Simple Stoic Methodology

[rbgilbert06 10]

I don't believe I'll shock the community with this strategy, but I do think that it's the best strategy to minimize my weaknesses as a trader while maximizing my strengths.

 

I'd like to hear feedback from the community about my strategy while I paper-test it.

 

Investing Plan

 

The method uses stoic methodology to limit emotional response to trading. It utilizes robotic /mechanic responses combined with human ingenuity to give it an edge over black box systems and speculators alike.

 

Rules:

 

1. Be unemotional about every aspect of trading

2. Use meditation to create a calm mind that can focus on trading

3. Trade using a simple strategy

4. Do not brag about your trading and success (don’t brag to yourself either)

5. Do not complain about your trading and failures (also applies to yourself)

6. Practice stoicism with trading

7. Don’t be dependent on the money (dependence brings bad decisions)

8. Filter out noise (don’t listen to speculation from news stations)

9. Get in, get out (short term trading)

 

Trend line strategy

• Buy breakout (busting out of resistance)

• Sell breakdown in trend (breaking support)

• Do not use indicators of any kind

 

Buy/Sell Specifics

• Identify potential trades as any price approaching support/resistance

• Buy/sell after 2 candle confirmation of direction

• Close if trend reverses 2 candle confirmation

• Sell approximately 1 candle before next support/resistance line

 

Progressive trading principle

• Begin trading only 1 set-up per day to maximize success

• If previous day was successful, add up to 1 set-up for a total of 2 set-ups per day

• If still successful, continue to add 1 set-up per day for a max of 3 set-ups per day

• If a losing day is encountered, reset to 1 set-up per day

• If two losing days encountered in a row, paper trade until 2 consecutive winning days

 

Performance Compensation

• Spend 10% of earnings each week on superfluous things (encourages winning while still retaining realistic goals – “makes the money real”)

[MightyMouse 12]

 

Rules:

 

1. Be unemotional about every aspect of trading

2. Use meditation to create a calm mind that can focus on trading

3. Trade using a simple strategy

4. Do not brag about your trading and success (don’t brag to yourself either)

5. Do not complain about your trading and failures (also applies to yourself)

6. Practice stoicism with trading

 

 

A plan is good.

 

Looks like your plan design is to not be human. It is somewhat hard to do since you are human. As humans, we get angry when we lose and happy when we win. Each of these reactions are completely natural. It's easier to accept that you are happy or mad than to pretend that you are not happy or sad. Don't beat yourself up for being human. That is crazy. Doing well trading is not the same as acting non-human. Another tactic you might want to try is to get all the happiness or anger out before you take another trade. Better to release the emotion fully than to suppress it. Just my 2 cents.

[SIUYA 11]

sounds a good start.....but is it you?

 

When you go down the pub (or what ever) and talk with your mates, do you wear your heart on your sleeve, or just keep things to yourself naturally.

Dont force yourself into a box because a trading rule suggests you should.....

 

you did not mention what your weaknesses and strengths were....does this play to them? (I assume it does)

[TheNegotiator 13]

Agree with MM. You are human. Just as it would be impossible to stop breathing, it would be impossible to eliminate all emotions. However, there are three things to help minimise emotional impact.

 

1- Make sure you don't muck about. Do what you should. Fully prepare each day. Do the work. Properly journal. Review that journal.

 

2- Approach trading properly. Know that to stay in the game, managing risk is your strongest ally. Know that to lose on one trade is not to be a bad trader or to fail. Take your stops as something important to protect you.

 

3- Be aware of your emotions. You mentioned meditation. Think about mindfulness. If you are aware of your emotions you can train yourself to react to those emotions in a better way. Over time, just as you can adapt and improve your physical fitness, you should be able to get better at controlling the way you react to you emotions.

 

Otherwise it's a pretty reasonable plan. Not sure about the idea of trading a certain number of setups per day though. I think maybe taking a number of consecutive losing trades and then stopping has merit. But if you take a winner then stop it's not always going to be thing. Maybe that day was particularly good for your strategy then the next, when you actually up the number of setups you take, is not. When it/you is good, capitalise on it.

[johnw 10]

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

 

The method uses stoic methodology to limit emotional response to trading..................

 

 

good morning,

 

Interesting comment above.

 

My question is ... why on earth would you attempt to limit your emotions.

Why not re-train them to work for you when trading.

You seem to want to deliberately handicap your potential

[MightyMouse 12]

 

Not sure about the idea of trading a certain number of setups per day though.

 

I agree. Limiting the number only adds an element of randomness to your trading.

 

You could take a few losses, stop, and then the good trades per your strategy appear and you do not take them. You end up losing when you should have had gains.

 

Execution is key. Learn to properly execute your plan under all emotional conditions and keep losses to a minimum. Each trade you take should be well below the max level of account risk you can take on a daily basis. If it isn't, then you are probably trading in a game that is too big for you. Coming out of a bad day with a 10% loss is nuts. My very worst days were less than half of that. Just my 2 cents.

[djohnsonhot 10]

I actually really enjoyed this post. It shows that the author is DEALING WITH THE PSYCHOLOGY of trading - - -which, from my experiences - - - is the most difficult to master.

