FOREX - Trends, Forecasts and Implications (Episode 13: March 2012) - page 206
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Mobile mania is already showing, they've got the kid...
I can only be jealous - trading on a clean chart! - starts with a boo! - What more do you need in your old age?
Are there any facts for the bottoms?
I can only be jealous - trading on a clean chart! - starts with a boo! - What more do you need in your old age?
What do you have to paint?! Can't I trade without drawing anything!? NONSENSE!
don't be fooled
blah blah blah.
There are no academics flying under the circus dome either
blah blah blah.
There are no academics flying under the circus dome either
there's a double-header flying around.
#1 The uninformed trader.
I don't want to crush anyone's dreams, but there are very few people who actually make money trading. Approximately 90-95% of traders lose their money. These are the facts. At the first stage all traders are full of optimism. Most trades are dictated by emotions, you buy just because you think the market will go in this direction, without any logical explanation. You do not know the psychology and mechanics of trading.
#2 Newbie.
By moving to this stage you have already lost enough money to realise what you are doing is completely wrong. In other words, you start to realise what you don't know. After that you will start reading everything you can find on trading. You will start studying technical analysis thinking you have found the Holy Grail. You'll learn by heart all the known patterns. You will know what is ADX, Moving Averages, Fibonacci, Pivot, MACD, Bollinger Bands, Channels, etc. You will learn all available indicators. You will add them to the chart and spend hours studying how they work. You will gain confidence because you will think you have found the magic indicator.
But, you will continue to lose money every day. You will start to realise that all indicators are lagging and that all other traders use them too. You will realize that you are still a beginner.
#3 Development.
At this stage, you start to realise how much work and learning you need to do before you understand how the market works. Usually at this stage beginners realise that they are not prepared to pay that price and they quit. It takes real desire and passion to get through this stage. Those who don't give up will put all their efforts into the next round of knowledge. This is a real learning process. You will work hard to figure out what works for you and what doesn't.
#4 Determination.
At this stage you learn to understand different market situations and trading systems. Without even noticing it, you finally found your way to trade after thousands of hours of hard work. You are using one method and improving it. You realize that it is better to improve in one direction, it might be Fibonacci lines or something else. Most importantly, you gradually become a more specialized trader. You test your strategy and it works. You gain tremendous knowledge about the market. You watch how you got started and you can't help but laugh at your stupidity. Although you haven't made enough money yet to call yourself a successful trader, you are proud of your accomplishments. You've realised that the Holy Grail is not technical analysis or indicators. You feel confident because you know that trading is a game based on probabilities. Your psychology changes and you become a professional trader.
#5: The Successful Trader.
Your main goal is consistency and you often follow through with your plan. You have achieved conscious competence. You know all your strengths and weaknesses well. You're finally able to make a living as a trader.
#6 Professional.
This is the last stage where you understand the market you're trading in. As soon as you feel euphoric you close a position as you realise it is tantamount to trading on emotion. You open trades naturally, without tension, and you enter and exit the market accurately. Instead of waiting for your position to be forcibly closed on a stop, you close it yourself if you see you were wrong. Being a professional trader is one of the most challenging professions in the world. If you enjoy the challenge, you'll enjoy the result immensely. Trading is 30% system and 170% psychology.
The basic postulates of the individual psychology of the stock exchange game
A player's emotional state directly affects the state of his capital. No matter how good is the system of choosing deals, the loss will not pass, if a trader takes up the game with anticipation of profit, with fear of loss or in upset feelings. In the stock market game you are competing with the sharpest minds in the world. If you allow your emotions into the fray, your game is over. You have to be mentally prepared to win.
BYPASSING YOUR OWN RULES.
Once you've made a few good trades, most amateurs think they're geniuses. One begins to feel dizzy at the thought that because of their uniqueness they can disregard their own rules - success is ensured anyway. Here, having bypassed the rules, the trader enters the road of self-harm and loses everything. The mark of a successful trader is his ability to steadily accumulate capital.
