How To Think Correctly

[Splitlink]

I completely agree. There aren’t many careers or vocations in which you receive direct reward for your efforts and skill. You could be the greatest artist in the world but if nobody buys your artwork, you get no reward. You could have the greatest voice in the world but if you remain undiscovered, or if nobody likes your music, you get no reward. But, if you are the greatest trader (even not so great) the market doesn’t care if you are fat, thin, tall, short, funny or morose, nor does it require anyone to employ or discover you and sign you up for a contract.

I am obsessed with trading too. Not solely for the financial rewards but because it is a trait of my personality. I like challenges and trading is one of the toughest I have ever encountered. My aim is to be financially independent.

An obsession is not healthy. You need to get your mind on to other interests. Sometimes, people get obsessed with the same thing and that causes a mindblock.

Split

 

[CYOF]

Whilst the analogy may not be the best, is it not the results of the trader what matters most?

We will all agree that pouring a pint is not of any real significance, and in the worst case scenario may only cost the owner a few dollars.

But, if this analogy serves its purpose, in that it shows how the simple act of pulling a pint can cause you to start a process that requires very little thinking on your part to solve the problem, then surely it has merit.

I think that everything we write down has some significance -but we must be prepared to look deeper into what the words can mean. Why do we suddenly stop pulling the pint when the see the froth rising up to the top of the glass? Are we thinking about the cost of the spill, or are we thinking about having to clean up a mess? What is the real reason why we stopped? Just because we do something, we may not really understand why we did it until we reflect on what actually happened in great detail!

In the case of the visualisation technique, whereby one creates a mental picture of one carrying out a sequence of events, this is actually not very easy to do, and depending on the individual, it may require months and months of practice in order to see a minor improvement in how one acts out under certain conditions.

On the other hand, if one decides to start writing down the various reasons as to why one stopped pulling the pint when the froth started to form, they may be surprised at what comes to mind?


1. Did I see / hear a few spurts before the froth formed - if so why did I not stop and check the gas.
2. Was the last pint Ok or was it a little cloudy - why did I ignore it if so.
3. Was I busy at the time or was it quiet.
4. At what level in the glass did I stop pulling the pint - was the glass nearly full or was it empty

I am sure that we can all come up with some questions, but the main point here is that everything we do can have numerous reasons as to why we acted they way we do.

To get to the root cause of any problem - which I take it that the majority of us are trying to do when we say that we trying to improve on our trading results - requires a methodical approach, and even better if that approach has scientific merit.

There is such a process called ATP - or Analytical Thinking process - which is a scientific approach to solving problems. It consists of 5 main steps as follows:

1. Define The Problem
2. Formulate The Hypothesis
3. Collect the Facts
4. Conduct the Analysis
5. Develop The Solution

So now, instead of just wondering about what might have happened, we can use a methodical approach to solve the problem.

In the case of the pint, the problem may well be as simple as the barrel was now empty.

But do we leave it at that - or do we continue on and and develop a solution so that it does not happen again.

The solution may be as simple as a phone call to the brewery to install an automatic changeover system, which eliminates any waste ant gets every drop out of the barrel!.

We can make problems as complicated, or as simple as we like, but what we should be doing is learning how to get to the root cause of a problem - AND THEN FIX IT so that it does not happen again, or as in the case of trading, minimise its effects to an acceptable level.

Not every problem will have a clear cut solution - but there is always room for improvement in everything we do.

Regards,

 

[CYOF]

An obsession is not healthy. You need to get your mind on to other interests. Sometimes, people get obsessed with the same thing and that causes a mindblock.

Split

Very true - but admission is the first step to overcoming.

Once one accepts the reality of the situation, then it become easier to change.

Knowing something, and doing something about it, are however, miles apart!

American Heritage New Dictionary of Cultural Literacy, Third Edition - Cite This Source
obsession


A preoccupation with a feeling or idea. In psychology, an obsession is similar to a compulsion.


[Chapter:] Anthropology, Psychology, and Sociology


American Heritage Stedman's Medical Dictionary - Cite This Source
com·pul·sion (km-plshn)
n.

An uncontrollable impulse to perform an act, often repetitively, as an unconscious mechanism to avoid unacceptable ideas and desires which, by themselves, arouse anxiety.

The American Heritage® Stedman's Medical Dictionary
Copyright © 2002, 2001, 1995 by Houghton Mifflin Company. Published by Houghton Mifflin Company.

