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Hi Dave and Ray R
I'm joining this late but as Ray said this thread is important.
I agree:
to succeed we need sound money management
and discipline to adhere to our plan. I also agree that
all traders need to come to grips with fear.
Where I differ, is with the belief that the key to overcoming fear
is discipline- that may be true in areas other than trading
but not so for sphere of activity.
Ultimately fear is managed by acceptance that losses are
inevitable and that the mkt can and usually does do anything.
In other words we have no control over the mkt will do.
Adherence to our trading plan (discipline) will come naturally
if we accept that for any individual trade, loss can happen.
The acceptance I am talking about is not just intellectual
acceptance but also the emotional acceptance. This allows
a trader to function when the unexpected happens.
Many traders I have met give lip service to this acceptance
but that is all that it is - lip service. There is a world of
difference between:
enhancing mkt knowledge because I want to perceive
opportunities the mkt is offering and which, but for the new
distinctions, I would not see and
enhancing mkt knowledge in an attempt to avoid
the pain that loss brings.
In the latter case I have failed to accept that loss is inevitable and
I am doomed to fail as a trader.
In summary:
I agree that money management and discipline are critical
to success. As Dave says, run from anyone who advocates
trading without either. On the other hand I believe that
the main tool to solve fear is the acceptance (in every
sense) that loss is inevitable. In this way we define loss as not
being painful and we thus manage our fear of the mkts.
regards
ray
R Barros
101/25 Market Street
Sydney NSW 2000
Australia
Voice: 61 2 92673470
Fax: 61 2 92673478
E-Mail: rbarros@xxxxxxxxxxxxxxxxxx
----------
> From: Raymond Raffurty <rraff@xxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: Larry Williams
> Date: Wednesday, June 10, 1998 4:24 AM
>
> David Cicia wrote:
>
> > I also took the B. Williams tutorial. He told me that using any kind
of
> > money management was "coming from fear, not confidence." In my opinion,
> > listening to anything he has to say is a major threat to your equity,
and
> > you SHOULD be afraid. None of his trading ideas are based on sound
> > principles - just "confidence" (if you know what I mean.) Risk control
and
> > money management are the most important aspects of playing this game!!!
Run
> > away quickly and steadily from anyone who tells you differetnly!
> >
>
> Hi David,
>
> I'm sorry that this response is so late but this thread is
> important to all traders. I agree with all your assertions but must
point out
> the fact that FEAR IS THE ENEMY of all traders. Fear is the main (only?)
mover
> of the market. Everyone has heard that fear and greed drive the market,
but
> what most people do not realize is that they are both the same emotion!
We
> have all experienced fear (fear of taking a loss, fear that the market
has
> turned, etc.) to some degree. More subtly we have experienced fear of
not
> being in a big move, fear that the market will go higher after we get
out,
> etc. We call this fear greed, two sides of the same coin.
>
> Fear is the GREAT PARALYZER. Have you ever seen or
experienced the
> following situation: the market is going against your trade, you are
both
> afraid of taking a loss and afraid of not being in if the market should
she
> turn your way. The inexperienced trader will often just stand there,
frozen in
> place, at the time when action is most critical. I have seen traders let
> options expire worthless because they where frozen with fear, when
appropriate
> action, applied at a critical time would have prevented some of the loss
(or
> even made a profit).
>
> As you correctly pointed out the key to conquering fear is
> discipline. Many people make the mistake of thinking bravery is the
opposite
> of fear. This is not correct. Bravery is a "mask" people put on to
cover
> over their fears. Some psychologists might even suggest that bravery is
also a
> form of fear, fear of being a coward. Only discipline overcomes fear and
only
> discipline can concur the market. Unfortunately this is the easiest
concept to
> expound and the hardest to practice. We simply bring to much baggage to
each
> trade. I learned much of this in the Army: Fear leads to defeat,
bravery may
> lead to victory but at to high a personal cost, discipline allows you to
defend
> yourself while destroying the enemy, which is the ultimate victory.
> Unfortunately, I had to relearn much of this when I started trading.
>
> > At 10:11 AM 6/2/98 -0500, Peter Timaratz wrote:
> > >>Bill Williams also talked about "trading the market not your wallet"
in
> > connection with stop >>placement.
> > >
> > >I was a student of Bill years ago. Back then I had a fairly small
account
> > and I told him I thought it >was too risky for me to trade bonds with
this
> > size of account. He said I should trade the market >and not my wallet.
I
> > agree that stops should be calculated based on market considerations.
> > >But if a stop entails too much risk relative to your account then you
> > shouldn't take the trade. It's a >simple money management principle,
but Bill
> > didn't agree with it.
>
> The truth is that you should set stops (and targets) based on
the
> market you trade and chose the market you trade based on your wallet.
> Unfortunately to many people try to trade S&P futures with $5-10,000 when
they
> should be trading 1 E-mimi contract. The Indexes have done a good job of
> creating a verity of product sizes. What's wrong with the rest of the
> markets? How about a mini-bond future contract?
>
> Good luck and
good
> trading,
> Ray
Raffurty
>
>
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