if they are trading with an edge they don't fully understand the dynamics that make their edge/setup work and therefore don't fully, in a psychological sense, accept the risk they are taking on.

 

 

“If you don’t have any of these problems, they don’t exist” This statement I agree with and to some degree may be guilty as charged as I am only speaking from my experience and the experience of watching a few handfuls of traders pretty closely.

[zdo 20]

 

So basically you agree that edge comes first but take it further by saying that ....wait a minute what exactly are you saying?

It seems like you are agreeing with me on some level by saying that edge does come first. Then you state that edge advancement comes by asking proper questions....yes I think that would be logical, after recognizing and utilizing your edge, improvement on that edge is always the preferable option.

 

...as motivated as most people are in finding their edge 1)they still aren't trading with a viable edge and 2) and if they are trading with an edge they don't fully understand the dynamics that make their edge/setup work and therefore don't fully, in a psychological sense, accept the risk they are taking on.

 

 

“If you don’t have any of these problems, they don’t exist” This statement I agree with and to some degree may be guilty as charged as I am only speaking from my experience and the experience of watching a few handfuls of traders pretty closely.

 

No. Edge first - not !

 

Clear some maya ->-> and edges suddenly are just there in plain view…

 

Also, ‘naturally’ , ‘implicitly’ coming to “accept the risk” (and the deeper issues below risk acceptance) as a by product of edge and exposure is not the only option a developing trader has…

[zdo 20]

You guys are absolutely corrupting the What Psychologists? thread – not discussing why they leave anymore at all so I will move some of it over here and maybe just maybe you can move too

 

As KeysToCastle (and FXGirl (glad you’re able to do some posts, girl!), Rande, et al ) has alluded to with things like "I’m glad we agree that successful traders have to have both edge and psychological savvy. Can we also agree that those two component some together in different ways for different people?"– I think it’s safe to say we have a consensus that the combination of 'operator and tool' is key. Also the point that everyone has their own path needs to be re – acknowledged. The divergences at issue in this thread are on the timeline of emphasis for the development of them both.

 

It is difficult - downright HARD – (especially without an almost perfect coach) to work on embodying the traits of yourself as a winning trader before you have an edge – but that is what I believe beginning traders need to give equal emphasis and time to. Why? For one – it will make openings that would otherwise not be available for you to discover your own edge.

 

FxGirl mentioned beginners might be served well to ‘subscribe’ to someone else's edge at first. I disagree! Wearing someone else’s pants is antithetical to ever making an edge truly your own. Trading someone else’s edge is a big mistake for all but a very few beginners/strugglers! In all performance work, ‘talent’, ‘tricks’, ‘cheatsheets’ at the beginning do help – but in the long run are extremely overrated. Just ask Derek Jeeter, Tom Brady, Tiger Woods, Stu Ungar, Phil Ivey, Bernard Barach, or Michael Marcus, etc etc.

 

KeysToCastle … you’ve contributed some genuine chronicling of your development. Thanks. I would suggest to beginners/strugglers that yours is a perfect case study in how to enhance the journey. Yes, “no matter the amount of psychological help” is correct – because we’re not really talking about psychology here. But giving equal emphasis to the work with self and the ‘fears’, etc that Rande has been discussing about would have helped you actually get to a point of “having an edge and understanding the dynamics behind that edge” more quickly. Much more front loaded discomfort would have been involved, but I’m asserting to beginners/strugglers that those ‘9 years’ would have been shorter. The work is more about seeing and allowing what actually is, about how the various realms of self are structured, than it is ‘doing’ or ‘changing, ‘mindset shifting’ or even ‘thoughts’. And I’m not making you wrong for how and what you ‘did’ either… via my own experiences, I honor and respect what you’ve been through. What I am saying is that if one gives equal time to really understanding their structure and their beliefs with the time they put into searching for ‘edge’ their development will be accelerated.

 

Working with less than adequate terminology here - but basically, as a foundation of ‘self’ is realized, it becomes pervasive: a practical basis and context for the methods, rather than only their fostered result. As that occurs, it might be said that the practices become classically authentic. To me content like “I dont know what else to say except that once I started trading from a winning mindset...thinking, acting and feeling like a winning trader did I start to do the things that winning traders do.” indicates emergent self development in the absence of explicit work with self. The call here is to give conscious equal time and energy to development of both self and edge, instead of just edge first or just self first.

Edited August 30, 2010 by zdo
good reason for editing

[zdo 20]

Not sure what an oxegenmoron is. I know what an oxymoron is though

Rande it was an explicit joist. You're being way too flippant

[zdo 20]

Traders appear to have to either confront their fears that manifest in trading or conquer impulsivity wiring that short circuits the desired impartial, disciplined, patient, and courageous state of mind required to produce peak performance trading. The first layer of fear (say fear of loss in trading) is rarely the deeper fear that drives the belief system of the person. It is out of this belief system that the fear of loss springs. Being that the brain is organized to avoid discomfort first, traders (like other human beings) are forced to confront and then conquer their deeper hardwired beliefs of inadequacy, unworthiness, and not mattering that manifest as trading fears (those 9 roadblocks I address in my webinars). This is what I call core material. And for me, there is an internal struggle within each of us that trading forces us to confront. This is the "conquering the self" to which I refer.

