October 29, 2006
I came across this article – 30 Days to Success – a couple of weeks ago through a link post by Trader Mike. I really like the concept of the ’30 day trial’. To sum up the concept behind it: you give something a shot for 30 days and after that the chances that this has become a habit for you are quite good.
When reading the article I remembered a chapter of “The Trading Athlete” (another pretty good read on psychology in trading – it compares professional sports to trading): the authors say that discipline can be learned thorugh establishing a routine. Back then reading that relieved me, since I already knew and still know that discipline is one of my big problems. I like to make plans and set up to-do lists I plan on doing on an everyday basis, but never stick to it longer than a couple of days.
However as I said, the authors suggest that discipline can be learned thourgh establishing a (daily) routine that sooner or later becomes a habit. The problem is that starting such a routine with the goal to do this on an everyday basis (without setting an endpoint) and the superior goal to improve your self-discipline through it, will make the whole task really difficult to maintain since this is a goal that is way out of reach in the beginning.
Splitting up the goals into smaller steps might help. Pavlina wanted to become a veggie. He says that after being a veggie for 30 days, it became natural to him.
So how about setting up a daily preperation list and limiting it to 30 days? Maybe after 30 days it is natural to me. If it is, it would already have helped me a lot.
October 28, 2006
This Chapter starts with a little foreword where Douglaes picks up what he said earlier about making a future projection of oneself as a consistent successful trader. In order to achieve that, he suggests to compare the situation with a sculptor. An artist creating a sculpture needs a medium. He suggests to use your mental environment as a medium: you can restructure and install the beliefs and attitudes you need to achieve the ultimate goal.
This ultimate goal is consistency. Two fundamental characteristics to consistent trading results are keeping yourself from committing fear-based errors and becoming reckless. Avoiding these will open the fullest potential of trading opportunities to you. Two important statements from Douglas:
- “Once the fear is gone, there just won´t be a reason to make these errors and, as a result, they will virtually disappear from your trading.”
- ” …eliminating fear is only half the equation. The other half is the need to develop restraint[...] to counteract the negative effects of euphoria or the overconfidence[...]. For a trader, winning is extremely dangerous if you haven´t learned how to monitor and control yourself.”´
October 11, 2006
Business in my job has been picking up lately and since I had to do some late shifts I will probably not be able to post Chapter 3 & Comments before the weekend. See you then.
UPDATE: Yes, I am still there. I hate lame excuses, but a flu struck me down for over a week and after that I had to represent my company at an exhibition. Summary of Chapter 3 will definately be up tomorrow.
October 9, 2006
I changed my mind concering the privacy of the blog ( I know, that didn´t take long). I think it could be interesting and thought provoking to receive comments and other opinions on the entries I post. Therefore I will be trying to get the blog onto the technorati index (which seesms to be difficult at the moment since I cannot register for whatever reasons).
October 9, 2006
Unlimited freedom coupled with “…people can´t exactly work on overcoming something if they don´t even know it´s a problem.” describes it best. Up until I read that I had no problem because I didn´t even know there was a problem.
Trading alone means virtually unlimited freedom, now when I take that one step further to ‘trading for a living’ that would mean even more freedom with even fewer rules and boundaries ( because no job anymore). But, when I am unable to be a consistent trader with my job, how could I master ‘(day-)trading for a living’ with even less boundaries and rules? Or am I taking it in the wrong direction here? Would less restrictions (through quitting my job) mean also less restrictions in my trading?
I am not sure. From the experience of my full-time experiement I would say that having the freedom of having no job made it not easier, because I missed a daily routine. I tried to establish one, but in retrospective that was only half-hearted. I know that I need to make changes in my mental structure(trading), but I now know that I also have to make some changes to the mental structure when life in general concerned (daily routine!).
I need to make changes, and to make them effectively I need to do some more thinking about the problems he outlines. I know them all and I´ve experienced them all. Especially problem no.1 “The Unwillingness to create rules” is one I have always had troubles with. I absolutley agree that the resistance against creating rules is more often subtle than overt.
