- Unless you nail it right exactly, you will feel frustration / regret / fear in all other outcomesTraders are always choosing among the lesser of the evils. Feeling regretful is practically inescapable.
- When you get the trade direction wrong
- When you got out too early
- When you got out too late
- When you miss a trade
- Regret Theory says that people have the desire to avoid future regret when they make their decisions.
Archives of “Philosophy of mind” tag
rssSelf-awareness
1) the recognition that our thinking and our emotions are intertwined and both influence our perception and judgment that leads to our decisions and actions (this view also happens to be consistent what the leading brain scientists are now saying)
2) much of our motivation – the intertwined thinking/emotion that drives our behavior – is actually subconscious, e.g. we assume we are trading the market but on other levels we are also trading our P&L and our feelings about our P&L (and what our P&L represents to us) is just one example.
3) when we understand (self-awareness) the underlying/subconscious motivation for our behavior we are in a better position to choose an alternative.
Obviously, nothing can guarantee change or improvement (contrary to many claims made by pseudo “experts”), but at least an approach that emphasizes expansion of awareness puts the odds in your favor. (more…)
The Man Who Thinks He Can- Written some 100 years ago , which nicely captures the value of 'Self Belief'
The Man Who Thinks He Can.
By Walter D.Wintle.
If you think you are beaten, you are
If you think you dare not, you don’t,
If you like to win, but you think you can’t
It is almost certain you won’t.
If you think you’ll lose, you’re lost
For out of the world we find,
Success begins with a fellow’s will
It’s all in the state of mind.
If you think you are outclassed, you are
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize.
Life’s battles don’t always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN!
If you think you dare not, you don’t,
If you like to win, but you think you can’t
It is almost certain you won’t.
If you think you’ll lose, you’re lost
For out of the world we find,
Success begins with a fellow’s will
It’s all in the state of mind.
If you think you are outclassed, you are
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize.
Life’s battles don’t always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN!
Traders Must Read ……………….EveryDay
One Liners for Traders
- “The paradox is realizing that being in control is about letting go.”
- “Even if you give your investments to others to manage, you are wholly responsible for that decision.”
- Letting go of your ego doesn’t create self-esteem. In order to trade soundly, you must lose your ego AND replace it with sound, prepared, professional judgment.
- The conscious mind assembles the data. The unconscious mind notices the patterns, makes the connections and guide your judgment.
- “The depth of your emotional resources is as important as your finances.”
- “The market is a collection of beliefs.”
- There is no content, only context.
- “If we ever fought battles, the main opponent was ourselves.”
- “If you persistently adopt someone else’s view, expect their performance. In that case, why don’t you just put the money into one of the thousands of funds and crystallize your implicit delegation of responsibility.”
Philosophical speculation
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
4 Main Reasons Why Traders Fail
# They do not understand that the markets are a mirror of life on a chart. Markets are a living thing and reflect crowd behaviour and your own, view of the world. CAVEAT: How you see yourself and the world is buried deeply in the subconscious part of your mind.
# Traders do to understand their own authentic personality hence they find it hard to settle on a trading style. Know yourself well, it makes THE difference between long term trading success or failure.
# Traders fail to notice how they transfer the feelings and emotions of the collective consciousness to their trading believing that their emotions and feelings are their own. Self awareness brings market knowledge, literally.
# Traders have subconscious mental blocks which they supress with superficial positive thinking and learned discipline. We all have blocks, to think that you are the one who has not is dangerous arrogance. Welcome to the experience of oneness!
6 Elements of Trading
1) What you’re trading – Why are you selecting one instrument to trade (one stock, one index) versus others? Which instruments maximize reward relative to risk?
2) How much you’re trading – How much of your capital are you going to allocate to the trade idea versus other ideas?
3) Why you’re trading – What is the rationale for the trade? Why does the trade idea provide you with an “edge”?
4) What will take you out of the trade – What would lead you to determine that your trade idea is wrong? What would tell you that the trade has reached its profit potential?
5) Where you will enter the trade – Given the criteria that would take you out of the trade, where will you execute your idea to maximize the reward you’ll obtain relative to the risk you’ll be taking?
