Do You What It Takes to Succeed? The Mindset of a Winner?

 

You did the hard work last week; today, you begin to reap the rewards!

Let’s start with a quick recap:

  1. To be a successful trader, you know that the mind you need to trading is not the mind you bring to the commercial world. Why? Because……
  2. Trading is a probability game and on a trade-by-trade process produces a random result. You can do everything right and lose money on the next trade; you can do everything wrong and make a squillion dollars on the next trade. I call this the ‘the nature of markets’.
  3. The nature of markets goes against our brain’s hard wiring. It seeks certainty and control of outcomes.

Today, we’ll look at how our the brain’s responses plonk us into the losing 10%; next week, we’ll consider what we can do to solve the problem.

The key to understanding our brain’s response is to be aware that it’s designed to serve us by moving towards pleasure and away from pain.  Also, it tends to view losses as painful and profits as pleasure.

So when it’s unable to control a random process, it’s first responses are denial and suppression.

We take a loss. Rather than look at the circumstances giving rise to the loss, we deny it even took place. This fact was brought home to me when a coachee said:

I know I ought to keep a journal! Hey, it’s easy when I’m making money. The journals make me feel fantastic! But, who wants to feel even lousier by recording and analysing losses.?

But, denial and suppression have an even more insidious effect. Research has now shown that if you deny and suppress negative emotions long enough, they’ll eventually rear up and ‘bite you in the bum’! For traders, this usually means an exceptionally large loss.

The other subconscious way our brain ‘protects’ us is to ‘pretend we are profitable traders’. As Rande Howell says:

“…traders want to project a sense of I’m looking good rather than learning to be good”.

You don’t believe me? It’s easy to show…..just drop into any chat room and listen to all ‘fabulous’ trades. Whenever I’ve done this, I’ve counted the winning and losing comments – the former outnumber the latter by over 92%!!! And yet, the reality is losers outnumber winners by that margin.

The effect of the brain’s protection is to substitute an illusion for reality. The problem is in so doing, we effectively give up on our dreams. Today that may not be a problem for you. But, it will be in the twilight of your years. The biggest single human regret is this:

I wish I’d had the courage to live a life true to myself…” (5 Things People Regret on Their Deathbed)

And, I believe, that this regret acts under the radar to lure us into taking trades we otherwise would not.

Don’t miss next week! We’ll be examining a process that allows us to make an ally of our brain in our quest for success.

Goals to Inspire Success

MIND X MONEY X METHOD = Trading Succe$$

Part of  “MIND” means we attain our goals. And goal attainment has two elements:

  1. Goal setting – setting the direction. Actions without direction could easily turn out to be aimless wandering.
  2. Goal execution  – goals without action are merely daydreams.

Recently, I read an excellent article by James Clear “Goal Setting: A Scientific Guide to Setting and Achieving Goals“. It’s mainly on the goal setting aspect. If you scroll down to the bottom of the page, you’ll see a host of articles on execution. I particularly like “Identity-Based Habits:….

And speaking of goals……….

It’s mid-January 2018. The stock indices and Crude Oil have provided opportunities for an exceptionally profitable year. The 30-Year US Bonds may be on the brink.

Have you secured your share?

If not, then maybe, just maybe, you need to set goals and plans for 2018 and make 2018, a year to remember?

 

You’ve Made a Ton! Luck or Skill?

A

The worst thing that can happen to a newbie? Make tons of money when you first start trading. I fall into that camp. In my first foray day-trading the HK Gold Tael market, I made enough money to buy my wife a first-class fur coat!

“How easy is this?!”, I thought!

The experience convinced me to sell my legal practice and become a full-time trader. Easy? It took me all of seven years and bucket loads of dollars lost to become profitable finally.

And that’s the difference between trading and other professions – luck plays such an important role for success.

Think of it this way: let’s say you have been charged with murder. Would you hire someone with no training or experience to defend you? What would you say would be his chances to get you acquitted – somewhere between 0% and -100%? In short, no knowledge, no training means no chance of success.

Not so the trading game. You can be a total ignoramus, and for a while, appear to be God’s gift to the trading world. And, the ‘unfairness’ doesn’t stop there. You can be the most knowledgeable trader, you can do everything right on any one trade, and still lose money on that trade!

It’s this randomness and uncertainty that makes trading so hard.

So, how do we overcome the hurdle? Accept that on a trade-by-trade basis trading is random and uncertain. Our profitability, our edge, comes from the consistent execution of our trading and risk management rules.

ORSS is Live!

BarroMetrics Views:  ORSS is Live!

Morning.

ORSS is live! To register, go to:

http://www.barrometrics.com/buy-opening-range-swing-system/

or

http://www.barrometrics.com/opening-range-swing-system-video-4/ 

The offer encompasses:

  1. Instrument Selection video (FX) .
  2. ORSS Instrument Selection Pdf
  3. ORSS Method-Excel video. 
  4. ORSS Barros Pivots Template
  5. ORSS Method-Market Analyst video. 
  6. ORSS Market Analyst pdf
  7. ORSS Checklist. Mind and Money video
  8. Psych Journal Excel Template.
  9. Turtle Contracts Excel Template
  10. 4 weeks email support (first 50 receive 6 weeks)
  11. 4 weeks of weekly videos showing my application of ORSS

Given what ORSS delivers, and the support you receive,  at SGD887.00, this is a great value product. Remember the offer closes midnight, Friday, October 10. And, the offer won’t be repeated.

