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My Reading of “Trading in the Zone” (thoughts and feelings) PT. 4
CHAPTER 2
THE LURE AND THE DANGERS OF TRADING
Page 31
To operate effectively in the trading environment, we need rules and boundaries to guide our behavior. It is a simple fact of trading that the potential exists to do enormous damage to ourselves—damage that can be way out of proportion to what we may think is possible. There are many kinds of trades in which the risk of loss is unlimited.
To prevent the possibility of exposing ourselves to damage, we need to create an internal structure in the form of specialized mental discipline and a perspective that guides our behavior so that we always act in our own best interests.
(What powerful words. The words of having rules so that we can act in our best interest. One of mans greatest struggle is rules. I like most felt that rules are restrictive. It is a way for someone to keep me of pleasure.
But to the contrary. As a pastor I taught that God gave us rules, like the 10 Commandments for are safety and out peace. God Created life and He was giving us the rules and bounders so that we could live with in them and not hurt are selves. I now see the same with trading.)
In trading, no one (except yourself) is going to force you to decide in advance what your risk is. In fact, what we have is a limitless environment, where virtually anything can happen at any moment and only the consistent winners define their risk in advance of putting on a trade. For everyone else, defining the risk in advance would force you to confront the reality that each trade has a probable outcome, meaning that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no matter how good a trade looks, it could lose.
(Good night! I'm glad Magic made this PDF available. This statement is the difference between constant winners. They expect that a trade can go the wrong way so they decide their risk before their trade. This is something that I am just now learning to do. By trading a larger time frame I gives me more time to plan.)
Page 32.
One of the many contradictions of trading is that it offers a gift and a curse at the same time. The gift is that, perhaps for the first time in our lives, we're in complete control of everything we do. The curse is that there are no external rules or boundaries to guide or structure our behavior. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self control, at least if we want to create some measure of consistent success. The structure we need to guide our behavior has to originate in your mind, as a conscious act of free will. This is where the many problems begin.
(So basically what you are saying is one must develop rules to govern himself. Because no one is going to do it for you.)
Page 33
PROBLEM: The willingness to Create Rules
(I would also say the willingness to obey the ones we create as well!! I had rules for day trading. The problem was I did not always obey them, thinking I would miss out on a big move I would take a trade and my system said no!!!)
Page 34
PROBLEM: Addiction to Random Rewards
PROBLEM: External versus Internal Control
(I don't fully understand what you are saying. So I must stop and re-read to see if I can comprehend it.)
Well that is all for today
THE LURE AND THE DANGERS OF TRADING
Page 31
To operate effectively in the trading environment, we need rules and boundaries to guide our behavior. It is a simple fact of trading that the potential exists to do enormous damage to ourselves—damage that can be way out of proportion to what we may think is possible. There are many kinds of trades in which the risk of loss is unlimited.
To prevent the possibility of exposing ourselves to damage, we need to create an internal structure in the form of specialized mental discipline and a perspective that guides our behavior so that we always act in our own best interests.
(What powerful words. The words of having rules so that we can act in our best interest. One of mans greatest struggle is rules. I like most felt that rules are restrictive. It is a way for someone to keep me of pleasure.
But to the contrary. As a pastor I taught that God gave us rules, like the 10 Commandments for are safety and out peace. God Created life and He was giving us the rules and bounders so that we could live with in them and not hurt are selves. I now see the same with trading.)
In trading, no one (except yourself) is going to force you to decide in advance what your risk is. In fact, what we have is a limitless environment, where virtually anything can happen at any moment and only the consistent winners define their risk in advance of putting on a trade. For everyone else, defining the risk in advance would force you to confront the reality that each trade has a probable outcome, meaning that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no matter how good a trade looks, it could lose.
(Good night! I'm glad Magic made this PDF available. This statement is the difference between constant winners. They expect that a trade can go the wrong way so they decide their risk before their trade. This is something that I am just now learning to do. By trading a larger time frame I gives me more time to plan.)
Page 32.
One of the many contradictions of trading is that it offers a gift and a curse at the same time. The gift is that, perhaps for the first time in our lives, we're in complete control of everything we do. The curse is that there are no external rules or boundaries to guide or structure our behavior. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self control, at least if we want to create some measure of consistent success. The structure we need to guide our behavior has to originate in your mind, as a conscious act of free will. This is where the many problems begin.
(So basically what you are saying is one must develop rules to govern himself. Because no one is going to do it for you.)
Page 33
PROBLEM: The willingness to Create Rules
(I would also say the willingness to obey the ones we create as well!! I had rules for day trading. The problem was I did not always obey them, thinking I would miss out on a big move I would take a trade and my system said no!!!)
Page 34
PROBLEM: Addiction to Random Rewards
PROBLEM: External versus Internal Control
(I don't fully understand what you are saying. So I must stop and re-read to see if I can comprehend it.)
Well that is all for today
Total Comments 1
Comments
(Must register to comment)-
This is a good vid to add to my read.
Thanks Simit
Posted 12-11-2010 at 03:43 PM by larryfolson
[Show Appreciation]
What's This?