When I plan to create a set of rules, I feel lazy. I find a thousand other things I need to do first, hardware problems that need a souluten first being one of my favorites. In the end I always sit there, feeling bad because once again I didn´t get it done. But at the same time I am not worrying too much about it, since by myself I think I still can trade without a set of rules until I find a few minutes anytime soon. There I have the problem with the unlimited freedom again: Nobody forbids trading without a set of rules. I myself have to make my set of rules. If I don´t do it, nobody else will force me to do it. If I don´t do it, nobody else will do it for me.
I think I am currently trading without taking full responsibility, because I don´t trade with a limited set of variables. Why? Simply because it is easier – I can take credit for good trades and blame somebody else, the market or an unknown variable for bad trades. Contrary to that I want repsonsibility, because it also means independency. I don´t want to be dependent on any tippster, I want to do my own research and find my own setups on a consistent basis.
October 8, 2006
The 2nd Chapter starts with something important and intersting: “Why are so few people successful in trading?” – “Trading is an activity that offers the individual unlimited freedom of expression, a freedom of expression that has been denied most of us for most of our lives. There are very few boundaries on how we can choose to express ourselves (some formalities, e.g. becoming an exchange member or funding an account exist).”
“Unlimited possibilities coupled with the unlimited freedom to take advantage of those possibilities present the individual with unique and specialized psychological challenges, challenges that very few people are properly equipped to deal with, or have the awareness of for that matter, and people can´t exactly work on overcoming something if they don´t even know it´s a problem.”
Douglas goes on that an internal mental structure is needed, that “provides the trader with the greatest degree of balance between the freedom to do anything and the potential that exists to experience both the financial and psychological damage that can be a direct result of that freedom. But creating a mental structure can alone be very difficult, especially if what you want to instill is in conflict what you already believe.”
He then explains where our needs and desires come from and that these are generated in our mental environment while they are fulfilled in the exterior environment. “As long as these two environments are in correspondence with one another, we´re in a state of inner balance (happy, satisfied). If these two environments are not in correspondence, we experience emotional pain (anger, frustration, dissatisfaction).”
October 7, 2006
All the concepts outlined in Chapter 1 make perfect sense to me.
As already noted in the original post, I definitely fall into group 2. I know that being consistent and therefore successful in the markets has absolutely nothing to do with being more intelligent, smarter or whatever. I personally know one guy who started out with 50 grands and took them to 15 million within 4 years and he had no higher degree – he didn´t even go to college. Other people with higher degrees or people who were/are extraordinary successful in their businesses terribly failed in the markets – one guy blew out >500 k within 3 months.
The market couldn´t care less about your education and that is one of the main reasons why I keep coming back. I have no higher education. I am not smart. I am not that intelligent. And I am not the high-profiled analyst / strategist. But I know from my experience and from the people I personally know, that education doesn´t matter. It´s about your mind-set: you got the right one, you´re ahead. And I will keep coming back.
I am not reading this book for the first time and I have already been doing lots of thinking and reflecting. With the knowledge gained in the book I am certainly better prepared and reduced emotional discomfort. But especially during the first couple of trades, everytime the market ticked against me it was like cutting myself for every bad tick.
Remember? There are no ‘good’ or ‘ bad’ ticks. Actually this should be clear because it is so damn obvious, but when I came across this for the first time I felt like somebody turned the lights on.This is something that I absolutely need to incorporate into my trading environment until I have adopted it as a belief / concept and I am quite sure that I will be able to transfer energy from one of my negative believes into this positive (because it reminds me of the neutrality of the markets) concept.
It´s a numbers game, it´s about probabilities – the market has nothing against me, he is just there, ticking up and down, up and down.He couldn´t care less about what I am thinking of his movements, patterns and so on.Understanding and incorporating this is a – if not the – keypoint:with this concept I can learn to accept that the market is doing what he is doing: he can stall, he can slowly trend up or down, he can just im- or explode 50 or 100 points, whatever. It doesn´t matter as long as I accept the fact that everything is possible and that the information he generates is 100% neutral. The Universe is not circling around me and the market is not dropping 50 points because I am long.