Psychological/Mental Pitfalls of a Trader - Oliver Velez

[Reggie]

Psychological /Mental Pitfalls of a Trader :

1. Thinking too much : The very best traders are doers who no longer have to think too much about doing as they can take decisions by looking at the chart and price action.

2. Imagination : Successful traders are rooted in what is real, actual and factual. While looking at the charts, they see what is not what may be or could be They dont imagine or guess or hope, just process and react to facts minute by minute, with little or no imagination.

3. Fear : Fear is the bane of intelligent action. It cripples the mind and judgment process. Fear is a poison which destroys every virtue required to become great in anything. It is one of the greatest impediments to achievement.

4. Greed : Successful trading is a numbers game. Instead of going for one 10 thousand dollar trade all at once, the master trader will go for 10 one thousand dollar trades, which will come more quickly with less risk and higher probability.

5. Information : The less the better. Too much information stimulates imagination which is not good for trading.

6. Expectations : Too high or too many expectations are the mark of a novice trader on their way to being taught to respect the market the hard way.

7. Analysis : Too much analysis will prevent action and increase uncertainty. Every successful trader has a few basic, very simple ways to determine buy, sell, hold or ignore.

8. Hope : Hope is dangerous and enemy of the trader, especially when the position is going against him.

 

[DanPickUp]

Sorry, but this post is not in your mind:

Point one: Not agree as algorithm trading disturbs that kind of trading to many times.

Point two: Again chart. Seems you not have any idea about any other tool. Means: Very limited knowledge for trading as trading not deepens 100 % on charts. (Must be really a past copy post from your side from a pure future trader)

Point three: Repetition again and again. How many times did we hear that in the past?

Point four: Very good comment. Can only press once the thanks bottom for that.

Point five: Agree.

Point six: Not agree. Not because of criticizing your comment. Imagine all the most bad traders in the past: Have they been novices?

No. None of them have been in that situation and even than they lost millions ans billions.

Point seven: Aha, and what are those basics once as you post that comment?

Point eight: Wow, what a find up. Must be really a pro which is posting such comments!

Good trading

 

[TradeJoker]

Nice post Reggie

Psychological /Mental Pitfalls of a Trader :

1. Thinking too much : The very best traders are doers who no longer have to think too much about doing as they can take decisions by looking at the chart and price action.

2. Imagination : Successful traders are rooted in what is real, actual and factual. While looking at the charts, they see what is not what may be or could be They dont imagine or guess or hope, just process and react to facts minute by minute, with little or no imagination.

3. Fear : Fear is the bane of intelligent action. It cripples the mind and judgment process. Fear is a poison which destroys every virtue required to become great in anything. It is one of the greatest impediments to achievement.

4. Greed : Successful trading is a numbers game. Instead of going for one 10 thousand dollar trade all at once, the master trader will go for 10 one thousand dollar trades, which will come more quickly with less risk and higher probability.

5. Information : The less the better. Too much information stimulates imagination which is not good for trading.

6. Expectations : Too high or too many expectations are the mark of a novice trader on their way to being taught to respect the market the hard way.

7. Analysis : Too much analysis will prevent action and increase uncertainty. Every successful trader has a few basic, very simple ways to determine buy, sell, hold or ignore.

8. Hope : Hope is dangerous and enemy of the trader, especially when the position is going against him.

 

[Reggie]

Thanks Dan, for posting your comments.

I think I should have made it clear that these quotes are from the book that I am reading - Tools and Tactics for the Master Day Trader, (where I have given credit to the author in the thread title)

Since you trade options, you have time to think out your strategies which are positional in nature. In contrast a daytrader does not have the luxury of doing analysis. He has to be in and out of the stock in a few minutes, or in a few hours.

I am making a point of posting my notes for the benefit of other traders. It is not important that anyone has to agree to all or any of the points made. However if a trader finds that one point which is useful to him, and sparks a realisation where he can improve his trading or help him to cut down on his loss, it will be worth the effort made for me.

My post are for sharing what I have learnt and am learning. One can take what one find is good and discard the rest.

Good luck as always and happy trading.

