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<DIV><STRONG><FONT color=#000000 size=2>Good Morning
RTer's</FONT></STRONG></DIV>
<DIV><STRONG><FONT color=#000000 size=2></FONT></STRONG> </DIV>
<DIV><STRONG><FONT color=#000000 size=2>One point about missing ticks in
intraday trading. Sometimes it is not the data services fault. Instead, it is
our computers capabilities. Some of us run numerous applications during the day.
Once in a while the CPU gets so busy it cannot process all the data. This can be
solved by installing what is known as a T-PORT serial card. It is simply a
serial port with a memory buffer. It will store the incoming data until the CPU
can process it.</FONT></STRONG></DIV>
<DIV><STRONG><FONT color=#000000 size=2>I've been using one for years. They
work.</FONT></STRONG></DIV>
<DIV><STRONG><FONT color=#000000 size=2></FONT></STRONG> </DIV>
<DIV><STRONG><FONT color=#000000 size=2>Sincerely,</FONT></STRONG></DIV>
<DIV><STRONG><FONT color=#000000 size=2></FONT></STRONG> </DIV>
<DIV><STRONG><FONT color=#000000 size=2>Richard J.
Chehovin</FONT></STRONG></DIV></BODY></HTML>
</x-html>From ???@??? Sat May 09 01:39:50 1998
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From: Paul Cote <cote@xxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Systems: A Winning Futures Trading Strategy
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A winning futures strategy, Larry Williams, Windsor Books 1989
Larry Williams On Fear and Greed
Chapter 4
I feel qualified for this chapter on fear and greed...more qualified
than I've ever been in life.
Currently on any given day I will be long or short somewhere over 2,000
Bonds and who knows how many S&P's. That means every tick in the Bonds
market will make... or lose me ...$62,500. Believe me, if you want to
get in touch with fear and greed there's no better way of doing it than
to have each tick in the Bond market represent $62,500!
While trading commodities does create an unreal sense of value and
economic worth, nonetheless, I can appreciate $62,500... I can
appreciate it leaving me and I can appreciate it coming to me.
My experience is that trading in large amounts gets you more immediately
in contact with the emotions of fear and greed. It really does not
matter how much you are winning or losing, it's all in relationship to
how much you have to win or lose. I know. I started trading, at one
point of my life, with simply what I could charge on all of my credit
cards. The pressures of fear and greed then were almost as great as
now.
The question is, how do traders go about handling fear and greed? What
can you do to compensate or cut back on the impact of these emotions?
Certainly if you don't learn to get these two wild horses under control,
you will experience financial difficulties trading commodities. That's
because fear will force you in a strange fashion to either hold onto
losing positions tool ong or to get out of positions too early, that
would have turned profitable.
The problem with greed is jut the opposite. Here, pure greed will force
you to hold on to positions you should be getting out of because you
always think there's another tick... or two ... or several hundred left
in the market for you. Hope may spring eternal, but uncontrolled greed
will be the demise of commodity traders.
You cannot escape these two emotions of fear and greed. They re just
like yin and yang, they go hand in hand, they are like success and
failure, salt and sugar, night and day; they separate making or losing
money.
There are several practical ways I have developed to eliminate fear and
greed; the first is to have a System.
WHY A SYSTEM IS IMPORTANT
Don't think this is a novel or a new idea. In Homer's Iliad, he tells
us, "Let us put our trust rather in the council of great Zeus, King of
mortals and immortals".
That's really what we system followers do. We are putting our trust in
the system, our God; the system thus can eradicate the emotions of fear
and greed. These emotions should have no impact on a system trader.
However, there is a world of difference between "should" and "won't".
Fear and greed will still impact the system trader and I'll talk in a
few minutes about how I attempt to handle fear and greed in my system
trading.
Those of you who are not system traders have a greater problem. You
don't have a Zeus to whom you can shift responsibility: thus, you must
be in a constant state of alert, battling fear and greed.
So, how can you do it... how can you go after these two dragons, putting
them to rest?
First, let's look at what we are dealing with here - emotions. Now I am
no psychologist, but I have had enough winning trades and losing trades
to have a sense of how one can go about desensitizing the impact of
emotions.
In fact the work of desensitization is perphas the most significant
psychological tool I could share with any commodity trader.
Remember the movie "The Exorcist"?
If you don't, try to call up any other spooky movie. It's almost
certain that the first time you you saw the movie it had its frightening
moments. in the case of the Exorcist some people were scared flat out
silly.
