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"Read the price action, understand
support/resistance, recognize the environment and then manage the trades =
execution. "
Bob,
I hear what you're saying but even this approach can be modeled because
you've described the basis for a consistent approach here. Also, one needs
to spend less time "learning" how to trade if they have a system. You need
to have patience to wait for the signal then pick up the phone and place
your order with systems but the trading method is already abstracted. And I
agree that learning to control your emotions is important in trading weather
you have a method or are trading a system. You have to have confidence in
your system/method to trade it during drawdown when emotions can run wild.
That often takes practice, either through physically placing the order or
visualization away from trading.
> -----Original Message-----
> From: Bob Heisler [mailto:bheisler@xxxxxxxxxx]
> Sent: Wednesday, February 16, 2000 9:17 AM
> To: lazar223@xxxxxxxxxxx
> Cc: CFischer; omega-list
> Subject: Re: Which holds best promise?
>
>
> 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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