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You learn to control your emotions by trading - I don't know any other way.
Trading is no different than any other profession/sport/game/business etc.,
in that it requires practice and experience. In sports they call it being
"competition tough". This process builds your confidence as well, and
that's where the Mini contracts and simulated trading accounts can really
help. One way or the other you must learn how to execute while being IN
THE MARKET.
You can't learn how to trade by just watching or studying the markets or
building systems, just like you can't learn how to become a doctor/engineer
etc. by reading a book. And I don't care if you have a 100% accurate
'system' - if you can't make decisions with money on the line you will still
lose. And you can't learn how to trade without learning how to lose first.
Everyone tries to avoid this learning process, but unfortunately it cannot
be avoided.
As for tools or my "edge", I don't use any indicators or systems - I just
use myself. That may sound funny to some, but price is the best indicator
that I know of and that is what I use. Read the price action, understand
support/resistance, recognize the environment and then manage the trades =
execution. Keep the losers small and manage the good trades well and you
will win. Each trade must also have a plan which includes a Stop and profit
objectives, and these can vary from trade to trade depending upon the
environment. Some trades are small losers, some are small - medium gains
and some are huge winners if managed properly. As you said, "trade the
markets not the money".
I don't believe timeframe has anything to do with how you enter a trade. As
I said there is no such thing as getting in early, only getting in RIGHT. I
don't trade an hourly chart any different than a 5-minute chart in regards
to entries - but the management of the trade will be different.
Trading is not all that complicated, but it does take time to learn.
Enjoying our conversation.
Bob
-----Original Message-----
From: lazar223@xxxxxxxxxxx <lazar223@xxxxxxxxxxx>
To: Bob Heisler <bheisler@xxxxxxxxxx>
Cc: CFischer <compsig@xxxxxxxxxxx>; omega-list <omega-list@xxxxxxxxxx>
Date: Wednesday, February 16, 2000 10:30 AM
Subject: Re: Which holds best promise?
>
>
>Bob Heisler wrote:
>
>> Hi Claus,
>>
>> In order to trade successfully a person MUST learn how to control their
>> emotions while in the market. There is no way to avoid that.
>
>So how do you learn to control your emotions? Do you will it to be so? No.
>Obviously, you need some tools that enable you to understand market
structure
>enough to know what is going on. Secondly, you need tools that tell you
what
>your response to what is going on should be. Then you also need to spend
the
>time studying, living with and ultimately becoming one with these tools
such
>that you can react instinctively with the ebb and flow of market swings.
You
>control your emotions when you have the ability respond appropriately.
>
>> While a
>> system or proper trading education may be of help, we still need to
conquer
>> the demons we all have - and greed and fear are among them.
>
>Whether you are a discretionary trader or a systems trader, you will only
>conquer your demons if you have an edge that you believe in. Both styles of
>successful traders use systems. For system traders all the rules of their
edge
>are hard coded. This is not the easiest thing to accomplish, but it can be
done.
>For the discretionary trader his rules and edge exist in his approach which
is
>coded between his ears. That being said, a system is another tool to use as
a
>guideline for the trader's actions to illustrate what the effects of taking
a
>certain action at a certain time might produce. If that action produces
profit
>and can be repeated successfully enough times to increase an equity curve
that
>trader has a guideline from which he can start to shape his greed into a
>reasonable expectation of gain thus controlling it. Further, he also has a
set
>of rules (A PLAN) which define correct behavior. Thus he now also has a
>benchmark which he can measure against to determine how to avoid bad
behavior
>(control his fear) or enhance good behavior. In a nutshell you don't just
wake
>up one day and say I AM GOING TO CONTROL MY EMOTIONS.
>You have to figure out what you need to do to succeed and through
developing
>that edge you should be able to take the mystery out of what the market is
>telling you to do.
>
>> I don't know
>> how many traders are able to do that, but I do know that 85% or so lose
>> money. So maybe it's that remaining 10-15% that have learned to control
>> their emotions.
>
>By having a specific plan which you understand and believe in completely,
by
>being a behaviorally flexible person, by being properly capitalized and by
only
>"trading the markets and not the money" will enable you to be one of the
10-15%.
>
>To the earlier points regarding entries, your trading time frame determines
the
>relative importance of your entry. The shorter the time frame the more
critical
>the entry. However, your time frame should not be so short as to effect
your
>execution and expectations for profitability. That being said the concept
of
>entry and exit efficiency lies at heart of the matter. 100% efficiency
means
>that you enter and exit at the exact beginning and end of a market swing.
No one
>does this but everyone would like to have as high an efficiency as
possible,
>thus your entry is important. If you can see the forest for the trees then
you
>know that entering at close to 100% efficiency provides the least risk per
>trade. Your chances of having a stop hit are much less and having a
successful
>trade are higher.
>
>>
>>
>
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