6) How you will manage the trade – What would have to happen to convince you to add to the trade, scale out of it, and/or tighten your stop loss?
A beginning trader will take time to answer these questions, much as a new driver will need time to properly steer and brake a car. With experience, however, planning can occur very quickly, as much of a trader’s homework is accomplished before the market opens. For instance, before the open, I already have identified the short- and intermediate-term trend of the market; pivot points that will serve as profit targets; and volatility that will guide my position sizing. From there, much of the trade is a function of pattern recognition and execution–seeing selling or buying dry up in a rising or falling market and entering the trade at a level in which I’ll make more by hitting my target than by hitting my stop.
Passion & Hope -Two Key Drivers
The two key drivers of success in any endeavor is passion and hope.
Passion creates the energy to do what we need to do to get to where we want to go. Many times money is just the side effect of the work we do driven by our own passion and desire for success with little thought given to the monetary reward that could happen during the battle for success. When we are passionate about something we just love doing it, we just love the game itself and everything about being in that game and playing it. True professionals do not use their bank account as a daily motivator to work, they are doing what they were born to do, they are just being who they are and what they are.
Hope is what gets us up in the morning and keeps us working toward our goals. Hope gives us the ability to do hard work today for a potential reward in the future. Hope sees an account at $0 and sees that it could be over a million dollars if the right plan is followed. Hope gives us the energy to work hard in our present circumstances believing that we are receiving an education that will show us the path to where we want to be. The greatest cause of depression is being realistic about the present and future and the loss of hope in tomorrow.
being better than today. Know what you want, and understand how to get there. If you are willing to do what you have to do and be willing to pay the price that your goal costs you can have what you want.
“A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do.”
― Bob Dylan
Simple Things For Creating A Great Trade
Research is showing how powerful our mental context is in making risk decisions. But the thing is, most traders think mental context is about what they know – their insights, their indicators and their experience. In reality, it goes much further and deeper than that.
Recent experience that seems totally unrelated to trading counts. For example, if you work on a desk, then the adminis-trivia and in particular, its effect on your attitude will influence your trading. If your boss or colleague seemed to criticize – or compliment – you, it will influence your trading.
College students have been shown to walk slower after hearing the words gray hair, glasses, knee replacement. Interviewers have shown they can feel differently about a candidate depending on the temperature of the coffee cup they just held. Our unconscious sensory and information machine is working all of the time. It pays to make it an asset and not a liability. (more…)
Dr.Elizabeth Lombardo, Better Than Perfect-Book REVIEW
Perfectionism as it is usually understood can be a terrible curse, especially for a trader. It leads a person to act out of fear rather than passion—and sometimes not to act at all (why bother? I’ll botch it anyway). The perfectionist has both an “incessant drive to control the future” and “the unsatisfying feeling that, no matter how hard [he tries, he] will always come up short.” (p. 7)
In Better Than Perfect: 7 Strategies to Crush Your Inner Critic and Create a Life You Love (Seal Press, forthcoming September 23) Elizabeth Lombardo, a clinical psychologist and author of the national bestseller A Happy You, tackles the problems perfectionists create for themselves and suggests ways to overcome them.
For the most part Lombardo’s solutions involve reframing attitudes and motivations. Take the fear/passion dichotomy. “When you are fueled by fear, you focus on what you don’t want. Your goal is to do everything in your power to reduce the possibility of an undesired outcome. … Just by switching your perspective from one of fear to one of passion—working toward a desired outcome instead of avoiding an unwanted result—you can begin to feel more motivated, engaged, positive, and hopeful.” (p. 50)
Perfectionists are inclined to compare themselves to others and to judge themselves negatively. Of course, it’s not only perfectionists who do this; they are simply more intensely competitive. As Lombardo says, “Perfectionists don’t just want to ‘keep up with the Joneses,’ they want to kick the Joneses’ butts!” (p. 185) Well, that sounds more like trader talk; maybe a dose of perfectionism is actually a good thing, at least professionally. Lombardo admits that “many champion athletes, prominent scientists, and celebrities demonstrate perfectionist traits.” (p. 6)