Aliassmith Psychology 101 and other stuff

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aliassmith
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Aliassmith Psychology 101 and other stuff

Postby aliassmith » Thu Mar 11, 2010 3:49 pm

If you take a look at the enormous amounts of information on the internet
and in books about trading,most of it focuses on methods.

If you look at the enormous amounts of information on the internet and in
books there is less about Psychology.

So, I figure I will carve out a little piece of the internet and post some
of my thoughts about the thought patterns involved with trading.

Maybe others will conversate, debate, and/or collaborate with me, or I
can just chat with myself.

Now let's dig down deep from within ourselves and be truthful about our
thoughts and emotions.

This is my driving force and I believe it was posted by MightyOne.
"If you can see a loss you can see the profit"
Last edited by aliassmith on Thu Apr 01, 2010 4:53 pm, edited 1 time in total.
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es/pip
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Postby es/pip » Thu Mar 11, 2010 4:30 pm

great idea

as psychology is what really separates a winning trader from a losing trader

some things i do

1. when i enter a trade i visualize the bars forming up to my target and me closing the trade. never ever thinking "what if it goes the other way and stops me out".

if i get stopped i get stopped, but i always try and visualize the positive side of the trade.

2. (this is more so for scalping)

i never look at my P/L while trading till i am done for the day

all i really know is if i am doing pretty well, just ok, or not so great

knowing where you are in p/l will create emotions

try this out

right now think to yourself--- "i am up exactly $100 in closed p/l, if i take this next trade my risk is $10 of the 100 i am up"---- your mind can compute that total coming down to 90 if you lose in a nano second. you know for a fact 90 is the new number if you lose

now think to yourself " i am not sure where i am at for the day, but i think i am up somewhere between 120-80. this next trade has a risk of 10. your mind does not know what the new number will be if you lose this trade---- it takes longer to compute it and even then it still does not know for sure-----

so it reduces emotions to not know where you are at p/l wise

and then you treat each trade as just a trade, and check the account when the dust settles and see what happened for the day. :D

also keep in mind that you cannot just hammer yourself into a blow-up either. if i just cannot do anything right and am losing every trade, i will then look to see where i am at and make a decision to continue or stop for the day
Bend over and assume the position for another 4 years of hope and change.

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Postby es/pip » Thu Mar 11, 2010 4:40 pm

adding 1 more thing to the above

i try and stay at an even emotional state through each trade---- no matter if it is a win or a loss

if i win i try not to get happy or excited---

if i lose i try not to have any feeling on it
Bend over and assume the position for another 4 years of hope and change.

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Postby aliassmith » Thu Mar 11, 2010 5:16 pm

Thanks ES/PIP for your contribution.

I will post something I am currently "thinking" about.

The thought process that allows for a single day loss of (x) percent
could also allow equivalent profits.

Note: If I can just get into Pro's head and follow along with his
thought process and emotions while lossing 20% in a day, I will figure out
how to do the opposite.

Thought Possibilities Situation #1:
**** A trade is in profit by (x) amount *****


if (x) is small;
-happy it is not a loss but not impressed
-confident it will get more profitable
-worried it won't get more profitable

if (x) is medium;
-happy it is not a loss, but not willing to close
-if I close now it could go more
-confident it will get more profitable
-plenty of room to let it move around
-OH NO! it is moving back, but it won't go to zero

if (x) is large;
-not a bad gain
-if I close now it could go more
-plenty of room to let it move around
-OH NO! it is moving back, but it won't go to zero
-if it went this far it could go to "more"

Those are definitely some of the things that go through my miind. Along
with emotions such as relief, confidence, nervousness, fear, greed, mad.
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Postby jarnapal » Thu Mar 11, 2010 7:26 pm

es/pip wrote:great idea

1. when i enter a trade i visualize the bars forming up to my target and me closing the trade. never ever thinking "what if it goes the other way and stops me out".



The way you described how you visualize each trade before making the actual trade reminded me the movie "The Secret". It's great way of thinking but I don't think it works with forex as you cant make the market move (unless you are moving the markets) in your deserved direction. However you could visualize the deserved market move and get the gut feeling for timing the entry. That's how you will influence yourself not the market.

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Postby tmanbone » Thu Mar 11, 2010 8:30 pm

Has anyone ever thought about dropping zeros off of their trading statement? Let's just assume your trading a modest $10,000 account; drop a zero or two off and think of your money as of lesser value. This is something a bigger lot trader told me once on how to think of your money. Just a thought and may not even pertain to the direction of the thread. Thanks for starting this thread.
"The simplicity of the markets is it's greatest disguise"

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Postby es/pip » Thu Mar 11, 2010 8:34 pm

jarnapal wrote:
es/pip wrote:great idea

1. when i enter a trade i visualize the bars forming up to my target and me closing the trade. never ever thinking "what if it goes the other way and stops me out".



The way you described how you visualize each trade before making the actual trade reminded me the movie "The Secret". It's great way of thinking but I don't think it works with forex as you cant make the market move (unless you are moving the markets) in your deserved direction. However you could visualize the deserved market move and get the gut feeling for timing the entry. That's how you will influence yourself not the market.



that wasnt the point--- making the market do what i want by trying to influence it with my mind

the point was---- to think positive and expect to win every trade
Bend over and assume the position for another 4 years of hope and change.

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Postby newschool » Thu Mar 11, 2010 11:49 pm

Today I closed my Citigroup 4$ Calls at 4.02$ (breakeven with comissions)

Shortly after, it went to 4.16 and now closed at 4.18$ (wich means a 100% profit with Options)

I was negative at first , (stock at 3.93), and by being just a little positive, I didnt want to become negative again.

I am not sure if I did the right thing or not.

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Postby bredin » Fri Mar 12, 2010 12:37 am

I find the battle with with the "twins"- Greed and Fear, which are the ONLY two emotions concerning money.

Greed makes you get into (or stay in) a trade
Fear makes you get out (or not get in).

Greed is caused by the desire for more.
Fear is caused by the desire to preserve what you already have.

I control them at entry by following the rules,
During the trade by reading PA and knowing only how many pips i am up/down,
and at at close by following the exit rules.

Now for what I think is an important psychological concept:
Head Knowledge vs Heart Knowledge.
It has been shown that the heart is a receptacle for memories, just as the brain is (This comes from a study of heart transplant patients). Memories with a great emotional content seem to be stored in the heart, while more 'academic' memories are stored in the brain.
How many times have you seen someone act in a manner contradictory to the stuff they claim to know? How many times have you done it while trading? This is because we ACT on heart knowledge, not on head knowledge. No matter how often we read MOs (and es/pip and dragon33 et al) posts all this does is put knowledge in ones head.
Next concept: there is no room in the heart for contadictory ideas. for head knowledge to become heart knowledge the existing heart knowledge must be eliminated (replaced), now the problems start because heart knowledge is full of emotions, like the twins, and they take some beating down.
The good news is that "Action Cures Fear" :)
So, we act on heart knowledge, but the brain can override the heart thought deliberate action.

G.
(yes, I am weird).
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Postby Humble » Fri Mar 12, 2010 12:58 am

For my contribution here I would like to recommend an ebook by the name of Phantom of the Pits.

A lovely read (if you like that sort of thing), covers psychology trading that well that I didn't realise that's what the book is about until half way through.
(but then I'm a bit slow on the uptake)
Is price closing higher or lower than something? Simple yet powerful question. ..MO

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