Cheers,

Sorry, but this post is not in your mind:

Point one: Not agree as algorithm trading disturbs that kind of trading to many times.

Point two: Again chart. Seems you not have any idea about any other tool. Means: Very limited knowledge for trading as trading not deepens 100 % on charts. (Must be really a past copy post from your side from a pure future trader)

Point three: Repetition again and again. How many times did we hear that in the past?

Point four: Very good comment. Can only press once the thanks bottom for that.

Point five: Agree.

Point six: Not agree. Not because of criticizing your comment. Imagine all the most bad traders in the past: Have they been novices?

No. None of them have been in that situation and even than they lost millions ans billions.

Point seven: Aha, and what are those basics once as you post that comment?

Point eight: Wow, what a find up. Must be really a pro which is posting such comments!

Good trading

 

[DanPickUp]

Thanks Dan, for posting your comments.

I think I should have made it clear that these quotes are from the book that I am reading - Tools and Tactics for the Master Day Trader, (where I have given credit to the author in the thread title)

Since you trade options, you have time to think out your strategies which are positional in nature. In contrast a daytrader does not have the luxury of doing analysis. He has to be in and out of the stock in a few minutes, or in a few hours.

I am making a point of posting my notes for the benefit of other traders. It is not important that anyone has to agree to all or any of the points made. However if a trader finds that one point which is useful to him, and sparks a realisation where he can improve his trading or help him to cut down on his loss, it will be worth the effort made for me.

My post are for sharing what I have learnt and am learning. One can take what one find is good and discard the rest.

Good luck as always and happy trading.

Cheers,

Dear Reggie

"In contrast a day trader does not have the luxury of doing analysis. He has to be in and out of the stock in a few minutes, or in a few hours".

Well said and thanks for your reply.

As you know me as some times a bit very directly forwarded: Yes, we ( Option and Future traders ) have not all the time the same way of thinking and posting. But that is no problem as market has enough space for all of us. For you, me and every body else.

Hope the book gives you much in return for the time you spent with it. I have read a lot of books in my live. Most I learned was by listening to other pros during live trades.

Please move on with your good post and see you around.

Good trading

DanPickUp

 

[Reggie]

Dear Dan,

Thanks for your kind words. You are ofcourse a well respected member of TJ, and from whatever post I have read of yours, I do know you to be direct and to the point. People not knowing you may take offence, but I do know you mean well.

The point of comming to TJ is to learn from the thoughts of other traders. I read many post of interest to me, consider the wisdom of them all, take what I like and ignore the rest.

As you rightly said the market has enough space to accomodate all different styles, and post here, come from all different traders. We need only to be open to listen to the experience of other traders so that we do not have to repeat the same mistake ourselves.

I beleive it is only the words that challenge and provoke us that help us to learn and to grow.

If we read only what we beleive to be right, what have we learnt.? It will be useless and a total waste of time!

BTW I am enjoying the book, and am continuing to make notes for myself. Will post when I have enough collection of the same.



Cheers and happy (stress free) trading.

Dear Reggie

"In contrast a day trader does not have the luxury of doing analysis. He has to be in and out of the stock in a few minutes, or in a few hours".

Well said and thanks for your reply.

As you know me as some times a bit very directly forwarded: Yes, we ( Option and Future traders ) have not all the time the same way of thinking and posting. But that is no problem as market has enough space for all of us. For you, me and every body else.

Hope the book gives you much in return for the time you spent with it. I have read a lot of books in my live. Most I learned was by listening to other pros during live trades.

Please move on with your good post and see you around.

Good trading

DanPickUp

 

[jlmalhotra]

Reggie Try getting a copy of TRADING IN THE ZONE by by Mark Douglas

 

[Anillal]

Psychological /Mental Pitfalls of a Trader :

1. Thinking too much : The very best traders are doers who no longer have to think too much about doing as they can take decisions by looking at the chart and price action.

2. Imagination : Successful traders are rooted in what is real, actual and factual. While looking at the charts, they see what is not what may be or could be They dont imagine or guess or hope, just process and react to facts minute by minute, with little or no imagination.