 

[new_trader]

An obsession is not healthy. You need to get your mind on to other interests. Sometimes, people get obsessed with the same thing and that causes a mindblock.

Split

Absolutely, I should say that I have a healthy obsession, like my eagerness to learn and play the piano. I have taken a few months break from trading to reassess the way I have been approaching it. The break has given me a chance to assimilate everything I have experienced and all the information I have read (especially on this forum) and it has been very beneficial. I think I have finally had my “aha” moment and now, much like Neo, I see the Matrix

The only advice I can give to budding traders (derived from my experience) is to completely abandon “black box” trading systems and automated strategy testing. The best analogy I can think of is this:

Imagine the aim is to drive a car from point A to point B without crashing. With an automated strategy you don’t actually drive the car, instead, you would enter in all of the instructions and press “Drive”. The results would come back saying “You made it 54% of the distance and crashed 5 times”. You would then keep tweaking the commands until it said something you were happy with, like “You made it 90% of the distance and crashed 1 time”. Perhaps you would keep tweaking until you make it 100% of the distance without crashing (the Holy Grail), or 95% of the distance without crashing and walk the rest.

It’s not until you actually drive the car yourself that you discover what the terrain is like and the obstacles you kept crashing into.

 

[Splitlink]

It’s not until you actually drive the car yourself that you discover what the terrain is like and the obstacles you kept crashing into.

By which time it's getting a bit late!

Split

 

[SOCRATES]

Yes, and everybody overlooks the significance of the obviious,...... because....... the obvious.....is not in their frame of reference at all......fascinating....

 

[darkwanderer]

If your personality and logic allows you to learn and adapt, then incorrect should become correct, if there ever were incorrect thoughts.

How to think correctly? Don't think incorrectly, and if you do, learn and adapt. Not being able to trade correctly is a submission to incorrect thinking...laziness.

 

[Charlton]

The only advice I can give to budding traders (derived from my experience) is to completely abandon “black box” trading systems and automated strategy testing. .

Exactly

Does a black box "simplify" or hide ?

Is there a need to "simplify" that which is conceptually not difficult ?

Does a black box really simplify things ?

Is there any need to hide that which, in Socrates's words, is obvious ?

Is it not better to focus on that which should be the subject of attention ?

Why hand over to someone or something else that which is or should be your main asset as a trader ? (and I am not talking about money )

Charlton

 

[SOCRATES]

Exactly

Does a black box "simplify" or hide ?

Is there a need to "simplify" that which is conceptually not difficult ?

Does a black box really simplify things ?

Is there any need to hide that which, in Socrates's words, is obvious ?

Is it not better to focus on that which should be the subject of attention ?

Why hand over to someone or something else that which is or should be your main asset as a trader ? (and I am not talking about money )

Charlton

Additionally there is a very wicked ongoing trade devoted to promoting exactly all the things you mention which are exactly contrary to the true development of a trader, like a sort of distortion violation phenomenon but made to look as if such a path were normal. Of course, people who are newbies or are just looking for plausible shortcuts fall right into it, with disastrous consequences for them.

 

[new_trader]

Additionally there is a very wicked ongoing trade devoted to promoting exactly all the things you mention which are exactly contrary to the true development of a trader, like a sort of distortion violation phenomenon but made to look as if such a path were normal. Of course, people who are newbies or are just looking for plausible shortcuts fall right into it, with disastrous consequences for them.

This would not have made sense to me 12 months ago but now I realise why I have been, in your words, cannon fodder. I wouldn't consider myself a successful trader yet, I am trading with "training wheels". But they are MY training wheels and I understand what is necessary to become a truly successful trader. THERE ARE NO SHORTCUTS.

 

[FXSCALPER2]

The title of this thread I find amusing. Correct by whose standard? This is a load of BS, excuse my french.

Either you can trade or you can't. It is like any other job. Some are good and some are c'rap at it. All this psychobabale is a waste of time. Very few people can make money trading because it requires intuition that only some people have the potential to develop. You can be a complete lunatic (and not think 'correctly') and make a living trading. It is a job, no point making a big deal out of it. If you can't do it, find something esle you can do. There are a lot of things you can do to make money. Trading is just a boring occupation like many others. You may be rich because you trade, but who gives a s'hit? I go to the same supermarket I used to 5 years ago when I had a full time job I hated, I still go to the toilet and stink, I still drive, sit in traffic, sleep about 7 hours a day, breath the same air. My life is pretty much the same except I can travel more comfortably. Am I happier now than when I was struggling? No.