 

I think of his word, "meditation" and apply the one I use: "ZEN-LIKE" or as "robotic" and distant from my view of a particular MOVE in the market that might be offering me my specific set-up (range failures is my specific set-up, based on several very hard rules).

 

I do something that is very helpful for me personally: I try my best to pull back from a setup, and give myself another candle to decide if a very fast-moving bar appears....those are often lures that grab a sucker's attention and cause an emotional mouse finger to tap on in! Instead, I TRY to toss out that feeling, "MAN, I am MISSING a trade" whilst reminding myself that there will always be another tell or another trade that will appear.

 

Pulling back from the small picture (say a 5min chart or a tick chart) and reminding myself where we are in the context of a move is KEY to finding range highs, lows or pauses in trend. Big picture analysis is a key to some of my most successful trades.

 

Finally, the less that you require to make a move, the better. I am sure many if not most of us who have been in the Futures or Equity markets for over 20 years can attest to the fact that many oscillators are backward looking and latent in their usefulness. Toss out unneeded SMA/EMA's, Volume Profile, MACD's, STOCK and work to find PRICE action setups instead. In the end, my analysis and experience tells me that price tells all and understanding candlestick formations is a true fundamental foundation to making progress.

 

Thanks for the post.

[wrbtrader 10]

...I'd like to hear feedback from the community about my strategy while I paper-test it.

 

The method uses stoic methodology to limit emotional response to trading. It utilizes robotic /mechanic responses combined with human ingenuity to give it an edge over black box systems and speculators alike...

 

First, you can't imply it has an edge over black box systems an speculators alike until you've become consistently profitable with real money.

 

Therefore, I think you meant that your "goal" is to give you an edge over black box systems although I'm a little confused why you're measuring your discretionary trade method against black box systems.

[AltosTrader 10]

Interesting you should mention meditation. Being a rather eclectic student of mainly Buddhism and Taoism for many years I have found it very helpful to have a calm mindset. I do not try to be a robot however, prefering to feel and appreciate all emotions without letting them dominate or runaway with my mind/thinking. I find this brings greater clarity to whatever I am looking at. I must concede however that many people have that clarity without conscious cultivation of it. I am not one of them. I needed to cultivate it.

 

Being a forex trader and a specialised design engineer I have found very difficult. As an engineer I worked (retired now) with absolutes, no room for error as peoples lives depended on my accuracy. Being a trader, I cannot have that accuracy and have to work with, often vague, possibilities and likelihoods. - Not easy to break the precision views developed over years.

 

I think any approach that widens ones perspective in whatever you are involved in. be it trading or conflict resolution of others differing views is very beneficial to outcomes.

 

However, too many people over complicate their trading and generally have less success than those with what appears as a simpler approach.

 

Music also helps. Many will like different music styles but studies some years back suggested that baroque style music tended to entrain the brain into more calm and receptive states.

 

I dunno if this helps anyone - just my idle thoughts when I saw the lead article. Feel free to ignore if you don't agree. :helloooo:

[fast 10]

Progressive trading principle

• Begin trading only 1 set-up per day to maximize success

• If previous day was successful, add up to 1 set-up for a total of 2 set-ups per day

• If still successful, continue to add 1 set-up per day for a max of 3 set-ups per day

• If a losing day is encountered, reset to 1 set-up per day

• If two losing days encountered in a row, paper trade until 2 consecutive winning days

As a means of managing money in an account, many traders will place a stop loss in the event trades turn against them. There are other things we can do as well. I’m sure you’ve heard of position sizing. But, that’s not all. You’ve actually touched on one when you talk about changing how many trades you’ll take.

 

It can often prove beneficial to limit how many trades you’ll take. For one, you might wind up waiting for better set-ups instead of just pouncing on what looks pretty good at the time. Secondly, it’s nips overtrading in the bud. Third, it forces you to be more conscientious about the trades you take. Fourth, you’ll have time to document your trades—not just what you did and why but also how you felt.

 

I highly recommend making note of what you thought the market was going to do and what it did. Eventually, you’ll start to notice something that amateurs never fully appreciate, and that’s the fact you will more often than not be wrong. Trust in yourself to execute your plans mistake free, but rely on the soundness of your trading rules to guide you through your trades, not your hunches or gut feeling—not the rules you listed in chronological order but actual trading rules that spell out what you’ll be acting upon.

 

I would recommend limiting your number of trades to a specific number (e.g. three). However, just as you can place a stop loss in the event a trade turns against you, there’s also something else you can do instead of alternating how many trades you’ll take based on number of losses. What you can do is create a stop loss for different time periods. For example, have daily, weekly and monthly stop losses. If you have lost all the money your rules will allow for the day, then you stop trading for the day, and if you have lost all your rules will allow for the week, then you stop trading for the week.

 

You don’t want to simply go back to one trade because you had a loss, for you need to get in as many trades as your rules will allow in order for the sample size to be statistically relevant, assuming you have a plan with rules that will yield positive results over a statistically significant number of trades.

 

I’m not saying to trade the financials; you should trade the technical’s, but cutting your already limited number of trades even shorter based on number of losses is inferior (in my opinion) to limiting them based on dollar losses per time period.