 

The impulse part is hardwired circuitry that is laying on top of the belief system embedded in neural pathways. Fortunately this can be disrupted by understanding the core concern that triggers the circuitry to produce an emotional cascade called an impulse. That can be interrupted using emotional regulation training, but the trader still has to conquer, then re-organanize their belief system. It is this belief system that trades using the tools of platform and methodology. Out of the totality of possibility that the market represents, it is the belief system that actually interprets what is actually seen. To re-organize the self, the belief system that creates the particular construction of the self, requires courage. The brain simply does not want to change a perceptual map once it is created. It is the deconstruction and re-organization of this core material that I call conquering the self. Trading simply forces you into battle within the self -- or you continue losing capital.

 

Rande Howell

 

Pristine material!!!! Thanks.

Limitations of terminology aside - the very same kind of work I’m saying beginners/strugglers need to give emphasis, time and energy to - equal to the emphasis, time and energy they put into ‘understanding the markets’ and ‘developing edge’

[zdo 20]

Here is a digest from the other thread for current and future readers...

 

...also think the unconscious is very unconscious and therefore we all have shadows that contain the hidden work some of us need or have to do. Pain is a great motivator for seeking the "grail". In the pain is nearly always the "answer" but most just want to be rid of it ie to find the 'secret' of trading... I believe too many place too much emphasis on psychology in trading especially when no edge has been really found in the first place.

 

I know there is a very wide scale of therapeutic application of psychology and therefore a very wide scale of quality of practitioners who could be graded from very poor to outstanding/enlightening in affecting the patient.... nothing is guaranteed in life though. Reputation has a lot to do with how much a therapist has their weekly schedule filled.

 

Trading is just one hook into finding the psyche (there are infnitely many others)...many get scared to look into the chaos and understandably so Hence they would rather repeat the same patterns over and over again...through chaos comes order and visa versa ...this is the human psyche cycle..Trading is an activity that can bring all of this out as it can affect everyone with differing degrees of body and mental experience..

 

What I wrote above has everything to do with trading and also nothing at all to do with trading

JBWTrader

 

//

 

JBWTRADER - "I believe too many place too much emphasis on psychology in trading especially when no edge has been really found in the first place."

 

very good point. you have to put the cart before the horse as they say, and practising good habits for trading will not do you much good if over the long run you have no positive PL expectancy. ie; no edge.

 

Didn't one of the market Wizards sum it up - "we all get what we want out of the markets"

DugDug

 

//

… tick tock...

//

I still observe this forum, but I found that everytime I entered a conversation, there were a bunch of trader psychologists joisting with one another. Didn't seem productive to me. And, yes, to another very mindful reader, this is a social media avenue. And it has to be evaluated as such. The real driver is whether people want to re-organize their psychology so that they can trade effectively. Few people come into trading equipped from a mindself point of view to be consistent traders. It has to be learned -- if you want to master trading, you will have to conquer the self. If people are seeking to grow as a trader, then I certainly want to be part of that conversation. Will part of that motivation be to expose my work to them -- yes, it will.

Rande Howell

 

//

 

IMHO you have it backwards sir. The more accurate statement is" learn to trade effectively by developing, understanding the underlying dynamics behind and capitalizing on your edge and then your psychology can be reorganized."

 

Unfortunately motivation alone is simply not enough to change someone's psychology in order to mold them into a successful trader. The market is chock full of unsuccessful motivated traders.

 

Only after one experiences consistent profitability utilizing their edge in the market can they begin to learn, act, feel, and think like a successful trader. Only after the experience of trading with an edge can one develop the confidence to accept risk...until then all the motivation in the world might not be enough.

KeyToTheCastle

 

//

…While we are talking, MadMarketScientist, I do want to question another of your statements: “…each persons psyche and overwhelming need for some reason to blow up the trade plan.” Although I have a healthy respect for the unconscious and its ability to interfere with our conscious intent, I don’t think that many people have an overwhelming need to blow up their trade plan. That seems like a catchall phrase that can prevent you from digging deeper and identifying the real issues. Just like a “fear of success” is not about fearing success, but about fearing you won’t be liked, or fearing that you won’t be loved by you father if you do better than he has, or a myriad of other possible reasons, if you don’t get down to the real issue(s), therapy isn’t going to go anywhere.

 

Or it could just be that the trader in question just doesn’t have the strategies he/she needs to handle his emotions/physiological arousal during trading – no big underlying issue.

FXGirl

 

//

 

Or it could just be that the trader in question just doesn’t have the strategies he/she needs to handle his emotions/physiological arousal during trading – no big underlying issue.

Hello fxgirl..not sure about your last statement there. If you are referring to having an edge then I agree. But I respectfully disagree with the traditional way in which people try to use psychology to become better traders. I am not a psychologist but rather speaking from my personal experience as well as observing other traders.

 

Everyone seems to lean on psychology as a crutch for their unsuccessful trading. Traders should concentrate on finding their edge first. But more importantly...not only having an edge and being able to implement it but fully understanding the underlying dynamics that cause your edge to work and tilt probabilities in your favor on a consistent basis. It's one thing to have an edge and being able to notice situations and patterns that produce the edge but it's not until you reach the point of understanding the underlying reasons beneath the surface that are making the situation play out in a certain way do you begin to take your trading to a whole new level where you accept risk and make decisions based on market derived information not some arbitrary stop or profit level.

 

Having and understanding an edge = Acceptance of risk = beginning to think,act,trade like a successful trader.

 

Can psychology help someone after that point....maybe....but until a trader is at the point of trading with an edge then the psychology only serves to temporarily make them feel better until they begin to trade and start losing again.

