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In a dialectic world there are two motivations, going towards or seeking and
going away from or running/avoiding. Generally we seek pleasure and avoid
pain. In thinking of things based on which will bother you more, you are
evidencing a gowing away from motivation. You measure your success by how
much you avoid pain, by staying away from losses, and whether you have
missed an opportunity or not. Your " failure possibility " is how you
measure your success at avoiding pain. ( notice the paradox there?) You can
only tell if you are meeting your goals by the absence of being bothered. In
this scenario you are more likely to have losses and miss opportunities
because this is specifically the criteria you are using to tell you if your
system is working or not. If you do not have pain, then in order to create
equilibrium, you will have to create pain in order to satisfy your world
view which posits that there must be some. Instead of going for what you
want, you are vigilant of what you do not want, and thereby attract it to
yourself. The classic example is " don't spill your milk ". In order to
conceptualize not spilling milk it is necessary to create the image of
spilling milk, and then not doing that. The image of spilling is real and
creatable, while the image of not spilling is abstract. It is more likely
that the milk will be spilled because that is the command that is most
attainable. The syntax, is dont | spill your milk . The dont is
isolated as an abstract concept, while spill your milk is a complete command
and a powerful image. This by the way is one of the tricks of hypnosis,
called an embedded command.
Regarding trading, I submit that there is another way. I propose that you
can go towards what you want, which is a system with low drawdowns, high
percentage of winners, and a specific style and frequnecy of trading. Using
this model you build what you want, and create a system that does not
require that you worry about large losses, or missed opportunites, because
you start with a going towards motivation. You know that you cannot have it
all. You do not seek to be perfect, just to capture reasonable profits from
certain situations. You protect yourself from losses, by using sound
moneymanagement techniques, designed to preserve capital, which is also
going for what you want, which is to keep trading. In this scenario you are
in control and you are seeking what you want. If losses occur, you do not
experience pain because you already know that you cannot have 100% winners.
>From historical testing you know what your average loser is and you know
what your largest loser is, as well as your largest consecutive number of
losers. If you see that you are exceeding your average percent losers you
have a signal that your system may need adjustment, but you are not in pain,
you are not bothered. You are a scientist, and your emotions are not
affected by how much money you made or lost. Your only concern is knowing
know how well your system is modeling the behavior you seek to describe. If
it is not performing up to your standards, it is not a sign of failure, it
is feedback that something has changed. This is a totally different frame of
mind from the one you describe which gets bothered, when a trade is missed
or a loss taken.
Suiting your "psychological profile" requires that you understand that an
avoiding pain mindset is not as favorable to trading as a going towards
mindset, due to the high level of emotional stress required to trade that
way, caused by the inherent preupposition that you will have exceptional
losses and missed opportunities. If you have a going away from mindset, you
may want to look at what you are trying to avoid,( pain / losses) and what
do you really want? ( Pleasure /profits ). It may sound trite, but changing
is simple. Turn around, suspend your beliefs temporarily. Think of what you
want. Design your systems around sound principles, and experience success.
d
> If you know your system then you will also
>know when it is going to trade and when it is going to be out of the
market.
>You will have already decided that you prefer taking small bites of a
>sideways market over sweating out big drawdowns in a roaring trend for
>example. Therefore missing a trading opportunity will not bother you
because
>you know that your system is going to catch the particular kinds of trades
>that you designed it for.
Yes that is very true...but you have to know before hand which will
bother you more; taking the losses or missing the potential profits.
If you don't design a system which suites your "psychological profile"
you will fail.
RGA
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