M6 - Man, Mind, Money, Markets, Method & Madness
- Thread starter DSM
- Start date
Snake.Head
Being disciplined means maintaining your integrity with yourself, your system and your rules.
Generally we Traders do not have any bosses to supervise us.So we have to supervise ourselves."Doing the right thing even when no one is watching"
Discipline is the hardest arsenal of trading.It is a continuous process and never stops.
Many successful traders after decades of hard-work,have blown off their accounts in just a day or two for lack of discipline.Discipline is a journey not a destination.Please check this thread for stories posted by DSM regarding traders successes and failures.
Also discipline is always developed by self motivation.Only if you decide you can be disciplined.
Almost certainly,all of us are working hard to develop that area.
Being disciplined means maintaining your integrity with yourself, your system and your rules.
Generally we Traders do not have any bosses to supervise us.So we have to supervise ourselves."Doing the right thing even when no one is watching"
Discipline is the hardest arsenal of trading.It is a continuous process and never stops.
Many successful traders after decades of hard-work,have blown off their accounts in just a day or two for lack of discipline.Discipline is a journey not a destination.Please check this thread for stories posted by DSM regarding traders successes and failures.
Also discipline is always developed by self motivation.Only if you decide you can be disciplined.
Almost certainly,all of us are working hard to develop that area.
Last edited:
Discipline in my view, can be broken down into components. Just a few thoughts on the same :
* Patience : Ability to wait, wait and wait for right setup to enter.
* Systematic : No impulsive trading.
* Introspective : Reflection/Analysis of each trade EOD.
* Methodical : Trade basis well define criteria.
* Rule base : Has well defined rules for entries, exits, SL's & trailing SL.
* Focused : Does not waste time during important/trading hours.
* Persistent : Finds weakness in decision making, rule following.
* Analytical : Spends enough chart-time EOD for next day.
* Evolving : Studies trades that are missed, and reasons for the same.
All of these and possibly many more can be added to these. My 2C.
* Patience : Ability to wait, wait and wait for right setup to enter.
* Systematic : No impulsive trading.
* Introspective : Reflection/Analysis of each trade EOD.
* Methodical : Trade basis well define criteria.
* Rule base : Has well defined rules for entries, exits, SL's & trailing SL.
* Focused : Does not waste time during important/trading hours.
* Persistent : Finds weakness in decision making, rule following.
* Analytical : Spends enough chart-time EOD for next day.
* Evolving : Studies trades that are missed, and reasons for the same.
All of these and possibly many more can be added to these. My 2C.
Some thoughts :
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500.
(bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved.
In trading have learnt the important aspect of making quick decisions. Sometimes, they workout, and sometimes they don't. Most of the quick decisions are made in real time basis existing RR as against that what is analysed. Have to accept the fact.
Another reflection of mine has been thinking of trading as an analogy to cricket. Centuries are scored with 1 and 2 and 3's... and not only with 4's and 6's. It is important to collect singles and doubles whenever available, and not think in terms of boundaries to score a century. In facts, accumulating the 1's and 2's help to build up the score to a level, where bigger risk can be taken.
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500.
(bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved. In trading have learnt the important aspect of making quick decisions. Sometimes, they workout, and sometimes they don't. Most of the quick decisions are made in real time basis existing RR as against that what is analysed. Have to accept the fact.
Another reflection of mine has been thinking of trading as an analogy to cricket. Centuries are scored with 1 and 2 and 3's... and not only with 4's and 6's. It is important to collect singles and doubles whenever available, and not think in terms of boundaries to score a century. In facts, accumulating the 1's and 2's help to build up the score to a level, where bigger risk can be taken.
Bought Asian Paints CE 500 @ 13.95 Its a directional call, and risky, since the script traded -2.40% today. The reason for buying is that I expect it to hit 550 which depending upon time factors should value call @ 25-27. Will use SL of 6.50 to exit. Let's see what happens....
Some thoughts :
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500. (bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved.
In trading have learnt the important aspect of making quick decisions. Sometimes, they workout, and sometimes they don't. Most of the quick decisions are made in real time basis existing RR as against that what is analysed. Have to accept the fact.
Another reflection of mine has been thinking of trading as an analogy to cricket. Centuries are scored with 1 and 2 and 3's... and not only with 4's and 6's. It is important to collect singles and doubles whenever available, and not think in terms of boundaries to score a century. In facts, accumulating the 1's and 2's help to build up the score to a level, where bigger risk can be taken.