 

The conditioning and repetition of seeing and experiencing your edge play out real time in the market is the 1st step to success. Edge first then the psychology can fall into place.

KeyToTheCastle

 

//

Hi, Castle: Yes, I can’t agree with you more that if you don’t have an edge, you can’t be a profitable trader. And understanding where that edge comes from, “the underlying reasons beneath the surface…” is essential. Where we probably disagree is how you get to profitability.

 

Because you are an experienced trader, you understand that there are different levels of understanding market movement – the novice’s grasp is much different from that of the trading veteran of many years. The novice trader who learns a trading strategy (let’s assume that it is a valid edge) from a class or mentor can trade that strategy without having an understanding of the underlying market principles from which it is derived. All he has to do is follow the rules. Of course, he is going to encounter psychological issues that make it tough for him to stay true to the rules of the strategy. The more cut and dry the rules are and the greater the win/loss ratio of the strategy, the easier it is going to be for him to navigate the psychological issues. Can he be successful? Yes, if he manages the psychological part of trading, after all, he has an edge that works. Does he really get what is going on in the market? Only to a very limited extent.

 

After a several years and many, many hours in front of the charts, our trader will begin to develop a more intuitive grasp of market movement. His subconscious mind has seen various patterns in the market over and over again. He has a “gut” feeling about what is happening. When he is able to move this implicit subconscious learning to a conscious, explicit level, he’ll be able to develop and test additional trading strategies. And, of course, a greater appreciation and understanding of risk is part of this process.

 

While our trader has been growing in technical expertise, he has also had to face his psychological demons. If he has not done some of this successfully, he will no longer be trading – his losses will have wiped out his account, despite refunding many times, and he will be demoralized and will quit.

 

If our trader survives this intermediate stage and continues to accumulate implicit learning and translate it to explicit market knowledge, he will be come a master trader. In the process, his greater win/loss ratio will make it easier to deal with psychological issues. There is nothing like consistent profitability to give you calm and confidence. But you’ll never get to consistent profitability without psychological mastery.

 

Let’s look at your formula: “Having and understanding an edge = Acceptance of risk = beginning to think, act, trade like a successful trader.” Acceptance of risk – a psychological issue if every there was one. You could argue that greater market knowledge give you a cognitive underpinning for greater acceptance of risk, but unless you also recognize that becoming comfortable (emotional component) with risk is a psychological process, you are missing the boat. “Beginning to think, act, trade like a successful trader” – also has significant emotional components. Even at the most basic level, acting like a successful trader requires that you have developed a way to manage the brain’s emotional/physiological response to threat. Never mind all the cognitive and emotional structures on top of that.

 

It’s easy to use our own experience in moving through the process of becoming a successful trader as a template for others. Perhaps you came to trading with a well-developed set of strategies for managing emotions. If so, your journey may best have been undertaken by concentrating on finding your edge. That isn’t necessarily the case for others. For some, the emotional components of trading are a real stumbling block that will prevent them from being successful even if they develop a great edge.

 

Anyway, the whole issue of edge versus trading psychology is a silly argument. Any careful observer can see that you can’t become a consistently profitable trader without mastering both. The important discussion is about how you make them work together so you get to mastery.

FXGirl

 

//

"Acceptance of risk – a psychological issue if every there was one." Absolutely agree 100% with that statement....but my point is only by the conditioning and repetition of seeing your edge play out will that psychological acceptance come. I take it that some would suggest that psychological exercises will get you to that acceptance and that is what I disagree with.

 

 

"It’s easy to use our own experience in moving through the process of becoming a successful trader as a template for others. Perhaps you came to trading with a well-developed set of strategies for managing emotions. If so, your journey may best have been undertaken by concentrating on finding your edge. That isn’t necessarily the case for others. For some, the emotional components of trading are a real stumbling block that will prevent them from being successful even if they develop a great edge."

 

I have to agree partly with that...I am speaking only from my own experience and the experience of watching a small sample of other traders closely. But I also have to say that psychologically I was a trading wreck for about 9 years on and off. Blowing through accounts, going from one indicator to the next, never comfortable being in a trade. And why? Because I never had the confidence that I had the odds in my favor when I entered a trade. During that time I never sought out live psychological help but I do own 4 of the most popular books on the subject and did a lot of reading and research about it. And none of it helped me. Until I started to realize my edge. And even after that it still took me months of repetition and conditioning before becoming profitable. My mindset slowly shifted from one dominated by the thoughts of a losing trader to those of a winning trader. I dont know what else to say except that once I started trading from a winning mindset...thinking, acting and feeling like a winning trader did I start to do the things that winning traders do.

 

Anyway, the whole issue of edge versus trading psychology is a silly argument. Any careful observer can see that you can’t become a consistently profitable trader without mastering both. The important discussion is about how you make them work together so you get to mastery.

 

I don't think its silly at all....especially on a traders website. I guess we both agree that obviously there are elements of edge and trading psychology that make up a successful trader but my point is that realizing your edge opens up the door to making advancements in the psychology department and not vice versa.

 

Great weekend all!

KeyToTheCastle

 

//

Castle: Okay, I take back the word “silly” – how about “chicken or egg”? I’m glad we agree that successful traders have to have both edge and psychological savvy. Can we also agree that those two component some together in different ways for different people?