BTW…..don’t forget, your bonus downloads are at:

http://www.barrometrics.com/opening-range-swing-system-video-4/ 

Thanks again for all who sent in comments and emails.

What It Takes To Succeed VII

BarroMetrics Views:  What It Takes To Succeed VII

We’re at the point in the series where the rubber meets the road – at least so far as a trading plan is concerned.  As a discretionary trader,  my plan (rules) serve as a starting point as well as a check and balance for my intuition. If my rules dictate a course of action but ‘I feel as though I’d like to do something else’, it ‘heads up’ time. I check to see if my ‘flight, freeze or fight’ is in gear, or whether there is something my conscious mind is missing.

I mention this because I believe humans deal with subjective probabilities in a different way then when dealing with objective probabilities…i.e. when faced with uncertainty, we are more likely to fall back on our intuition. Anyway, back to the plan.

My first step? I ask three questions:

  1. What is the trend of the timeframe I am trading?
  2. Is it likely to continue or change?
  3. What is today’s bias likely to be – directional (up or down) or rotational?

The answers to the first two questions determines if I’ll be seeking to go long or short; the answer to the last helps identify the likely tactics I’ll be using to enter the position. Let’s take the AUDUSD as an example, my trader’s timeframe is the 18-day swing (monthly trend).

Figure 1 is a chart of the 13-week swing (quarterly trend). My current scenario is we are seeing the final leg of a change in trend triangle. If so:

  • We should see a throwover to mark the ‘E’ leg.
  • The minimum target for the ‘E’ leg is 1.0645.
  • The probable target is 1.0800 to 1.0805
  • The maximum target (if there is a triangle) is 1.0855.

Since the 13-week swing line direction is up, the 18-day swing trend will be up. At this stage, the trend is likely to continue. Hence I’ll be looking to buy dips so long as my reward:risk ratio is adequate. More next time

13w-tri.png

FIGURE 1 AUDUSD 13-week Swing

What It Takes To Succeed VI

BarroMetrics Views: What It Takes To Succeed VI

Well, we are that point: we’ll  be examining the various elements that go into a discretionary trading  plan.

Remember our goal is to define when the probabilities favour a trade and when they favour an exit and the plan does this for the timeframe we are trading. For the plan to be effective, it needs to be one that suits our personality. For example, I process information with a visual-kinesthetic process. So, it’s natural that I would migrate to technical analysis augmented by my intuition. Now, Damasio would say that no decision is possible without emotional input, and I would agree. The question is how much input and with what tools. The answer is determined by who we are and how we process info.

OK, let’s now put that issue aside and turn to the next step of a plan.

The market bombards the trader with a tremendous amount of information. To make sense of it, the trader needs to create a framework. Here is where a model like Wyckoff’s or Steidlmayer’s come in – the models structure information in a way as to make enough sense so that the trader can come to a conclusion.  Figure 1 again shows the Wyckoff model that sees a trend change from down to up:

  1. After a sustained downtrend, the directional starts to lose momentum.
  2. Finally, we see an end of the move down. This end is characterised  either by larger than normal volume or volume that shows divergence with the prior swing low, i.e. the final low has lower volume than the previous swing low.
  3. The market then goes sideways until a breakout occurs (accumulation).
  4. Following the breakout, we see a retest. If the retest is successful we’ll see a markup phase that ends in distribution and a downtrend.

Figure 2 shows the 2009 low and how well the Wyckoff identified the possible low …..More tomorrow.

tubbs.jpg

FIGURE 1 Wyckoff Model

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FIGURE 2 Cash S&P March 2009

What It Takes To Succeed V

BarroMetrics Views: What It Takes To Succeed V

Today, let’s look at elements of a discretionary trading plan. It’s worth bearing in mind that as traders we create plans to help us determine when the probabilities favour a trade (entry) and when they no longer favour it (exit).

There are many ways to frame a plan – what is important is they suit our personality. For example, Rob Hanna is a swing (Quantifiable Edges) trader using quant methods. His approach could not be more different to mine – yet we both succeed.

[Speaking of Rob, he has a new service, Overnight Edges ‘dedicated to taking advantage of overnight movements’. Looks really interesting – a story for another day].

My approach is based on:

  1. A model to place structure around price action – based mainly on Wyckoff and Market Profile (note the CME is interactive; so, click on the headings to see what they say); and, to a lesser, my re-interpretation of the Elliot Wave (which I call the Ray Wave)
  2. Testing and validation of the setups that I use in my trading.

