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I am going to open Pandora's box ( excuse the pun ) with the following.
Trading as far as all the good work done here is primarily a left brain activity. Linear. This of course makes people comfortable that they have the church of science ( rationality) in their corner and ultimately this truth will persevere. But logic is only part of the human experience. There is a huge untapped resource in the right hemisphere. And a natural ability our intuition that, while not quantifiable, is often more trustworthy than binary data. As the saying goes the mind thinks but the body knows.
Many years ago i attended a chat room session with Linda Raschke. A veteran trader and apparently very successful. She said something that afternoon that just chilled me. " After all these years i am still not really sure what I am doing" This coming from a Market Wizard. So something else was operating. Even she could not package her belief system of trading into something quantifiable. Intuition. Gut check. Feel. Energy. These are resources that our bodies as energetic beings can we can access. ( i do not confuse any of those with hope . That is not the same animal ). But we like predictability. A sense of safety. That is the great illusion and also suck the experience of life right out of you. The truth is that this is ultimately a subjective game. New traders need to come to terms with that. You will never really know what you are doing.
I think this is important because market flow is ultimately is energy aka: quantam mechanics ( i know this term is overused ). Regardless when we impose a belief system on it of classical mechanics, hard stop losses for example, we are trying to put a square peg in a round hole. Nature does not work that way. When we screw with an eco system we know the law of unitended consequences is always lurking. We are nature.
I remember call Don Miller saying best indicator of the market was to ask a child which way is it going? Oh up! That rational analysis is not the truth is the 800lb gorilla in the room nobody wants to acknowledge. Try looking at your charts with the eyes of a child. Good trading.
For starters. Look at a chart and simply ask what does this market feel like? Put an arrow on it and then keep a record after a few weeks.
Left brain turned off. One day I had eaten part of a hash brownie before the market opened. Needed some sweets with my espresso. As it turned out i had to just sit on my hands as it was stronger than i expected. I was part of a MP trading room. All experienced teachers and traders. So i just sat back, watched and listened. It was a comedy of the absurd. Not that they were fools but they were so handcuffed to their training and analysis that absolutely refused to buy a market that only wanted to go up. No they were only going to sell it.
Everything from, MP distribution shows buyers will vanish up here, this is overbought now for five days, delta is at all time high, we are sigma 4 relative to vwap, fundamentals are all nonsense as this market is overvalued, MACD, blah blah blah. I am dying laughing watching them send their troops * cash * out to be slaughtered again and again. THis market only wanted to go up. That was the truth. Buy and close your eyes would have worked better. But my left brain was so off while high that i could only see without all the wheels turning of analysis. I am not suggesting get high just simply turn off the little general of perpetual thinking who will not simply let you just see.
To enter the kingdom of heaven you must see the world through the eyes of a child. * ( not sure which book of the Gospels that came from but i know who said it )
This thread is currently in the "Platforms and Indicators" section. I am guessing it was created there by mistake and should be moved to the Journals section.
Do you want it moved to regular Journals or Elite Journals?
Sorry about that. Regular journals makes the most sense. I assume you will redirect? I guess my thesis was intuition is an indicator and hence my choice.
I'll throw a few of my opinions out there to help get things get moving along. First, I doubt this topic will gain much traction because IMO most traders on these forums run and hide under a rock when someone starts talking about the psychological aspects of trading. New traders seem to have a one track mind, make money. And as you mentioned most believe that goal will be accomplished by utilizing the brute strength of the right side of the brain! Yes, a trader most definitely needs to bring an "edge" to the party, without an "edge" monetary success (even limited success) will elude traders like slippery fish. So let's assume Newbie has exercised the right side of his brain, has an edge and is enjoying limited success consistently. Those who have tasted or continue to make real money in the markets know those profits generally come from the left side of the brain.
You titled this thread, Thinking Outside the Box. What if we change "Thinking" to operating and "Box" to comfort zone? No matter how we slice it, it's personal. The "Box" is personal,, we each build our own. My psychology is my BOX, I have a greater fear of entering ten contracts than I do of entering two contracts. If I can step outside my comfort zone and size up on just one trade a week from two to ten contracts I can see the Royal Road to Riches if only on that one trade.
What I'm trying to say here is, it's mandatory to utilize both sides of the brain to become a successful discretionary trader. Yes, I believe we are either right or left brain dominate and that gives us the first clue as to which side we may need to "work on".
This topic has potential for vibrant discussion, I hope others choose to join in.
Sometimes I have people ask me how I trade....and while the mechanical concepts are dead simple, it breaks down when I try to explain the non mechanical stuff.....and lets be perfectly clear, I am not an accomplished trader. I do alright but there is always room for improvement.
That being said, I can define the mechanics of how I trade pretty well. However, I recognize there is more at work than mechanics. There is a deep and sometimes vague sense of "knowing" that happens when you see a good trade that looks exactly like the one before it that failed and yet ends up working out well.
How to define this "knowing" and tell other people how to do it is impossible other than, "stare at charts for a long time, learn how price moves and eventually you will simply KNOW when something is about to happen.
Other times you take that same set up and instead of something happening, it doesn't or it takes 2-3 times longer than you expected. Did that something inside fail you? I don't think so. I think we simply acted on a mechanical signal prior to that intuition kicking in.
Mark Douglas talked about trading in the zone. (By the way, I am not a fanboy of Mark Douglas although he has said many important things, I'm just not a raving fan) Athletes talk about being in the zone. I've done some public speaking over the years and I can tell you the same applies in that venue as well. Sometimes you are dialed in and everything flows smoothly and sometimes you just can't get it going the way you want. This "zone" is the holy grail of almost everything we do. We can be good at something and be successful and we can be in the zone and hit home runs all the time.
I get amused at all the macro analysis, indicator analysis, 16 monitor set ups, etc all in an attempt to predict the market. What Don Miller said was appropriate, ask your 6 year old which direction its going and trade that way. Or stand 15 feet away from the chart and decide direction.
For intra day traders that are not looking to hold all day long, macro and fundamental analysis are not necessary.
As a trader, or anything else for that matter, we need to learn how to cultivate that zone state of mind.
Go with your gut, its right most of the time.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Most of the time, I'm just best guessing with style yes I have a method and it seems to work, but it only gets you so far.
Keep it simple, find the direction, enter on a pull back with the direction, SL out if that turns into a new direction and hold for profits, REPEAT until rich or bored. ( if no direction, play the range, till the range is broken )
i certainly agree with Cashish ( which interestingly rhymes with hashish ) that traders, especially the FNG's ,a Vietnam term for newbies, need to pay attention to the psychology of trading at least as much as they do to the download section. Otherwise they will soon be another statistic. And mortality rate for traders is pretty high. This thread would have a thousand views if it included some neural network squiggly line system. We need balance in our tool kit.
I think part of what initiated my post was thinking about fixed stop loss orders and how they can so quickly take you out of your game. Mechanical tools doing damage to the psyche. I do not like fixed stops nor do i use them. Among the fantasies that draw people into futures is the fantasy that you can make a lot of money starting with very little money. Not impossible but sure makes it less likely. But under capitalized traders keep tight stops and get eaten. Folding on a bad hand is part of the game but just allowing the market to snatch your money as it can with fixed stop loss orders seems contrary to what the market is - even at calm it is always in motion. As such fixed objects will be overtaken and consumed. Thinking also needs to be fluid, intuitive and reactive or we will all be consumed.