 

You said: “My mindset slowly shifted from one dominated by the thoughts of a losing trader to those of a winning trader. I dont know what else to say except that once I started trading from a winning mindset...thinking, acting and feeling like a winning trader did I start to do the things that winning traders do.” I’m very interested in what you mean by a “winning mindset” and “I start to do the things that winning traders do”. Could you tell me more about what you mean and what your experience was?

 

I do believe that if traders started their careers with a winning edge, either by subscribing to a reliable signal service or learning a reliable system from a mentor, they could avoid a lot of the emotional anguish that comes from loosing again and again while they are attempting to find an edge. Perhaps these traders-with-an-edge would be starting from a very different place than most of us started from and would have a much different experience of becoming successful. What do you think? Is that possible? In what ways would the path to profitability be different?

FXGirl

 

//

IMHO

We disagree. But I am not wrong. We are constantly creating the conditions of our experience in trading. Our belliefs, living as dialog in our mind, create the world we see. This is what you trade. Anything else is a fabication. If your trading account is growing, then in, black and white, can assess your compentency in the current organziation of the self that you are trading. My observation is that few people are so currently orangized as to trade well. Cutting out all the BS lies the simple fact, are you profitable or are you seeking? Your beliefs trade. Most of the traders I work with have been trading for a good time and still sabotage themselves. If practice were the answer, then simulated trading would be a good indicator or success. It's not. Re-organzing the self to produce a competent trader is .

RandeHowell

 

//

 

I’m glad we agree that successful traders have to have both edge and psychological savvy. Can we also agree that those two component some together in different ways for different people?

 

Hello FxGirl...been a very busy Sunday open so far. I wanted to quickly respond and maybe follow up with how my winning mindset evolved at a later date.

 

I speak mostly out of my own personal trading experience and the transition that I went through as a trader. A process, I must say, that took me a very long time. Again...the place that I started from was that of a consistently unsuccessful trader with no edge, no consistent results, no mentor... obsessing over one indicator then the next, looking for the holy grail while blowing through account after account so I think I started from a place familiar to most typical retail traders. And...forgot to mention...trading with scared money.

(I can easily go in many directions here but whether someone starts trading with scared money or not, sooner or later they get to that frame of mind of trading with scared money as they blow through any financial cushion they had.)

 

We agree on most basic points. The thing I am adamant about, (again personal experience) is that no matter the amount of psychological help I had available to me it wouldn't have helped me until I got to a point of having an edge and understanding the dynamics behind that edge. It's only at that point did I start to trade from a mindset of a successful trader...started to think, act, feel like a successful trader and become comfortable in the market, whether taking heat in a trade or riding a big winner. (Acceptance of risk) Yes, from that point on is where I think the psychology started to come into play and help me advance as a trader but at that point (at least for me) the psychology started to fall into place on its own. And obviously trade management had to be learned and improved upon but at least I had my base in which to build on.

 

I sound like I'm rambling so we'll pick this up again I'm sure.

KeyToTheCastle

 

//

…conquering the self, in my work with traders, is central to them becoming consistently successful. Traders appear to have to either confront their fears that manifest in trading or conquer impulsivity wiring that short circuits the desired impartial, disciplined, patient, and courageous state of mind required to produce peak performance trading. The first layer of fear (say fear of loss in trading) is rarely the deeper fear that drives the belief system of the person. It is out of this belief system that the fear of loss springs. Being that the brain is organized to avoid discomfort first, traders (like other human beings) are forced to confront and then conquer their deeper hardwired beliefs of inadequacy, unworthiness, and not mattering that manifest as trading fears (those 9 roadblocks I address in my webinars). This is what I call core material. And for me, there is an internal struggle within each of us that trading forces us to confront. This is the "conquering the self" to which I refer.

 

The impulse part is hardwired circuitry that is laying on top of the belief system embedded in neural pathways. Fortunately this can be disrupted by understanding the core concern that triggers the circuitry to produce an emotional cascade called an impulse. That can be interrupted using emotional regulation training, but the trader still has to conquer, then re-organanize their belief system. It is this belief system that trades using the tools of platform and methodology. Out of the totality of possibility that the market represents, it is the belief system that actually interprets what is actually seen. To re-organize the self, the belief system that creates the particular construction of the self, requires courage. The brain simply does not want to change a perceptual map once it is created. It is the deconstruction and re-organization of this core material that I call conquering the self. Trading simply forces you into battle within the self -- or you continue losing capital.

Rande Howell

 

//

Castle: You make an interesting point about “the conditioning and repetition of seeing your edge pay out”. In some ways, it is like developing faith in your system (edge). Lack of faith (or confidence, if you like that word better) seems to be a big issue for many traders and can result in hesitating to get in, then once in a trade, getting out too soon. For those whose systems have a high win/loss ratio, developing faith can be relatively easy. For those with potentially profitable systems, but with win/loss ratios closer to 50-50, faith, or acceptance, may be a hard won commodity.

 

Could you say more about “….from that point on….the psychology started to fall into place on its own”? Thanks.

 

Rande: Sorry, I wasn’t clear about who/what you are disagreeing with. Could you say more?

 

You make an interesting point when you say the results in your trading account are a reflection of “your competency in the current organization of the self that you are trading”. I would have to agree if we start from the assumption that the trader in question really has an edge and that we are looking at his/her results over a period of time. However, until a trader has a reliable edge, sorting out what is lack of technical skill from what is psychological issue can be messy. For example, a trader saying, “I’m never going to be successful at this” is an accurate statement when he doesn’t have an edge and may say very little about his psychology. Okay, I’ll grant you that was an extreme example, but I’m sure you get my drift.