Figure 1 shows the Wyckoff-Tubbs model. Tomorrow, we’ll examine Wyckoff’s ideas in a little more depth.

tubbs.jpg

FIGURE 1 WYckoff – Tubbs Model

What It Takes To Succeed IV

BarroMetrics Views: What It Takes To Succeed IV

In the preceding posts, I looked at the ‘generic’ factors for trading success. In the next we’ll look at the specific factors,  what Dr Elder calls ‘method’ ‘money’ and ‘mind’.  I like to use the ‘formula’:

Plan with and Edge (method) x Risk Management (money) x Winning Psychology (mind) = Success.

The multiplication sign is important because it highlights that success is a function of the weakest element in the chain. If you fall below the pass mark for any of them, then failure in all of the chain must result. Each of these has its essential elements.

Let’s first look at  ‘method’ but before I do that, I’d like to consider the role of ‘context’.

Plans can run the gauntlet from mechanical system to ‘gut’ trading. Figure 1, courtesy of Three Skills of Top Traders, shows Pruden’s view of this range and the relationship with state management. He feels that the mechanical trader is best served with simple rules; moreover, he takes the view that the mechanical trader has the lowest need for state management. While I agree that may be the case for entry, it’s not the case when a mechanical system shifts into drawdown mode: when a system is experiencing loss after loss, the trader needs high state management. But that’s merely an aside – let’s get back to the main point.

I take the view that ‘context’ allows a discretionary trader greater flexibility in selecting low risk trades. As an example. let’s take the current AUDUSD situation:

  1. Figure 2 shows the 12-month swing. We see a possible Triangle Change in Trend Pattern forming. The ‘e’ leg of a Triangle will either fail to reach the trendline or will end a ‘throwover’.  If that’s the case, how do we know that the Triangle is complete? The great thing about Triangle completion is the strong impulsive thrusts in the direction of the new trend.
  2. Figure 3 is the 13-week swing chart.  We see a possible completion patten on Aug 10. The following week we see a strong thrust down So far all seems well with the TRI CIT scenario. BUT…. last week… the move down slowed. Now it’s true that in another context I’d treat last week’s price action as a bearish bar because:
  • there was an attempt to rally
  • that rally failed and
  • we then saw the market push past the open and close near the lows. But in the TRI CIT context……..we have a problem.

3.  The problem is we saw a range and volume for the week that was below normal. In this context, this price action  throws doubt on the idea that the Triangle is complete. As a result. if short, I’d be covering the whole position (I did) or at least a substantial part of it.

This is the power of context: the flexibility to determine, within the happening environment, whether a pattern is bullish, bearish or neutral.

system-buliding-and-discipline.png

FIGURE 1 Trading Plan

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FIGURE 2 AUDUSD 12-M Swing

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FIGURE 3 AUDUSD 13-W Swing

What It Takes To Succeed III

BarroMetrics Views: What It Takes To Succeed III

The next set of generic skills are the those of planning, executing and reviewing. Another name for planning is goal-setting.

Like ‘thinking’, there is a whole  genre of material in the printed pages. Names like ‘Bob Proctor’ and ‘Anthony Robbins’ have created fortunes by delivering material in this field. Just Google and you will see what I mean. The info is out there, you need only have the will to seek, learn and apply.

Goal-setting has its own circular of influence; the best goals are those set when we know:

  • Our Purpose – the reason we want what we want – and our best purposes are aligned with our values.
  • Our Mission – the description of what we’ll do for others when we achieve our purpose – a ‘you statement’
  • Our Vision -a description of what we will have and be when we attain our goals.

The review process is an essential part of our learning and thus our achievement process.  The importance of ‘review and correction’ has now been validated by research and enshrined by the ideas of Anders Ericsson. I have written about his ideas in this blog e.g. see “A Better Way to Learn“.

There is one last generic skill I’d like to mention before moving on: managing our finances. It’s all very to plan, execute and review for other areas; but if we don’t learn to manage our finances to the best of our ability. the success we deserve will elude us. And again, we can Google to see what’s out there. For example: Top Ten Books About Money

“Thinking’, ‘Planning’, ‘Executing’ and “Reviewing’ all essential skills in any area of life – not just for trading. In the next set of blogs, I’ll look at the particular skills mainly relevant only to trading. I say ‘mainly’ because there will  be some overlap between the generic and specific.

On Trading Success

Cross ref:

http://anatrader.com/?p=809Tonight TRT hosted a 2-hour  presentation by Ray Barros on how to  succeed at trading.  This talk was targeted at all traders who wished to improve on their trading.

Here are some video clips of the presentation.

QE v S&P

http://youtu.be/_fn0HisxvnU

FRED v FRA

http://youtu.be/FdYAG8wMx4E

Bull-Bear markets

http://youtu.be/PwuY6P-j79k

Winning Psychology

http://youtu.be/qmCUeFeoQEg

3 elements of success

http://youtu.be/dn7tWijJf3s

Coyle

http://youtu.be/O75nrreijTU

Coach v mentor

http://youtu.be/jhE55jYZUvY

Guppy MA -CIT

http://youtu.be/VLAJRUCEY-I

Zone

http://youtu.be/RUEmXwCG104

Hope you can find points of contact .

IDkit aka Ana, Ag Moderator