All of this makes no bloody difference. Try it and see if you can do it. It doesn't matter if you win or lose. I mean that in the deepest sense. It makes absolutely NO DIFFERENCE AT ALL. One day you will die and will find all this BS as if trading is the best thing in the universe is stupid. Give it a shot if you want to. You will find out in about 2-3 years if you can do it. If you can, then you got a new job. If not, do something else. It doesn't mean you are a failure. It just means you tried ONE THING and it didn't work out. There are di'ckheads and b'astards in trading, as well as good people, like any other walk of life.

A successful trader is someone who just makes a living trading, rather than flipping burgers or sweeping the street or presenting a case in court.

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

 

[SOCRATES]

The title of this thread I find amusing. Correct by whose standard? This is a load of BS, excuse my french.

Either you can trade or you can't. It is like any other job. Some are good and some are c'rap at it. All this psychobabale is a waste of time. Very few people can make money trading because it requires intuition that only some people have the potential to develop. You can be a complete lunatic (and not think 'correctly') and make a living trading. It is a job, no point making a big deal out of it. If you can't do it, find something esle you can do. There are a lot of things you can do to make money. Trading is just a boring occupation like many others. You may be rich because you trade, but who gives a s'hit? I go to the same supermarket I used to 5 years ago when I had a full time job I hated, I still go to the toilet and stink, I still drive, sit in traffic, sleep about 7 hours a day, breath the same air. My life is pretty much the same except I can travel more comfortably. Am I happier now than when I was struggling? No.

All of this makes no bloody difference. Try it and see if you can do it. It doesn't matter if you win or lose. I mean that in the deepest sense. It makes absolutely NO DIFFERENCE AT ALL. One day you will die and will find all this BS as if trading is the best thing in the universe is stupid. Give it a shot if you want to. You will find out in about 2-3 years if you can do it. If you can, then you got a new job. If not, do something else. It doesn't mean you are a failure. It just means you tried ONE THING and it didn't work out. There are di'ckheads and b'astards in trading, as well as good people, like any other walk of life.

A successful trader is someone who just makes a living trading, rather than flipping burgers or sweeping the street or presenting a case in court.

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

 

[new_trader]

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

I suppose like any other career there are certain prerequisites. I'm not sure where the average Trader fits in but I read somewhere that they have above average IQ's
---------------
Mean IQ score of persons in various occupations, taken from a variety of Western studies

Professors and researchers.......131, 134
Physicians and surgeons............128
Lawyers........................................128
Accountants..................................119, 128
Engineers (civil and mechanical)125
School teachers............................121, 123
General managers in business...122
Education administrators............122
Stenographers..............................119, 121
Pharmacists..................................120
Nurses...........................................119
Senior clerks................................118
Managers, production.................118
Clerks (general)...........................118
Managers, miscellaneous...........116
Cashiers.......................................116
Foremen, industrial......................114
Salesmen.....................................114
Clerks...........................................112
Electricians..................................109
Policemen....................................108
Mechanics....................................106
Machine operator........................105
Store managers..........................103
Shopkeepers...............................103
Butchers.......................................103
Carpenters, construction............102
Warehouse men...........................98
Carpenters and cabinet makers.97
Machine operator.........................97
Cooks and bakers........................97
Drivers, truck and van...................97
Laborers........................................96
Small farmers................................96
Gardeners.....................................95
Unskilled laborer...........................90
Factory packers and sorters........85

 

[CYOF]

The title of this thread I find amusing. Correct by whose standard? This is a load of BS, excuse my french.

Either you can trade or you can't. It is like any other job. Some are good and some are c'rap at it. All this psychobabale is a waste of time. Very few people can make money trading because it requires intuition that only some people have the potential to develop. You can be a complete lunatic (and not think 'correctly') and make a living trading. It is a job, no point making a big deal out of it. If you can't do it, find something esle you can do. There are a lot of things you can do to make money. Trading is just a boring occupation like many others. You may be rich because you trade, but who gives a s'hit? I go to the same supermarket I used to 5 years ago when I had a full time job I hated, I still go to the toilet and stink, I still drive, sit in traffic, sleep about 7 hours a day, breath the same air. My life is pretty much the same except I can travel more comfortably. Am I happier now than when I was struggling? No.

