MENTAL STATE: switches in thinking
Part 2
If you adopted the ideas of the uncertainty of market action and of your being solely responsible for the state of your trading account, the next natural switch is from "I know what the market will do" to "I know how I will react on anything the market does".
This will save you a lot of frustration. Frustration is inevitable for those who are looking for a definite way to predict market action. The first approach is disaster. The second approach leads to control over yourself. This is the only control you need to trade successfully. With control, confidence comes, bringing that great feeling of joy of being in tune with the market. The market ceases to be a frightening enemy, it becomes a friendly place. You still have to respect it and be careful with it, but you are not frightened by it anymore. What could possibly hurt you if you are not taking trades that do not exceed your risk criteria and if you are controlling your losses? How can you get frustrated by the fact that market doesn't do what you expect if you expect nothing, but are ready to anything?
When you switch to the approach "I know how I will react on anything the market does" and assume the fact that the market works in probabilities, the next switch in thinking comes. You start to think in scenario terms.
You begin to plan your trade like following:
If ABCD goes below this level, the trade is no longer valid and I am going to stop out. If ABCD goes above that level, the reason for being in trade is reinforced and I will stay with it until ABCD does this or that. Being armed with this set of scenarios, you are pretty much ready to respond to any turn of events and nothing can surprise you or throw you off balance. As Eric Patterson’s adage says, Plan your trade and trade your plan.
There is one last thing I want to say today on this matter. There is a Russian movie titled Stalker. The plot line shows there is a machine that grants wishes. It’s hidden in the Zone. The Zone is a pretty dangerous place. Guides illegally bring people to this machine for a fee. But there is a catch that becomes known only at the end of movie. The machine grants not the wish one asks for. It grants a wish that is hidden somewhere deep inside that person. It is hidden in their core. Usually the carrier of this wish has no idea what it is.
In a way, the market works like that machine.
Hidden self-destroying tendency, off-screen desires to suffer might sit within and undermine one's attempts to make it in trading. That's why trading is a path to self-discovery. This path is not easy. Trading rules are so simple. Cut your losses, let your profits run, the trend is your friend, do not double up on losers, etc. That journey to self-discovery and self-changing, requiring absolute honesty and willpower, is the real challenge.
Let’s go for questions, if there are any.
<RT Member> Concerning the opinionless state of mind: thought Threei might like to know that in psychotherapy, A. Bion's famous aphorism is that one must approach each new session "without memory or desire." Seems to fit here as well.
<Threei> Thank you, I was looking for your professional comment :)
<RT Member> The "emotionless" state of trading is something I've been working on for a while now. I've found I can reach that "zone" most of the time now but definately not all the time. I'm curious if your experience has
found that the emotionless state is something you aspired to and reached one day or is it something you are constantly working on and 'tweaking' along the way?
<Threei> I would put it this way. Man is not a machine. We reach this state, we exploit it for a while, then we slip out of it and start to work our way back in. This cycle repeats itself many times and I really doubt there is an end to it. But, the more experience you get, the faster your recognition of another "slip out of the right state" occurs and the easier your recovery is. The ratio of time spent in "right" state and "wrong" state becomes more and more favorable. In a while, the very process of recognition if you are tuned right becomes almost automatic. You know when to take a break and let yourself to get regain your balance.
<RT Member> What is your opinion about whether or not most folks can develop the right mental attitudes in isolation or do they need to be dialoguing with others to hear themselves more accurately?
<Threei> There is plenty of arguing going on about this. Trading from home or from trading office. My strong opinion is (I realize it's arguable) that trading from an office has high potential to hurt the right mental tune. Interacting with other traders more often than not tends to lead to listening to others opinions rather than thinking on your own. Trading is a lonely business. Internet communication is less dangerous as it has no noise and no emotions expressed by others by intonation, face expression, etc. There is less impact. Pretend you get a strong feeling for a stock reversal or your system generated a buy signal in the situation of furious selling. Why is there furious selling? The crowd is panicking. You know it's a sign of the bottom. But when you have 30 traders around, the chances are that most of them will feel and act like the crowd. You don't want your thinking/perceiving process to be impacted by anyone who can induce emotions. There are some positive sides to it of course. For instance, if the trading office has some real good instructor or a great trader who lets you to look over his shoulder, this would be OK for some initial stages. Eventually, the trader has to cut off external impact, in my opinion. There is too great of a temptation to verify your take with others, to be a part of crowd that gives a warm and fuzzy feeling. But profits and discomfort go hand in hand in trading. |
