Trading Lesson: 12/30/2008
Summary: a review of some 5DD and 5DDC setups, and an inquiry into self talk
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The Trader: COP has a nice chart today. Had my eye on it after you put it on your list of 5DD. Got distracted after it went down a 6th day. Should have watched it closer as it seems like one of your classic plays that has played out to form.
Coach: let’s take a look at COP, and see what we can see
Coach: tell me what patterns you see;
Trader: 5DD and WO
Coach: (technical discussion)
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Coach & Trader: <technical discussion of the 5DD techniques & trade mgt>
Focused inquiry on the Psychology of Trading:
The Coach: you chose the word “distracted”, why that word? The Trader: Used distracted because I should have kept watching COP after it went down for a sixth day, but I was looking elsewhere in the market. I am now attributing my not looking at COP because of my current interpretation of being distracted by other potentials. I think I need to plan what I am going to be focusing on a little better before the market day starts.
I will submit to you that the Voice that spoke those words is a different part of you than the one who is making an honest effort to achieve mastery of trading, would you agree?
so for the moment, lets call them “KnowItAll” and “NewTrader”
K = know it all voice, NT = newtrader
K says ” I (really, you) got distracted” and says it in a way that you (NT) feels bad about missing the original trade, which in retrospect looks so easy and perfect
NT feels bad for missing the easy one, and vows to work even harder to not miss them in the future; the only way to do that, realistically, is to widen your span of attention and double or triple the number of signals/setups
however the energy required to do that will take focus away from mastering the patterns at your current level
watching more things for potential will actually then get in the way of mastering the forms
try this script instead:
i didn’t get distracted from COP, i was simply focusing on my current set of setups
‘
i “shouldnt have seen it” because i chose to focus my attention
i know there are millions of setups that i am not watching
i don’t worry about them
i attend to the ones i am focusing on to play them well
when i have mastery of the patterns at my current level of attention, and “span of control”, i will widen my area of focus for more opportunities, and/or add to my set of tradeable patterns
so, now when we see COP in the chart above, we aren’t looking at the 5DD that got away as a way to beat ourselves up for missing a layup, but rather simply as
(1) a confirmation of the basic soundness of that pattern,
(2) a piece of information that confirms the quality of the 5DDC pattern that follows it,
(3) a way to consider framing COP fro trading now using the 5DDC pattern,
(4) an opportunity to examine self talk, and what hindsight can impose on us emotionally
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imagine this is a big lake and we are trying to catch fish
we have a plan and go to the lake to catch bass in a certain spot where bass hang out, and we have kit and bait and patience and go at the right time of day
we put out our lines
we look across the lake and there is a guy catching <any fish, not bass>
if that’s going to make us feel mad or bad or sad, then we are going to be mad, bad, sad fisherman all the time, guaranteed
we want to be glad fishermen
but we will also be fishermen that learn too, and focus on getting better with our patterns, and looking to incorporate the patterns of others in a sensible way
we will remember though that fishing is a lifetime, and we wont catch them all, and will focus on our objectives, and share what we learn with others, because there are an infinite number of fish, and all the time in the world
The Trader: Thanks for the insight and perspective so well noted above.
The Trader: I have learned recently something about myself that I was not aware of before. I seem to be more upset when I miss potential good moves and trades rather than getting upset about losing in a trade. Knowing this will help me in the way that I view trading. My statement earlier would seem to validate my being more upset at missing the original COP trade. Your fishing analogy helps put it in perspective.
Coach: a thought experiment: practice putting a voice and a face to the actor who is generating the “upsetness”. learn to recognize that as soon as it happens, and think about the purpose that person/actor/part serves for you; its something important to you now, because it keeps coming back
i think there is some goodness in the ideas above of “the Parts” and the Voices and the roles they are playing in the theater of the mind. the words we choose come from places deep within us, i believe, and are a way to follow the trail back to our core being to see what’s going on