 

In an earlier post, you said: “Few people come into trading equipped from a mindself point of view to be consistent traders. It has to be learned…” If I understand you correctly, I think this is very true. Many of the strategies we use to be successful in other arenas, business and personal, are irrelevant in dealing with the market. For example, the market doesn’t care how charming you are. And the market is incredibly ambiguous thus giving us a wonderful Rorschach on which we can project any and all of our psychological glitches. Throw in the threat of loss and we have a very tough environment indeed. Nevertheless, some survive and become successful traders. Maybe we could talk about the psychological traits, strategies, hardiness, etc., that allow some traders to be come winners. What do you think? Also, please tell me what you mean by “mindself”?

FXGirl

//

 

FXGirl

What most traders say to me is this, "I know how to trade, but my emotions get in the way." There are numerous methodologies taught that give a trader a technical edge. And, when capital is not at risk with simulated trading, they are able to trade effectively. However, when their money enters the game, the edge is lost. They cannot separate biologically based fear from a higher order risk management. The edge, the Holy Grail, is within them. It is the re-organization of belief that shifts the perspective so that they can act from a peak performance state of mind. If they have not become competent in a methodology with which they can manage risk, you are right, they do not have an edge to begin with. Here, I'm assuming that the trader has invested in his/her platform and methodology and are learning how to develop the psychological skills to use them under game conditions.

RandeHowell

Edited August 30, 2010 by zdo
ppl keep adding stuff to WhatPsy? ...

[Head2k 10]

I haven't read all the lengthy posts in this thread, but let me state something. IMHO, a wrong mental attitude can -- and I believe it often does -- prevent a person from developing an edge. If someone trades and lives in state of fear of being wrong and is building illusions to deny this state, how effective he can be in developing a good strategy and executing properly whatever he has developed? And how can he know whether whatever he has developed is a true edge if his fears and illusions prevent him from executing it and even testing it properly?

[SIUYA 11]

One thing that seems to have been missed (or maybe its me who has missed the point )

 

Having the right psychology (mindset - if you like) is an edge when it comes to trading.

 

This is always part of the debate about whether or not great traders can be taught....ala the Turtle trading bet.

End result is that given the same set of rules and opportunities, a group of traders will differentiate themselves between successful and unsuccessful traders due to the difference in their mindset and their ability to follow the rules.

[Rande Howell 10]

zdo

A friend and former client of mine, who now trades on a substantial scale with a 65% win rate and a 3:1 ration between profits and losses, wrote to me recently and said, "Most traders lose before they begin trading. They enter their day in a cloud of fear attempting to "not lose". This mindset sets them up for failure." Until he mastered his psychology, he did not put up these numbers -- so clearly the re-organization of the mindself of the trader can have a powerful impact upon his/her trading.

This guy also teaches trading methodology and recognizes that it is the mindset, the beliefs and perceptions, of the trader is what drives the methodology in trading. Both are essential to produce consistently successful results. Some learn the two together, and some learn after struggling for years how to integrate these two aspects of trading into a unified field.

It really does not matter to me what comes first or last. Sooner or later, traders have to face their psychologial demons courageously rather than avoid them. It is in this learning from the mirror of the self that trading essentially is that the trader learns what drives them to trade. Rather than a passion for trading, often it is a cover up their own sense of inadequacy, worth, or sense of mattering. These folks seek the Holy Grail "out there" and have not looked inwardly for the source of their strength. The market can be cruel to this mindset. Until this core material is reorganizated into high functioning beliefs, suffering will continue for the majority of traders.

To those that seem to breeze through and "get" trading without the introspection, good for you. You are the exception. Consider yourself blessed and go in peace. To the vast majority of traders who have the technical skills, but are lacking essential skills for peak performance trading, managing psychology is an essential aspect of becoming a successful trader.

When you consider that large numbers of people are entering trading as part of this economic downturn and the age bias downsizing in American businesses, more and more people will be entering trading ill-equipped. The very psychological skills that lead them to a modicum of success in their past career will turn on them and become enemy in trading. As long as fear is the dominant motivator of action, trading will suffer. No amount of technical skill decouples the perceptual map laid down by fear. It has to be faced and reorganized.

Rande Howell

[Tams 20]

> "Most traders lose before they begin trading.

 

 

how true.

[KeyToTheCastle 10]

zdo

"Most traders lose before they begin trading. They enter their day in a cloud of fear attempting to "not lose". This mindset sets them up for failure."

 

Could not agree more with that statement!

 

However my experience was that I didn't start trading with a losing mind set. That losing mindset had to be formed from conditioning just as a winning mindset has to be formed by conditioning. Hell...who starts trading as a newbie and expects to lose...it seems so easy when you first look at the markets....my newbie thoughts went something like this :"I'll take a trade when this line crosses that line and the moon is full and I can't lose. After the close today I'm going to start looking at where I'll buy my 1st vacation property cause this looks so easy" So yes, I was doomed before I began but I certainly didn't realize that at the time.

