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I've been reading "The Disciplined Trader" by Douglas, and I think
he takes it a step or two further. Nevertheless, perfection is not
within my reach in this regard. The ability of the human emotions
to sabotage good trades is subtly present and at work whether one
uses a mechanical system or flips a coin or throws darts. The choice
of what to buy/sell and when and then when to exit is not mechanized
enough. Programmed trading may be computerized but an analyst stands
by always to override it.
At 09:00 AM 5/2/98 -0600, BrentinUtahsDixie wrote:
>Dr Narayan,
>
>Thanks for your input, I felt the need to better understand the use of
>discipline in regards to trading because it is so often sited as the means
>to success. I'm sure that if it paid off as automatically as the food
>dispenser does for the chicken that we'd find it easy to play those notes.
>The quest that most of us are on is to find the right notes to play.
>
>It would seem to me that non-system traders would have to trade purely at
>random, by the flip of a coin or a random number generator. According to
>the recent survey pure system traders are about as rare as random traders.
>I figure that there is something to be learned here. It would seem that
>instinct in the end is virtually never completely eliminated from the human
>equation. As it is with most aspects of life a careful balance usually
>results in the best result.
>
>Brent
>
>----------
>> From: narayan c.k. <ckn58@xxxxxxxxxxx>
>> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>> Subject: Re: SYSTEMS/Discipline
>> Date: Saturday, May 02, 1998 2:24 AM
>>
>> Brent wrote:
>> A chicken will learn to play a few notes in response to a light
>> coming on if it knows that it's going to get food if it does. Is that
>> discipline and if so which kind?
>>
>> Brent,
>>
>> It seems to me that you have almost answered your own question. Be it
>> the chicken or ourselves, the ultimate objective is to get the "food"
>> (for us, the profits). The difference is, the chicken may not find it as
>> difficult to play a few notes as you and I have in observing some simple
>> trading rules. "Discipline", in my book, refers to our ability (or lack
>> thereof) to learn to play those few notes on a consistent basis so that
>> we too get our food.
>>
>> Dr. Narayan
>> Mumbai, India.
>>
>>
>>
>> ______________________________________________________
>> Get Your Private, Free Email at http://www.hotmail.com
>
I had a hard time at first with the opinions a week ago or so
to the effect that "price is the only indicator." Now I am a
bit more prepared to agree. The only indicator that I have found
that often (no precise measure) is a leading one is when a stock
is trading normally (level and volume) a large spurt of option
trading pre-sages a major move in the stock by several days.
I recently saw a stable stock take a tumble (NOB from 43 to 37.5) and
thought to myself when there was no news to back it up except the
DOW crowd's behavior, here's an opportunity. Indeed I put the trade
on and exited at 40 1/8 in calls. I also bought the stock and will
wait for a further rise another week. If it dips I buy calls again.
This was not a system at work, but not gunslinging emotions either.
Discipline, in any case, whether you use a mechanical system or
a more intuitive approach, discipline means you stick to the rules
you pledged to yourself that you would follow (in a very rational
moment). It means you observe the scary feelings that this is
going wrong, or it means you freeze when it is going wrong and your
rules would tell you to take a profit or cut the losses.
PeteNa9090
petena9090@xxxxxxxxxxxxxx
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