However, if those people had seen The Exorcist 30, 40 or 50 times, can
you imagine them being scared on the 39th or 40th screening? Of course
not. Regardless of how scary anything is, if you see it over and over
and over it starts to lose impact and your mind can act rationally,
without emotions running amok. Thus one approach to sublimating fear
and greed is to desensitize yourself by having a physical action
involving money that has thousands of decisions all having fear and
greed at stake.
Even an active commodity trader may only feel the tugs of fear and greed
on four or five trades a day. However, there are other activities
involving money that may have you exposed to literally hundreds of
ultimate decisions with money.
To desensitize myself from fear and greed many years ago I wagered small
amounts at gambling casinos, not really caring if I won or lost money.
The idea was to repeat the process over and over and over, literally
thousands of items, to desensitize myself from being pulled into having
any emotions about what happens to money. After you win or lose several
thousand discussion you start to gain some control of your emotions...
you start to realize that you can be in charge of them, rather than
having them in charge of you. This type of desensitization for
commodity traders will take a long time and is something not everyone
can do. But, if you've got the time and patience, it is one of the best
physical ways I know to go after desensitizing emotions.
Another approach might be to simply come into contact with the reality
that simply nothing matters.
If one can get to the point that fear and greed are not
considerations... that fear and greed don't matter, one is lees impacted
by them. So how do we pull this off? The way we get to that point is
to goes back to the comment that nothing has value to it. This may be
hard for some readers to grasp or intellectually accept, but it is a
truism. This is an intellectual thought, but needs to be experienced at
an emotional level before it will be of value to the commodity trader.
We all express it in one form or another, even in your own humor
regarding the market, when we say, after winning or losing days, it's
only money...it's only more zeros past the base number; thus, we attempt
to give a sense of nothingness to money.
When you get to the point that in fact there's a total sense of
nothingness to money or market success or failures, you will then reach
that state of nirvana.
If it has no value, then of course there cannot be fear. You cannot be
fearful of losing nothing nor can you be greedy about gaining something
that is nothing. Indeed, this is a strange attitude or approach to
have, especially toward something that people covet as much as money.
But, this is the attitude that will free you of the charge and emotional
trauma that will come from these emotions.
When you attach importance to something, you become so screwed up about
it that you cannot function correctly around it; so it is with our
money. When we attach importance to it, in come our viscious dragons of
fear and greed.
We systems traders have it a little bit better, because we can
intellectualize without going to the emotional/intellectual level. We
need not surgically remove these emotions.
Consider this... if you are a system trader, you have selected a system
to follow. You are following that system for numerous reasons, some of
which may be" it's easy to follow, it works well in the markets you like
to follow. The truth of the matter is you are following a system for
two reasons: 1) it has show the ability to eliminate losses and 2)the
mirror image of that is it has been profitable for you.
Isn't this really another way of talking about fear and greed? Aren't
systems really created to get us away from these two emotions?
You see once you start following a system what you actually have said to
yourself is, I am happy with the profits the system generates, I am
pleased with the profits this system generated; therefore, I will follow
the system.
There is no reason for you to try to stretch out the system's
performance... to cheat trying to eek out and extra buck or two. Be
content with the system and you will have eliminated totally the impact
of greed.
Let's turn our attention to fear. As I said, systems are constructed
for two reasons, one to handle greed and the other to handle fear.
What you're really saying... if you're a system follower... is that you
have developed a set of concise rules that have managed the commodity
markets and your money in such a fashion that you are able to accept
what losses occur in the system, knowing that losses are a part of the
process and also knowing that the system controls these.
Ah hah! There it is... the kernel of truth. The system controls loses
far better than you can control losses. Once you grasp that, you will
realize there is no need to not follow your systems. There is
absolutely now way your emotions, your consideration, your friends or
whatever will be able to do a better job of jananging losses and money
management decisions than a well thought out system.
Hence, the system becomes your shield, you are on your own big boy, and
who knows what's going to happen. You certainly don't! But we do know
that you and other people most always make the wrong decisions when the
emotion of fear comes sneaking in.
Yes if you have a system you don't have to have fear. You have already
turned it over to your Zeus. Your trust in the system, that it will
handle the losses... the origination of fear... greater than you can.
Thus, a system becomes almost a father confessor for its follower. The
problem is system followers have not intellectualized or rationalized to
the level I hope I have brought you, so they buck the system. When the
system says buy, they sell. When the system says take profits, they
hold on. When the system has a loss, instead of following the system,
they continue holding the losing trade.
There is no need for system followers to do this once they realize they
chose the system because it has made profits and those profits are
satisfactory for them. Hopefully, this section will help you stab an
ice pick into the hear of the emotions of fear and greed and stop these
emotions from shilling you.
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