All of this makes no bloody difference. Try it and see if you can do it. It doesn't matter if you win or lose. I mean that in the deepest sense. It makes absolutely NO DIFFERENCE AT ALL. One day you will die and will find all this BS as if trading is the best thing in the universe is stupid. Give it a shot if you want to. You will find out in about 2-3 years if you can do it. If you can, then you got a new job. If not, do something else. It doesn't mean you are a failure. It just means you tried ONE THING and it didn't work out. There are di'ckheads and b'astards in trading, as well as good people, like any other walk of life.

A successful trader is someone who just makes a living trading, rather than flipping burgers or sweeping the street or presenting a case in court.

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

Hi FX,

Whilst a lot of what you say is true, in that the act of trading will not have any major impact on your normal social activities (well, not until you have become financially independent, as we all know the benefits that can be realised by winning the lottery!) one can not deny that one has to think before one can act.

To write these words I must think - no argument here!

The whole point is this - the way one thinks will determin the way one acts.

I believe that trading tends to bring out many conflicting thoughts. This is due to the way we are brought up - which, whether we like it or not, has the greatest impact on the way we think.

To say that the way you think has nothing to do with the way your trade, can not be correct.

It can not be - due to the fact that you have to think before you act!

This thread was not started with a view to discussing psycho babble, as some will call it, but discussing factual points in relation to how the way one thinks' can affect the way one trades'.

Again, it is the results that matter.

As mentioned in the previous posts, if one wants to get a TRUE picture of how they are doing as a trader, then you must work out the Expectancy of your system.

If anyone is brave enough to back up their words with actual results, then I will happily assist with the compiling of the trading data to get the real Expectancy figure. This figure tells all, nothing to hide behind and fool oneself.

I plan to do my own this weekend, which I know will be negative, but the whole point here is the understanding that in order to make any progress, the first step is admitting that you may know very little about most things.

Why don't we all try to help each other, instead of trying to out speak or outsmart each other.

Results are all that matter - period.

Whether you think, p**s, s**t, f**t, or f**k, there is still only one think that matters in the end - the results of your trading.

Whatever can improve the results is what one should be concentrating on - and in my opinion, because you have to think before you act, then how you think in relation to trading is definitely going to determine how you act in relation to trading.

Your results, i.e, your Expectancy figure, tells you exactly where you are, and even better, can greatly assist you in achieving your objectives.

Regards,

 

[CYOF]

I suppose like any other career there are certain prerequisites. I'm not sure where the average Trader fits in but I read somwhere that they have above average IQ's
---------------
Mean IQ score of persons in various occupations, taken from a variety of Western studies

Professors and researchers.......131, 134
Physicians and surgeons............128
Lawyers........................................128
Accountants..................................119, 128
Engineers (civil and mechanical)125
School teachers............................121, 123
General managers in business...122
Education administrators............122
Stenographers..............................119, 121
Pharmacists..................................120
Nurses...........................................119
Senior clerks................................118
Managers, production.................118
Clerks (general)...........................118
Managers, miscellaneous...........116
Cashiers.......................................116
Foremen, industrial......................114
Salesmen.....................................114
Clerks...........................................112
Electricians..................................109
Policemen....................................108
Mechanics....................................106
Machine operator........................105
Store managers..........................103
Shopkeepers...............................103
Butchers.......................................103
Carpenters, construction............102
Warehouse men...........................98
Carpenters and cabinet makers.97
Machine operator.........................97
Cooks and bakers........................97
Drivers, truck and van...................97
Laborers........................................96
Small farmers................................96
Gardeners.....................................95
Unskilled laborer...........................90
Factory packers and sorters........85

Interesting figures - for accuracy we will of course require some further citation, but for this excercise we will assume that they are accurate enough.

Question, why do you think that a Professor has an IQ of 131-134, and a Factory Packer has an IQ of 85?

One thing comes to my mind right away!

 

[bizmanny]

Thinking correctly is consistently making money over long period of time and there are a lot of ways of doing it in trading. Then anybody who is consistently making money is thinking correct. The only way to know will be to check your trading balance at the end of 12 month or whatever time limit one set for himself. Will that be fair description of thinking correct in trading? Or can one be thinking correct and consistently be losing money?

This thread i guess is for discussion on how to reach that point where you can make money consistently. I see no harm in sharing info on how to reach that level or once your there how to stay there. I find the thread Fascinating to know what others think.