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500.
(bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved. In trading have learnt the important aspect of making quick decisions. Sometimes, they workout, and sometimes they don't. Most of the quick decisions are made in real time basis existing RR as against that what is analysed. Have to accept the fact.
Another reflection of mine has been thinking of trading as an analogy to cricket. Centuries are scored with 1 and 2 and 3's... and not only with 4's and 6's. It is important to collect singles and doubles whenever available, and not think in terms of boundaries to score a century. In facts, accumulating the 1's and 2's help to build up the score to a level, where bigger risk can be taken.
curious to know, weather your decision was in some way influenced by some posts,after you posted your trade yesterday,combined with -ve opening of Nifty today?
Some thoughts :
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500. (bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved.
[/COLOR][/B]
Exited Asian Paint CE 500 @ 13 - the lowest price for the day soon after open, for a loss of about Rs. 500.
(bought yesterday at 13.95) The CE did make a high of 21 and is currently trading at 18.75. Will reflect on the learning of the same and look at the 'why' for the exit and if the process of exits can be improved. [/COLOR][/B]
Jetking, Ultimately I have to take responsibility for my trading decisions. While trying to be objective (which no doubt is an everyday process) in trading we have to move quickly. Basically if the MTM is -ve, I cast all analysis aside, and I look to exit. So if the CE had opened slightly +ve instead of slightly -ve, I would have held on....
The learning from this is that I have to give the trade an additional bit of wriggle room..... So if the MTM was -ve 500, I should have give another 500 odd bucks to see if it moved in my favour. Am updating my rules.....
Guess nobody has to read this more than me.....
Trading Rules: Logic Wins; Impulse Kills - by Boris Schlossberg and Kathy Lien
http://www.investopedia.com/university/forex-rules/rule2.asp
More money has been lost by trading impulsively than by any other means. Ask a novice why he went long on a currency pair and you will frequently hear the answer, "Because it has gone down enough - so it's bound to bounce back." We always roll our eyes at that type of response because it is not based on reason - it's nothing more than wishful thinking.
We never cease to be amazed how hard-boiled, highly intelligent, ruthless businesspeople behave in Las Vegas. Men and women who would never pay even one dollar more than the negotiated price for any product in their business will think nothing of losing $10,000 in 10 minutes on a roulette wheel. The glitz, the noise of the pits and the excitement of the crowd turn these sober, rational businesspeople into wild-eyed gamblers. The currency market, with its round-the-clock flashing quotes, constant stream of news and the most liberal leverage in the financial world tends to have the same impact on novice traders.
Trading Impulsively Is Simply Gambling. It can be a huge rush when a trader is on a winning streak, but just one bad loss can make the same trader give all of the profits and trading capital back to the market. Just like every Vegas story ends in heartbreak, so does every tale of impulse trading. In trading, logic wins and impulse kills. The reason why this maxim is true isn't because logical trading is always more precise than impulsive trading. In fact, the opposite is frequently the case. Impulsive traders can go on stunningly accurate winning streaks, while traders using logical setups can be mired in a string of losses. Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy. Let's take a look at how each trader may operate in the market. (To get a better understanding of traders, check out Understanding Investor Behavior.)
The Impulsive Trader. Trader A is an impulsive trader. He "feels" price action and responds accordingly. Now imagine that prices in the EUR/USD move sharply higher. The impulsive trader "feels" that he has gone too far and decides to short the pair. The pair rallies higher and the trader is convinced, now more than ever, that it is overbought and sells more EUR/USD, building onto the current short position. Prices stall, but do not retrace. The impulsive trader, who is certain that they are very near the top, decides to triple up his position and watches in horror as the pair spikes higher, forcing a margin call on his account. A few hours later, the EUR/USD does top out and collapses, causing Trader A to pound his fists in fury as he watches the pair sell off without him. He was right on the direction but picked a top impulsively, not logically.
The Analyzer. On the other hand, Trader B uses both technical and fundamental analysis to calibrate his risk and time his entries. He also thinks that the EUR/USD is overvalued, but instead of prematurely picking a turn at will, he waits patiently for a clear technical signal - like a red candle on an upper Bollinger Band® or a move in the relative strength index (RSI) below the 70 level - before he initiates the trade. Furthermore, Trader B uses the swing high of the move as his logical stop to precisely quantify his risk. He is also smart enough to size his position so that he does not lose more than 2% of his account should the trade fail. Even if he is wrong like Trader A, the logical, Trader B's methodical approach preserves his capital, so that he may trade another day, while the reckless, impulsive actions of Trader A lead to a margin call liquidation. (To read more on technical and fundamental analysis, see Technical Analysis: Fundamental Vs. Technical Analysis.)