 

So only after trading and losing my shirt did my mindset form into one of a losing trading because now the only experience I had as a trader was as a losing one. Soon everything I did in the markets came from the mindset and experience of a losing trader. I never felt at all comfortable while in a trade...whether I was taking heat or showing profit on a trade I was always anxious and unsure and was guaranteed of doing the wrong thing. Always with one eye on my rapidly dwindling account balance...always feeling the pressure. Everything I did set me up for further failure.I don't know of any psychological training that could have helped me get past that point. Yes after researching or reading about trading psychology I remember temporarily feeling better but as soon as I started to trade and lose again I would be back to my losing mindset.

 

Long story short, finally after recognizing and more importantly understanding my edge I began to adapt a mindset of a winning trader. I was becoming a little more comfortable in a trade. I began to truly accept the risk. I can say that once I came to that point of realizing , understanding, and trading my edge and observed it play it out over and over I was able to start using psychology to further advance my winning trader mindset. But it took the repetition and conditioning of seeing my edge play out, understanding why it played out the way that it did, to get me to the point of being able to start adapting a winning mindset, and take steps to advance that winning mindset.

 

Again, I speak from my personal experience. There are obviously many little nuances in defining what composes the essence of a losing mindset vs a winning mindset but it is definitely a transition , that at least for me, would not have even been able to begin occurring if I didn't find my edge and therefore the confidence to accept risk.

[KeyToTheCastle 10]

One thing that seems to have been missed (or maybe its me who has missed the point )

 

Having the right psychology (mindset - if you like) is an edge when it comes to trading.

 

This is always part of the debate about whether or not great traders can be taught....ala the Turtle trading bet.

End result is that given the same set of rules and opportunities, a group of traders will differentiate themselves between successful and unsuccessful traders due to the difference in their mindset and their ability to follow the rules.

 

Very true indeed sir...but at least after being taught an edge all the turtles had an opportunity to become successful whereas if they didn't have that guidance pointing them to a viable edge they would have been doomed before they began.

 

I also wonder if the turtles who were successful had a deeper understanding of their edge then the turtles who weren't successful.

[FXGirl 10]

Zdo, you said: "FxGirl mentioned beginners might be served well to ‘subscribe’ to someone else's edge at first. I disagree! Wearing someone else’s pants is antithetical to ever making an edge truly your own. Trading someone else’s edge is a big mistake for all but a very few beginners/strugglers! In all performance work, ‘talent’, ‘tricks’, ‘cheatsheets’ at the beginning do help – but in the long run are extremely overrated. Just ask Derek Jeeter, Tom Brady, Tiger Woods, Stu Ungar, Phil Ivey, Bernard Barach, or Michael Marcus, etc etc."

 

Wow, Zdo, that’s an interesting list of examples! When you talk about some one like Tiger Woods, or Mozart for that matter, I think we are looking an innate quality, something they were born with, that gives them the ability to perform at a level far beyond others. So, I’m not really sure what to take from their experience that can be generalized to traders other than the right coaching and long hours of practice develops the skills through which talent is projected. I think that with those two elements, the right coaching and long hours of practice, most of us can make a very respectable income trading without having to rise to the prominence of someone like Tiger – even though being a star might be fun.

 

It amazes me how many experienced traders give beginners the advice that they have to reinvent the wheel. As traders, we all start using someone else’s edge, even if it is just EMA or MACD (this was once someone’s edge, just like candlestick charts were). The lucky ones of us get some further guidance and a mentor shows us how to organize the information the market is giving us into to something meaningful.

 

If you start with trading someone else’s edge, at first you don’t really understand why it works. If you stick with it, you’ll learn what the market is telling you through the lens of the system. After you spend more time in front of the charts, you’ll begin to see other patterns as well. Then you can incorporate them or develop them into your unique edge. While you are gaining the knowledge that allows you to develop your edge, trading someone else’s successful system gives you the advantage of making some money (that is the goal after all), and avoiding some of the psychological trauma of blowing through a number of accounts. And as far as trading psychology goes, it’s nice to avoid trauma – much less repair work to do.

 

Now if you want to use trading primarily as a challenging exercise in self-development, yes, please, reinvent the wheel.

 

Okay, I know I’m being snarky. Sorry. But there isn’t just one way to become successful.

[SIUYA 11]

I also wonder if the turtles who were successful had a deeper understanding of their edge then the turtles who weren't successful.

 

 

No - most of the original turtles probably initially did not understand the edge..... the edge in the turtle system - what is it? Is it the pyramiding, the loss taking (70% losers/30% winners), the running of the profits, the diversification, the combination of them all.

From my extensive reading, testing and trading this style - its pretty much about diversification of instruments. This is however always debated amongst many people.

 

But enough of that..... the thread is more about mindset, and on that note, here is a quote from the book by Curtis Faith - Trading Instincts pg 31. He was one of the few successful Turtles right from the get go....

 

"My intuition told me that the most important factors would be how well we displayed the spirit of our training, took advantage of the opportunities that arose, managed our risks and handled the trading on an emotional level. Most of the other turtles thought our goal was to make as much money as possible"

"It wasn't my intellect that made me take that trade.......The difference was intuition: I followed my instinct."

 

He followed the rules....so in this respect the rules came first.

But the point is the mindset to just follow the rules in itself is an edge

If you like its an "edge over other traders on the edge."

 

Given this, and that there are lots of entries, exits, strategies that have a positive edge (this again is debatable) that are readily available, why so many traders continually try to invent new ways of doing things - finding a new edge, surely the mental aspect of understanding the edge, why it works, and WHEN it works (as context is king) and then applying it is the extra edge.