 

[new_trader]

Interesting figures - for accuracy we will of course require some further citation, but for this excercise we will assume that they are accurate enough.

Question, why do you think that a Professor has an IQ of 131-134, and a Factory Packer has an IQ of 85?

One thing comes to my mind right away!

Hi CYOF,

Citations:

http://sq.4mg.com/IQ-jobs.htm

http://www.articlealley.com/article_36759_19.html

A few years ago in my quest to become a member of Mensa I did plenty of research into IQ's. But I am not prepared to enter into any debate about the validity of IQ tests. There is enough of that on the web if you look.

 

[dbphoenix]

The title of this thread I find amusing. Correct by whose standard? This is a load of BS, excuse my french.

Either you can trade or you can't. It is like any other job. Some are good and some are c'rap at it. All this psychobabale is a waste of time. Very few people can make money trading because it requires intuition that only some people have the potential to develop. You can be a complete lunatic (and not think 'correctly') and make a living trading. It is a job, no point making a big deal out of it. If you can't do it, find something esle you can do. There are a lot of things you can do to make money. Trading is just a boring occupation like many others. You may be rich because you trade, but who gives a s'hit? I go to the same supermarket I used to 5 years ago when I had a full time job I hated, I still go to the toilet and stink, I still drive, sit in traffic, sleep about 7 hours a day, breath the same air. My life is pretty much the same except I can travel more comfortably. Am I happier now than when I was struggling? No.

All of this makes no bloody difference. Try it and see if you can do it. It doesn't matter if you win or lose. I mean that in the deepest sense. It makes absolutely NO DIFFERENCE AT ALL. One day you will die and will find all this BS as if trading is the best thing in the universe is stupid. Give it a shot if you want to. You will find out in about 2-3 years if you can do it. If you can, then you got a new job. If not, do something else. It doesn't mean you are a failure. It just means you tried ONE THING and it didn't work out. There are di'ckheads and b'astards in trading, as well as good people, like any other walk of life.

A successful trader is someone who just makes a living trading, rather than flipping burgers or sweeping the street or presenting a case in court.

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

True, with a minor quibble or two.

Since this thread is in "psychology", I've assumed it need not have anything to do with actual trading. But I do hope that beginners who are reading it don't get diverted into the usual detours (e.g., "expectancy") which may give them the appearance of making progress while they do little more than spin their wheels.

Making money in trading is the result of developing a consistently profitable trading strategy, not entangling oneself in endless psychological and metaphysical angst.

But, as I said, this is in "psychology" . . .

Db

 

[chump]

Pretty unfair stopping at 85 ..some of us feel excluded.

 

[the blades]

The title of this thread I find amusing. Correct by whose standard? This is a load of BS, excuse my french.

Either you can trade or you can't. It is like any other job. Some are good and some are c'rap at it. All this psychobabale is a waste of time. Very few people can make money trading because it requires intuition that only some people have the potential to develop. You can be a complete lunatic (and not think 'correctly') and make a living trading. It is a job, no point making a big deal out of it. If you can't do it, find something esle you can do. There are a lot of things you can do to make money. Trading is just a boring occupation like many others. You may be rich because you trade, but who gives a s'hit? I go to the same supermarket I used to 5 years ago when I had a full time job I hated, I still go to the toilet and stink, I still drive, sit in traffic, sleep about 7 hours a day, breath the same air. My life is pretty much the same except I can travel more comfortably. Am I happier now than when I was struggling? No.

All of this makes no bloody difference. Try it and see if you can do it. It doesn't matter if you win or lose. I mean that in the deepest sense. It makes absolutely NO DIFFERENCE AT ALL. One day you will die and will find all this BS as if trading is the best thing in the universe is stupid. Give it a shot if you want to. You will find out in about 2-3 years if you can do it. If you can, then you got a new job. If not, do something else. It doesn't mean you are a failure. It just means you tried ONE THING and it didn't work out. There are di'ckheads and b'astards in trading, as well as good people, like any other walk of life.

A successful trader is someone who just makes a living trading, rather than flipping burgers or sweeping the street or presenting a case in court.

Thinking 'correctly' doesn't come into it. Like any other job, you need some talents and skills specific for trading. Some people have them and other don't. END OF STORY. No reason having a bl'oody heart ache about it and listening to some ridiculous, laughable nonesense from d'ickheads talking absolute tosh about how they are on a different level and live with certainty and all that c'rap.

Thank god for this post. I thought I was going mad

UTB