3. Fear : Fear is the bane of intelligent action. It cripples the mind and judgment process. Fear is a poison which destroys every virtue required to become great in anything. It is one of the greatest impediments to achievement.

4. Greed : Successful trading is a numbers game. Instead of going for one 10 thousand dollar trade all at once, the master trader will go for 10 one thousand dollar trades, which will come more quickly with less risk and higher probability.

5. Information : The less the better. Too much information stimulates imagination which is not good for trading.

6. Expectations : Too high or too many expectations are the mark of a novice trader on their way to being taught to respect the market the hard way.

7. Analysis : Too much analysis will prevent action and increase uncertainty. Every successful trader has a few basic, very simple ways to determine buy, sell, hold or ignore.

8. Hope : Hope is dangerous and enemy of the trader, especially when the position is going against him.

Do not mind me saying sir that all these points are by a daytrader and for a daytrader who, as you said in your later post, does not have the luxury to analyse or think while trading. Daytrading is kind of automatated trading for which all these points are absolutely irrelevant anyway even for consideration. But for positional trader all these points more or less, in this or that way, come into play otherwise he can not be successful in the long run. For example point 4 is good advice for the daytrader or scalper who normally play with high beta scrips or index but is absolute nonsense for a positional trader who intentionally scan for scrips having potential setup for megaprofit target in one entry. I am afraid the writer seems to have very little idea about the actual working of probability mathematics and has just repeated the popular myth. Please do not mind me being in disagreement with these points. Thanks

 

[Reggie]

Thanks JL for the recommendation. Much appreciated.

I do have the PDF of both of Mark Douglas's books - Trading in the Zone and also The Disciplined Trader. In fact, I liked the pdf version so much, that I later orderd the hardcover copies of both.



Just to add a bit further, reading is just one aspect, which has to trickle down in our trading life. However, trading full day, one tends to forget over time the wisdom that has come from the experienced traders. Hence, it is necessary to go thru the books time and again, so as to not forget the lessons.

To that effect, I am making notes for myself, so as to refresh upon the important lessons from time to time. I am also posting on the forum.

And BTW, also have read and recommend the following books to all traders :

Market Wizard series - 3 books, I believe there's a 4th one as well. All written by Jack Schwager

2 books by Nassim Taleb - The black Swan and Fooled by randomness.

Reminiscence of a stock operator - A fictional story based on the life of Jesse Livermore

Trading for a living - Alexander Elder

Cheers and happy trading.

Reggie Try getting a copy of TRADING IN THE ZONE by by Mark Douglas

 

[Reggie]

Thanks Anil,

No, don't mind you speaking your mind. That's perfectly fine.

Its good to be open to ideas if one has to learn. If one sticks to only what one beleives in, without reflecting on alternatives, experiences and teachings, I think growth stop there. It is only when we reflect free of bias and prejudice do we and grow intellectually and in life. And without openess to learning (maybe even ideas contrary to the one's we hold) there will be no difference in the person one was some years back and now. And that would be sad.



From the points made in my post taken from Tools and Tactics for the Master Day Trader, many traders will have differences of opinions based on ones ideas, thinking strategies and experiences.

All that I advocate is that one should take what one finds good and leave the rest. My post I hope is helpful to my fellow traders, and that is the only reason I have it there.

And by the way, you are absolutely right, that as positional player, one has to go for the big swing. A nibble would not make any sense. It is not the fault of the author, but mine. I should have added the word Mental pitfalls of a day trader instead of trader.

Cheers and happy trading.

Do not mind me saying sir that all these points are by a daytrader and for a daytrader who, as you said in your later post, does not have the luxury to analyse or think while trading. Daytrading is kind of automatated trading for which all these points are absolutely irrelevant anyway even for consideration. But for positional trader all these points more or less, in this or that way, come into play otherwise he can not be successful in the long run. For example point 4 is good advice for the daytrader or scalper who normally play with high beta scrips or index but is absolute nonsense for a positional trader who intentionally scan for scrips having potential setup for megaprofit target in one entry. I am afraid the writer seems to have very little idea about the actual working of probability mathematics and has just repeated the popular myth. Please do not mind me being in disagreement with these points. Thanks