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In much of the trading literature, we are instructed to “think in terms of probabilities”. I am familiar with Trading in the Zone and the exercise described there. All this makes sense theoretically when reading from the comfort of the couch. But when viewed on a trade by trade basis, it can fly out the window as you experience the aggravations of no fill on a profit target, just barely stopped out on a good trade, etc, etc.
ReplyDeleteCan you suggest any exercises (trading related or otherwise) to practice one’s ability to truly think in terms of probabilities? Maybe after lots of practice with nothing at stake one could hone this ability.
Thank you.
For me, it was "losing attention." When I traded one system, each fill, almost fill, missed target, stop at exact high or low, etc. impacted my psyche a great deal. I knew that the probabilities were there that these things could and would happen, but I always felt like I was singled out - that the market was out to get me.
ReplyDeleteNow, I trade 10 or so systems. So, these kinds of things happen 10 times more frequently (just look at a few posts ago, where I was filled at the high, and the price has crashed since then!). BUT, even though it happens much more often, it doesn't bother me as much.
The aggravation is reduced because I have "lost attention."
"Losing attention" for me means that I do not focus on any particular trade. Some trades I never even look at, since I am probably taking 10-50 or so per week, with probably that many positions on at any one time. I can't keep track of it all!
If you can't do what I do - let's say you are only trading 1 or 2 systems, just change your focus. Assume that all your fills will be missed, trades will be losers, etc. Than, you'll be pleasantly surprised when it works out good!