 

(I think everyone can relate to the initial trading winning then loosing mindset Keys to the Castle described above.... kinda makes us all seem like hopeless gamblers)

 

Edit: while writing this FXGirl, submitted a similar point..... the wheel already exists, why reinvent it.

Additionally, just about every supposed trading edge is a variation of some sort, but they all have a few similar attributes.

Edited September 1, 2010 by SIUYA

[Rande Howell 10]

Certainly the naive mindset of a beginner dies a quick death. And certainly at pattern of failure can be set up based on that loss based on conditioning. And I think it goes beyond that. What I find in people in transition to trading is that stuff they covered up well before trading comes to haunt them in trading. It becomes a sharp knife to the psyche. One that was well avoided before trading. Beliefs are revealed as either workable in trading or alibies that blow up trading accounts.

Rande Howell

[kingfisher3210 10]

I have developed a plan to put in 5000 hours of training over a period of 3.5 years in strengthening neurons and synapses inside my brain to create trading pathways in my brain neural network enabling me to execute day trades flawlessly.

 

As a discretionary trader who is reading price action, understanding the ebb and flow of markets, internalizing the patterns, the training in edge + mindset goes side by side.

 

For mindset training, i love mark Douglas trading in zone and making notes out that book so as to integrate them with my cognitive thinking.

 

I am very sure to reach to the stage of unconscious competence- Executing the trades flawlessly, i have to train the neural network inside my brain.

[Rande Howell 10]

I have developed a plan to put in 5000 hours of training over a period of 3.5 years in strengthening neurons and synapses inside my brain to create trading pathways in my brain neural network enabling me to execute day trades flawlessly.

 

As a discretionary trader who is reading price action, understanding the ebb and flow of markets, internalizing the patterns, the training in edge + mindset goes side by side.

 

For mindset training, i love mark Douglas trading in zone and making notes out that book so as to integrate them with my cognitive thinking.

 

I am very sure to reach to the stage of unconscious competence- Executing the trades flawlessly, i have to train the neural network inside my brain.

Good luck with this experiment. And I would love to hear progress reports.

 

Neurons, for sure, can be wired together so they fire together. Anybody who has trained brain and body to produce an automatic behavior has experienced this. The pesky part is that the mind is not a machine -- no matter how many reps you expose it to. It, as it emerges from brain, is still organized around fear as survival strategy and it can not tell the difference between fear and uncertainty. Humans persue excellence -- perfection is not possible in the world of uncertainty that defines market. We are emotionally driven biological creatures. It is in learning how to manage emotions that we learn to trade more effectively.

 

Re-organization of the self for trading actually requires confronting self limiting belief system that are already hardwired into the archetecture of the brain. Putting new pattern on top of that does not deconstruct or eliminate these old beliefs, and they have a way of resurfacing. The skillful use of compassion, courage, and shame are the elements of changes to the core self. Compassion is the antedote to fear and the self limiting beliefs that come from fear. Courage is necessary to face things we really don't want to see about the self. And shame is needed to disorganize the old belief system so that compassion can do its work.

 

I personally would love to hear about your experience as you move through this process. It's interesting.

 

Rande Howell

www.tradersstateofmind.com

[kingfisher3210 10]

Good luck with this experiment. And I would love to hear progress reports.

 

Neurons, for sure, can be wired together so they fire together. Anybody who has trained brain and body to produce an automatic behavior has experienced this. The pesky part is that the mind is not a machine -- no matter how many reps you expose it to. It, as it emerges from brain, is still organized around fear as survival strategy and it can not tell the difference between fear and uncertainty. Humans persue excellence -- perfection is not possible in the world of uncertainty that defines market. We are emotionally driven biological creatures. It is in learning how to manage emotions that we learn to trade more effectively.

 

Re-organization of the self for trading actually requires confronting self limiting belief system that are already hardwired into the archetecture of the brain. Putting new pattern on top of that does not deconstruct or eliminate these old beliefs, and they have a way of resurfacing. The skillful use of compassion, courage, and shame are the elements of changes to the core self. Compassion is the antedote to fear and the self limiting beliefs that come from fear. Courage is necessary to face things we really don't want to see about the self. And shame is needed to disorganize the old belief system so that compassion can do its work.

 

I personally would love to hear about your experience as you move through this process. It's interesting.

 

Rande Howell

www.tradersstateofmind.com

 

Thanks for your best wishes. Good luck with our trading endeavors.

 

Very well said. You are referring to our 'rat/reptilian brain'. It is a small primitive brain which sits deeply within our new brain- neocortex- logical and thinking brain.

 

This rat brain when activated like in trading causes fear and greed. Fear and Greed spoils the 'trading edge'.

 

The idea is to deactivate the fear and greed emotions during trading but not to deactivate other useful feelings like intuition.

 

If i am long in futures market and market goes 20 ticks against me, rat brain will be activated causing fear and inducing me to close the position at small loss. I am practicing to consciously deactivate the fear and greed during these times and it is surely helping. I can see the change coming in me- More calm and composed during trading.

 

One year has approx 250 trading days. Over a period of 4 years, i will be exposed to 1000 trading days. I will also be working on last 4 years patterns. So my left brain will organize and internalize approx 2000 day trading patterns and structures.

 

This 2000 day trading experience will be used by my right brain to generate an intuitive whisper in my subconscious mind about the possibility where price is heading.

 

I am training my self to use both left and right brain. Left brain is responsible for analysis and internalizing and right brain is good in matching patterns and intuition + rat brain trading.

