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The Ultimate Psychological Block

  
  Education
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It’s my belief that the ultimate psychological block in trading is the ability to consistently follow a set of rules for a long period of time. If you can do this, then you have the Trading Psychology part mastered (as this would also take care of the Fear and Greed aspects).

For some reason, I personally find this simple task outrageously difficult to accomplish. I can see that there are two things that cause this, which are what you might call GOAL DECAY (I just invented that term) and NEW DATA.

GOAL DECAY is when you set your goal on Monday, and it feels meaningful and purpose driven, but by Friday you’ve lost the plot. It seems stupid, pointless, wrong etc. Or else you just plain forgot… Your trading goals start off with energy, but then the energy quickly dissipates and the goal loses force. At this point you are ripe for the second issue:

NEW DATA – Once your previous goal has decayed, your then happen upon or else purposefully go looking for NEW DATA. This new data can also spring up from within your own mind as some great new idea and you set a new goal.

Then this cycle repeats. Somehow going around and around on this Ferris Wheel has to come to an end and some clearly defined goals need to be set. I guess in my previous post I alluded to this in terms of ‘sorting out’ all of the information and techniques I have acquired.

10 Questions for Trend Followers ,Yes Just Answer Them

  
  Education
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Now, let’s get practical. Answer the following five questions, and you have a trend following trading system:

1. What market do you buy or sell at any time?
2. How much of a market do you buy or sell at any time?
3. When do you buy or sell a market?
4. When do you get out of a losing position?
5. When do you get out of a winning position?

Said another way (Bill Eckhardt inspired):

1. What is the state of the market?
2. What is the volatility of the market?
3. What is the equity being traded?
4. What is the system or the trading orientation?
5. What is the risk aversion of the trader or client?

You want to be black or white with this. You do not want gray. If you can accept that mentality, you have got it.

State of Mind

  
  Education
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The goal of any trader is to turn profits on a regular basis, yet so few people ever really make consistent money as traders. What accounts for the small percentage of traders who are consistently successful is psychological—the consistent winners think differently from everyone else.

The defining characteristic that separates the consistent winners from everyone else is this: The winners have attained a mind-set—aunique set of attitudes—that allows them to remain disciplined, focused,and, above all, confident in spite of the adverse conditions.

Those traders who have confidence in their own trades, who trust themselves to do what needs to be done without hesitation, are the ones who become successful.They
no longer fear the erratic behavior of the market. They learn to focus on the information that helps them spot opportunities to make a profit, rather than focusing on the information that reinforces their fears.

You don’t need to know what’s going to happen next to make money; anything can happen, and every moment is unique, meaning every edge and outcome is truly a unique experience.

The trader that it’s his attitude and “state of mind” that determine his results.

Philosophical speculation

  
  Education
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I used to do a lot of philosophical speculation as a young man. I wasted a large part of my youth regurgitating certain ideas. Then I discovered that one can learn a great deal more through action than through contemplation. So I became an active thinker where my thinking played an important role in deciding what actions to take and my actions play an important role in improving my thinking. This two-way interaction between thinking and action became the hallmark of my philosophy and the hallmark of my life. – George Soros

speculation

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