Frustration

[Trader Question]

I am writing to you and or Charlie. I am now starting lesson 30. For the last 6 weeks or so I have been excited because more times than not I have the day's framework in the 30 yr bonds studied the night before.. I spend time each night reviewing charts and determining support and resistance. Although the levels (C..D. Geometry) are very good,

A.C.

[pldot]

===so far so good... Analysis ahead of the game. This should be reduced to yes-or-no decisions... If X occurs then Y is the action to take, otherwise Z is happening etc ...

[Trader Question]

I am not taking advantage from a profitability standpoint. I believe many times I either don't trust the levels enough, or seem to make the trade more complicated than it should be.

A.C.

[pldot]

====this is the same as saying that your analysis is not complete, and that your research is not deep enough to believe in it. The answer would be more analysis and more research... But AHEAD of the game, not during it.

[Trader Question]

When I miss a trade opportunity, I then seem to miss the next trade also . As this business is truly one where 1 mistake leads to another.

A.C.

[pldot]

===this is probably a pure emotional issue, where you are feeling bad because of your "error" and need time to recoup. If the next trade signal is valid then you have to take it.

[Trader Question]

Is my issue one that you have heard before from new P&L'rs?

A.C.

[pldot]

==yes of course...

[pldot]

This is a known issue among traders, you are not the first to comment on this difficulty. And your diagnosis and suggested remedy is right on target... You need to be less emotional and more mechanical in your trading. This is not always easy but there are definite and well-tested methods for accomplishing this. The topic is discussed in the Lessons but the primary reference would be to the psycho papers, which lays out the conceptual framework for a trader's mental processes (the three centers of activity---the intellectual, or analytical, the mechanical or taking action part of the brain, and the emotional or reactive facility.) The descriptions of the most appropriate mental stance for a trader is discussed in the last chapter of that book...

The key is to separate the intellectual analysis of the trade set-up and the market condition from the mechanical action of taking the trade. Trading itself should b e virtually entirely mechanical. Emotions play no part and will invariably get you in trouble and so the object is to completely eliminate the emotions, apply analysis only ahead of the trading situation, and when trading to do so in a mechanical manner.

The appropriate analogy is to driving a car... When you are learning then your analytical and emotional centers are active, and driving is both "thrilling" and dangerous... Because you are always trying to think of what to do next and every traffic situation is scary and filled with emotion. But

the mature driver can drive "on auto pilot," mechanically, without much thinking, and without emotion.

Training your mind to eliminate emotion and to apply the intellectual facility only in pre-market and in research modes takes some time and will not be accomplished in a day. But recognizing the different modes, and understanding why and how emotions can throw you off, and seeing what to do about it when that does occur, is very helpful. I recommend a close study of the psycho papers book, and the relevant sections of the lessons dealing with psychology.