The inner market
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Thread: The inner market

  1. #1
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    The inner market

    Like one trading coach said - "We don't just trade the market, we trade our PNL, and our feelings about our PNL*"

    PNL - equity curve

    I will provide you small example of how one can trade his PNL and feelings about his PNL:


    Have you ever faced this pattern - after long break you start trading and you feel focused, you feel some anxiety but not very much. Odds that you will be selective and cut bad trades are pretty good.

    If you are experienced enough, you will definitely will be able to make some money in this state of mind.
    After series of profits you might be even more aggressive with your best setups and your PNL will accelerate.

    Guess what happens next?

    Your performance anxiety increases and your pressure becomes stronger.

    Many traders confirm that anxiety is higher after profits are made not before.

    It means that they now bet not only money on their trades but also feeling of being successful (profits and positive performance is equal to success in some traders' minds).

    Pressure increases and, guess what? Some traders start trading defensively and thus, lose some money ("defensive trading" can't co-exist with profits), some start trading more aggressively - their new indentity of "successful trader" creates "demand pressure", and then, after couple of losses they start defending their bad positions, producing losses, making revenge trades and so on.

    tradingyourpnl.jpg

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    Rookie martyn's Avatar
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    True, it looks like if we had a better benefit, then we are a growing concern. Maybe it is influenced by our expectations are getting bigger and we would like to hope that we can accomplish in a short time. Usually when we encounter situations like this, we will trade with more haste, want to quickly get a bigger profit and ignored the usual trading plans we made as before.

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    Actually after i earn a serious of profits both my anxiety and confidence increases. With confidence my desire to earn more profits also increases. Thus I start trading with bigger lots and this usually leads to a bigger loss. I usually lose the profits of a couple of trades in a single trade or even more.

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    Quote Originally Posted by PROPENSITY100 View Post
    Actually after i earn a serious of profits both my anxiety and confidence increases. With confidence my desire to earn more profits also increases. Thus I start trading with bigger lots and this usually leads to a bigger loss. I usually lose the profits of a couple of trades in a single trade or even more.
    I would say, that's overconfidence. Overconfidence multiplied by anxiety creates deadly cocktail and leads trader straightly into tilt.
    I'm not saying that tilt is necessary in this case, but odds for destructive behavior are greater

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    Last edited by Value trader; 09-09-2013 at 02:08 PM.

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    I need to say some continuous profit will increase our confident then become over-confident. If we trade with over-confident then we will forget about the risk and telling ourself, trading is without risk. But, after suffered unsuccessful order then it bring a big pressure. Thats why i am totally agree with the statement "more profit will increase pressure".

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    Well, not actually game pusher but more to the gamblers. Can't blame them at all because many people just didn't want to get behind the train and they want to earn as much money as possible. For that, they make a position before the trend in the market decided.

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    The thing is that , the market will never moves in the perfect sloping method, this is not possible the traders that trades the market must knwo also that it is never possible for them to get that result, if not the market will crash internally, nad this is what we all want. That is why the retracements of the market at times is very effective in keeping the market.

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    Rookie Azis Muslim's Avatar
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    Quote Originally Posted by Value trader View Post
    I would say, that's overconfidence. Overconfidence multiplied by anxiety creates deadly cocktail and leads trader straightly into tilt.
    I'm not saying that tilt is necessary in this case, but odds for destructive behavior are greater
    Yes sir, overconfidence is not good for a trader because he is very confident of all the action he did because he had previously been getting a lot of profit in the same way. But, the state of the market will never be the same, all the time changing. When this happens, and he's still too confident, this is the point where he just started his failure. I think, we should have to remain humble even though we get a lot of profit.

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    Rookie rinaji's Avatar
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    Quote Originally Posted by Azis Muslim View Post
    Yes sir, overconfidence is not good for a trader because he is very confident of all the action he did because he had previously been getting a lot of profit in the same way. But, the state of the market will never be the same, all the time changing. When this happens, and he's still too confident, this is the point where he just started his failure. I think, we should have to remain humble even though we get a lot of profit.
    And I think all of the excess is not good, over-confidence is an excessive action in us that tend to do reckless things without calculation. Excessive euphoria after getting huge profits is one of the causes of over-confidence. Psychologically it is a bad thing. Low self-esteem is a positive thing that a trader does not make a lot of high-risk behavior.

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    Do you believe than if our profit is reaching 61 fibo level, it will come to 100 % level for sure :) I often think about my traveling..as a trader i never believe in 100% that iwould come from place a to place b, i am watching that in probability, and when i reach 61 % of my journy , i am sure that i will evenutally come to my goal, place b .. do you have some similar examples?

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