 

Certainly trading is at least 90% Neuropsychiatric and Neuropsychological. Without working on psychological issue, it is next to impossible to make consistent gains even if a trader has got an 'edge'.

[Tradewinds 12]

Me, . . . I developed the Edge first. Now that I'm 1000% percent (mentally) sure that I have an edge, I'm struggling (emotionally/psychologically) to implement it. I wish I'd been working on the mental/emotional/psychological part before this. I compartmentalize things, and intentionally focused on my technical trading edge, thinking that unless I have that, everything else is pointless. But I don't think that is the best attitude to have. The mental/emotional/psychological part of my life isn't just about trading. It affects everything.

[Rande Howell 10]

Me, . . . I developed the Edge first. Now that I'm 1000% percent (mentally) sure that I have an edge, I'm struggling (emotionally/psychologically) to implement it. I wish I'd been working on the mental/emotional/psychological part before this. I compartmentalize things, and intentionally focused on my technical trading edge, thinking that unless I have that, everything else is pointless. But I don't think that is the best attitude to have. The mental/emotional/psychological part of my life isn't just about trading. It affects everything.

 

For better or worst, your journey is in keeping with the vast majority of traders learning how to trade. They develop the methodology edge first, believing that is the Holy Grail. Only after they experience failure and pain from ignoring the psychological component of trading, do they open themselves to psychologcial development. Then they discover that they have always been the Holy Grail -- but like a diamond in the rought -- it has to be developed.

 

Best, as you point out, would be both simultaneously. But, I'm not holding my breath for traders to have this AHA! moment before they have blown up an account or two. That would require an emotionally literate human being. Most of us have to learn our emotional literacy the hard way.

[zdo 20]

Me, . . . I developed the Edge first. Now that I'm 1000% percent (mentally) sure that I have an edge, I'm struggling (emotionally/psychologically) to implement it. I wish I'd been working on the mental/emotional/psychological part before this. I compartmentalize things, and intentionally focused on my technical trading edge, thinking that unless I have that, everything else is pointless. But I don't think that is the best attitude to have. .

 

Thanks. The whole point of this thread was to call attention to the option of using each progress be a trigger / stimulus to work on the other ‘side’ – an advancement in edge triggers (necessitates – in this model) compensatory attention to and work in the inner game and vice versa. It took me a long time to get this but with persistance they start to feed on each other – sorta like pushing a wheel barrow (with a little bit of theta thrown in )

[Tradewinds 12]

I've been thinking about trading as a business (it is) and that I simply need to execute my business plan. (Which is what I need to do.) To view my trading as a business that I have a responsibility to, and must do, appeals to me. I think the appeal of being very "business like", is that it disassociates the trading from my personal life. If I tell myself, "It's just a job", then the trading becomes impersonal. It's not that I want to be a cold, impersonal person, but trading needs to be very "machine like", in the sense that you don't want the emotions of fear and greed sabotaging you. If I take the attitude, that I have a job description, and the job description is to trade this strategy that you've been given, I can relate to that. It's gives a whole new meaning to the saying, "I am my own boss" LOL. The boss tells me what to do, and I must do it. (But in this case, the boss and myself are the same) :rofl: So I'm bossing myself around. It's giving myself permission to take charge of my own destiny.

[zdo 20]

Early in the thread someone asked me to concede that it is the edge work that comes first for beginners. No. The 'first' one is the one in awareness now. They are inseparable.

Be careful of the assumption that the point in time each emergent trader first starts to work on edge is some sort of discrete startup point. If you think about it a huge amount of the inner work, in the form of decisions and belief formation and prioritizations, was made in the journey previous to starting all that long suffering edge work. Obviously for many these are seamless, unattended, even unconscious decisions; but nonetheless they are extremely important. Most trading books have some level of coverage regarding this area in the ‘sychology’ chapter(s) or, even better, threaded in throughout. Good examples of that are found in the works of Tom Demark, Chick Goslin, and Larry Williams, just to mention a couple… Recently Rande Howell has written extensively about the 'emotional intelligence' we bring at the beginning. the (conscious or not) beliefs we literally act on, and the hazards to development real time trading can reveal. This thread posits (whether by schedule or by what is in front of you at the completion of work on one side) that real time advancements on one side are optimally a call to make intentional advancements on the other side. It is hard work to relentlessly develop the habit of using any advancement in one side as requirement to ask and answer difficult questions about the other side.

Great place to apply "D-I-S-C-I-P-L-I-N-E"*. Willfully stepping into the unknown - saying "I don't know what this belief work I've done this week means to my edge work. But I will ask the right questions and remain actively and consciously open to the implications and possibility this work will enable...". Ok that's starting to sound like some oprah guest or dr phil bullshit. Just use the first three crucial words, "I don't know" and you take it from there...

 

 

(* Note to ingot54, et al. (see OP at http://www.traderslaboratory.com/forums/f37/your-mama-doesnt-trade-so-wise-9278.html) - this a much better place to apply "D-I-S-I-P-L-I-N-E" than in day to day "enforcement" of a trading plan.

"If you have to apply 'discipline' in your trading more than about once a month, something is terminally wrong with your match to your system(s)" zdo.

Also from the OP over there, I didn’t want to make an argument with you in a great thread but - ‘yo inna mama’ is trading! :helloooo: )

[chcculle 10]

working on your mental side will greatly help you to take trades where you have edge. both are very important.