THE NEED TO BE LIKE EVERYONE ELSE
Most people feel a strong need to 'be like everyone else'. This primal urge to join the crowd clouds the mind when it comes to deciding on a trade. A successful stockbroker thinks solely for himself. He must be strong enough to analyse the market on his own and execute his game decisions. No strongman can withstand a dozen people hanging on him: his knees will buckle. The crowd is stupid, but it is stronger than you. It has the power to create stock trends. Do not play against them under any circumstances. Going with the crowd is optional, but going against the crowd is extremely risky. The crowd is strong, but primitive; it acts artlessly and formulaically. Living by their wits, the stockbroker gets an opportunity to outplay the crowd. The members of the crowd can catch the right trend, but not the reversal. Joining the group, one behaves like a child following his parents. Successful stockbrokers live by their wits.
MONEY SOURCE
The money you are counting on belongs to others - people who have no intention of sharing it with you at all. The stock market game is an attempt at mutual robbery. The stock exchange is full of "sheep": they are waiting to be sheared or put under the knife. It's easy prey, but try to get it: you'll have to fight your dangerous rivals first.
The main rule for regaining your sanity is that it must happen slowly. Gradually, with many small profits, until your confidence is fully restored.
When real money is invested, it is not a good idea to look at it that way. It is useful to treat capital as abstractly as possible. It is better to see it as interest or just numbers, which do not refer to anything tangible.
This way it will be easier to remain disciplined. Just as children may refrain from bagels if they do not see food in them, traders may avoid acting under the influence of fear and greed if they do not see cars, luxury goods or houses hidden in the capital. It can be an exercise in the mind, but it works. The more you abstract away from the money invested in a particular trade, the more logical and impassioned you will be.
A lot of novice traders, having experienced success at first, later give everything to the market. This often happens when traders are overconfident. With a combination of minimal experience and lots of luck they skyrocket, but their winnings are not firmly anchored. And eventually, they will "fly out". It is possible to win with little experience at first. Such premature successes, however, develop an erroneous mindset in newcomers. They think they already have the necessary skills and can only concentrate on maintaining winning statistics of trades and the image that corresponds to it.
A trader - gauge, for example, may want to know a certain price level where resistance will manifest itself. He would prefer to follow a certain set of rules to determine exactly where the resistance will be. An intuitive trader, on the other hand, simply sees the "rules" of resistance identification as just principles that may sometimes work, sometimes not. For example, there may or may not be resistance at a round number or at the level of a previous peak or bottom. No one knows anything for sure; such principles are just possibilities. And this is where intuition allows you to cut off unnecessarily difficult choices. Sensors look at market concepts literally, believing them to be true rather than abstract concepts. The intuitive trader looks at markets in a figurative sense. All signals and indicators are subjective after all, they may be slightly inaccurate, and reflect reality with some accuracy. There is a chance that they will turn out to be wrong, but that's okay.
When it comes to the market, it is generally more advantageous to be an intuitive trader. Reading charts and feeling the market is subjective. Trading decisions are simply based on educated guesses. They are random, unpredictable and conceptual rather than precise. They are not linear. Experienced traders and master traders have long noticed that it is hard to learn how to trade by gauges. They want to find all the certain facts and immutable rules that can be used to predict the market. They think that by finding the "right" set of signals, they can make big profits.
Arrogance is one of the most common psychological problems of traders. All people are prone to arrogance, but in some it can reflect deep psychological conflicts. Sometimes, however, arrogance is simply a matter of the difficulty of breaking old habits.
It is vital to hone your trading skills so that you can make trades freely and intuitively. Thinking is limited, and with practice you can multi-task at the same time and 'broaden' your thinking.
What happens when trading on 'autopilot' no longer works? The state of the market is constantly changing and a strategy that worked last week may not work today. When this happens, you have to learn to use a new strategy. However, it may be harder than it looks.