The point is that trends in the market can last for a very long time, so even though picking the very top may bring bragging rights, the risk of being premature may outweigh the warm feeling that comes with gloating. Instead, there is nothing wrong with waiting for a reversal signal to reveal itself first before initiating the trade. You may have missed the very top, but profiting from up to 80% of the move is good enough in our book. Although many novice traders may find impulsive trading to be far more exciting, seasoned pros know that logical trading is what puts bread on the table.
Trading Rules: Logic Wins; Impulse Kills - by Boris Schlossberg and Kathy Lien
http://www.investopedia.com/university/forex-rules/rule2.asp
More money has been lost by trading impulsively than by any other means. Ask a novice why he went long on a currency pair and you will frequently hear the answer, "Because it has gone down enough - so it's bound to bounce back." We always roll our eyes at that type of response because it is not based on reason - it's nothing more than wishful thinking.
We never cease to be amazed how hard-boiled, highly intelligent, ruthless businesspeople behave in Las Vegas. Men and women who would never pay even one dollar more than the negotiated price for any product in their business will think nothing of losing $10,000 in 10 minutes on a roulette wheel. The glitz, the noise of the pits and the excitement of the crowd turn these sober, rational businesspeople into wild-eyed gamblers. The currency market, with its round-the-clock flashing quotes, constant stream of news and the most liberal leverage in the financial world tends to have the same impact on novice traders.
Trading Impulsively Is Simply Gambling. It can be a huge rush when a trader is on a winning streak, but just one bad loss can make the same trader give all of the profits and trading capital back to the market. Just like every Vegas story ends in heartbreak, so does every tale of impulse trading. In trading, logic wins and impulse kills. The reason why this maxim is true isn't because logical trading is always more precise than impulsive trading. In fact, the opposite is frequently the case. Impulsive traders can go on stunningly accurate winning streaks, while traders using logical setups can be mired in a string of losses. Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy. Let's take a look at how each trader may operate in the market. (To get a better understanding of traders, check out Understanding Investor Behavior.)
The Impulsive Trader. Trader A is an impulsive trader. He "feels" price action and responds accordingly. Now imagine that prices in the EUR/USD move sharply higher. The impulsive trader "feels" that he has gone too far and decides to short the pair. The pair rallies higher and the trader is convinced, now more than ever, that it is overbought and sells more EUR/USD, building onto the current short position. Prices stall, but do not retrace. The impulsive trader, who is certain that they are very near the top, decides to triple up his position and watches in horror as the pair spikes higher, forcing a margin call on his account. A few hours later, the EUR/USD does top out and collapses, causing Trader A to pound his fists in fury as he watches the pair sell off without him. He was right on the direction but picked a top impulsively, not logically.
The Analyzer. On the other hand, Trader B uses both technical and fundamental analysis to calibrate his risk and time his entries. He also thinks that the EUR/USD is overvalued, but instead of prematurely picking a turn at will, he waits patiently for a clear technical signal - like a red candle on an upper Bollinger Band® or a move in the relative strength index (RSI) below the 70 level - before he initiates the trade. Furthermore, Trader B uses the swing high of the move as his logical stop to precisely quantify his risk. He is also smart enough to size his position so that he does not lose more than 2% of his account should the trade fail. Even if he is wrong like Trader A, the logical, Trader B's methodical approach preserves his capital, so that he may trade another day, while the reckless, impulsive actions of Trader A lead to a margin call liquidation. (To read more on technical and fundamental analysis, see Technical Analysis: Fundamental Vs. Technical Analysis.)
The point is that trends in the market can last for a very long time, so even though picking the very top may bring bragging rights, the risk of being premature may outweigh the warm feeling that comes with gloating. Instead, there is nothing wrong with waiting for a reversal signal to reveal itself first before initiating the trade. You may have missed the very top, but profiting from up to 80% of the move is good enough in our book. Although many novice traders may find impulsive trading to be far more exciting, seasoned pros know that logical trading is what puts bread on the table.
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