Stop trying to outsmart the market. NO ONE knows exactly where it will go. - With each decision you make comes stress:
- The more decisions you make, the more likely you are to be wrong.
- The more decisions you are used to making, the more pressure you’ll put on yourself to make even more decisions.
- No one can be that right.
- Forget about the “whys’ of the market. After all is said and done, the reasons will be known.
- Don’t apply logic. Markets move on emotions — period!
- Plan your trade and trade your plan.
- Reduce the amount of decisions you make.
- Make decisions and live with them (also a life lesson!).
- Good decisions come from experience.
- Experience comes from bad decisions.
Archives of “experience experience” tag
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Stop trying to outsmart the market. NO ONE knows exactly where it will go. Learn from Turtle Trading
“Good judgment comes from experience, and experience comes from bad judgment.” Barry Le Platner
All beginning traders lack one key ingredient for success: experience. Experience is simply exposure to a particular activity over an extended period of time. Good judgment is a by-product of experience and is necessary for success in all areas of life, from driving, cooking, golf, to surgery, etc, as well as, you guessed it, stock and options trading. We can sum it up as follows:
EXPERIENCE = TIME + SPECIFIC ACTIVITY = GOOD JUDGMENT
Unfortunately, very few beginning traders have enough “education” money to succeed at trading because good judgment requires that a person remain focused on a specific activity long enough to draw sound conclusions. In other words, good judgment is based on trust in the specific activity without doubting its overall effectiveness. (more…)
On Psychology
- Stop trying to outsmart the market. NO ONE knows exactly where it will go.
- With each decision you make comes stress:
- The more decisions you make, the more likely you are to be wrong.
- The more decisions you are used to making, the more pressure you’ll put on yourself to make even more decisions.
- No one can be that right.
- Forget about the “whys’ of the market. After all is said and done, the reasons will be known.
- Don’t apply logic. Markets move on emotions — period!
- Plan your trade and trade your plan.
- Reduce the amount of decisions you make.
- Make decisions and live with them (also a life lesson!).
- Good decisions come from experience.
- Experience comes from bad decisions.
The market is both carrot & stick
Over the past year of my trading life I have identified several interwoven cycles of learning. The most obvious being that knowledge and practice combine into your overall understanding. Knowledge alone (book learning) does not equate to understanding – you also need to practice in the market. The two combined give you what we generally call experience. Experience seems to be the thing that makes the difference. Someone who has experience tends to do better over someone who has no experience, in any field. If you were having brain surgery, would you rather have a surgeon doing it who has experience or no previous experience? Yeah, enough said.So over time, our understanding increases (our experience). But you may also notice that your ability to act on what you know seems to lag far behind, and this can be incredibly frustrating and puzzling. Don’t you wonder at it, every time you make the same stupid mistake over and over? Whats going on here?
The fact is that we have two brains (more actually, but lets stick to two for now) – an intellectual brain and an emotional brain. In the East, there is a common analogy of rider and horse. The horse (emotional brain) is stupid and only knows such things as fear, hunger, punishment and reward. The horse understands the difference between a carrot and a stick, but not much else. The rider struggles to make the horse go where he wants to go.
This is our problem in trading. Our emotional brain (the horse) understands fear and greed, and unfortunately these fight or flight level of instincts are stronger (and faster) than our intellectual brain; they have to be. If a mugger jumps out of the bushes you don’t have time to decide if its a mugger or your friend playing a trick on you, you just run.
In the market however, this mechanism is the cause of all our woes. The market provides both a carrot and a stick. A sudden break out (carrot) lures us into buying long, and then suddenly reverses and stops us out (stick). We are lead all over the charts in a random walk, one minute its carrot, the next minute its stick; we are the dumb money.
Who then is the smart money? Surely based on the above it is simply those individuals who can actually control the horse and act according to a trading plan. There is no conspiracy by the major institutions to steal your money from you – you simply hand it over to them or other traders (and they happen to be willing to take it). In the case of the smart money, the rider is in charge, but in the case of the dumb money the horse goes where ever his instincts take him, and the rider simply hangs on (until he falls off that is).
Trading psychology
Stop trying to outsmart the market. NO ONE knows exactly where it will go. - The more decisions you make, the more likely you are to be wrong.
- The more decisions you are used to making, the more pressure you’ll put on yourself to make even more decisions.
- No one can be that right.
- Good decisions come from experience.
- Experience comes from bad decisions.
Good Points on Trading psychology
- Stop trying to outsmart the market. NO ONE knows exactly where it will go.
- With each decision you make comes stress:Forget about the “whys’ of the market. After all is said and done, the reasons will be known.
- The more decisions you make, the more likely you are to be wrong.
- The more decisions you are used to making, the more pressure you’ll put on yourself to make even more decisions.
- No one can be that right.
- Don’t apply logic. Markets move on emotions — period!
- Plan your trade and trade your plan.
- Reduce the amount of decisions you make.
- Make decisions and live with them (also a life lesson!).
- Good decisions come from experience.
- Experience comes from bad decisions.
