Posts Tagged ‘coaching’

Why Can I Make Money In Demo; Yet Lose My kaboose In Real Time?

Your Driving down the highway in the dead of winter.
You had heard the traffic reports of patches of black ice in certain locations on the highway. You had decided that you were going to press on with the trip and drive on using extreme caution. With this thought in the back of your mind you feel a certain tension through out the muscles in your arms, neck and lower back. You know just how dangerous this could be. As you look in the rear view mirror you make sure your children are thoroughly locked in there car seats. You look over to your right to notice your wife checking her Blackberry, and as you turn your head back towards the road you feel something is very wrong! Yes, something is definably wrong with the motion of the car. It starts to weave back and forth, slightly at first.
You have a white-knuckle grip on the steering wheel, which starts to jerk back and forth, more and more severely. “It’s malfunctioning!” You scream out-loud. Just at that moment you slide into the side of an 18 wheeler, you bounce off the gas tank of that 18-wheeler that was keeping pace with you on the right. You hit the brakes and instinctively know its not the correct thing to do, but its to late! You start spin into a 360’s and hit into several other cars. Its all happening in slow motion, and you are relived to see that the 18 wheeler is receding from your view, but just then you are hit again by another oncoming car, and you car rolls over! Spinning in circles, you can’t believe this is actually happening.
When the car stops moving, you ask your wife are you okay? As you look in the rearview mirror, you see your children, hanging upside down in their car seats, looking very surprised. You wife is hysterical and hyperventilating, You are bleeding and don’t know the extent of your injury. You attempt to open the door and cannot due to the damage from the collisions. At this point illogical thoughts come into your mind, of the car exploding into flames, and you whole family perishing on the scene. You panic further, and can’t even remember were the seat beat release button is.

Why can’t you calmly consider all the information available?
You could for example open all the windows, the electronics still work. You could then calmly unbuckle your self and release you family by pulling them out the windows! You could dismiss the illogical thoughts of fire, and assess the situation as is, after all your all awake and talking. Do you consider any of these logical alternatives? No, because under the stress of the situation, these alternatives do not exist for you!

So What Does This Car Accident Have To Do With My Trading Performance?

The parallels of uncertain events whether they be in the physical world, or in the mental trading arena have the same affect on human performance. Just as in the car crash above the over powering stimuli of the unknown forces the
Sympathetic Nervous system to takes over. This is the fight or flight response, and is the not the best for solving even the simplest problems. So this is one of the main reasons why people ca make money in a Demo account yet can not repeat the performance in a live account!
When Money Is At Stake, People Tend To Worry, And Worry Has A greater Impact On Human Performance Then Emotionality!

What’s the difference between these to states?
Emotionality Is exactly what we went through in the car crash, It is the Biological release of the flight or Fight response, when we are under physical attack.

The State of Worry is the precursor to emotionality, it is the concern for one performance and its consequences. It puts the trader in a negative self evaluation that often is self fulfilling in a failure. The trader is always ready to kick in the flight or fight response and as stated above is not the correct state of mind for problem solving.

Trading Contrary To Popular Belief Is A Complex Task!
Another reason people can make money in a demo account and not in a live account is because the major incentive is not present in a demo account.
The major incentive is money once again. Now we stated above that money can produce worry, which hampers human performance. However the second part of the equation is that when money is at stake GREED PRODUCES LOSSES!
Incentives hamper human performance, traders focus their attention on the outcome rather then a solution to a problem or task. This make them extremely inflexible and leads to losses.

Traders In A Live Account Get Frustrated!
When Traders begin to trade a live account they can become frustrated, frustration will cause a trader to become angry and do silly things. They will revert to doing the simplest tasks which maybe be to do nothing. This in turn causes them to cut profits to quickly and let Losses run!

So How Do We Reverse This Pattern?
Well just by it being pointed out to you, it should be of a big help. However you must realize that this can not be cured over night, you need to have a system in place.

Money Management is one of the primary systems to get you out of the primitive state of trading. Money Management is a plan to minimize losses and maximizing gains. Just by following this one plan will require discipline and force you in higher thinking. This will get you out of the primitive state and into a state where you control your emotions and stay out of the Emotionality or State of Worry!

If You Are Interested in Breaking these Primitive Trading Cycles Please See Money Management by Tom Strignano.

Forex Talk In The Street ~Dollar Yen

I find it interesting, to note that the Yen has made its way “up” and through 84
Yen/dollar and that in the process it has broken a very, very well defined downward trend for the
dollar, a trend that was obviously in the Yen’s favor. Now that trend has been broken and not only that,
but we think the trend is reversing against the Yen and for the dollar.

Certainly Japan’s exporters would prefer this situation to the other, and so too does and shall the Bank of
Japan. The Bank was rumored to have considered intervening in the dollar’s favor, against the Yen, when the Yen/dollar rate was putting 80 to test, although it never actually
did intervene. Jawboning was sufficient to keep the Yen from strengthening further. Now, however, with the Yen weakening it would make far greater sense for the monetary authorities in Tokyo to come to the Yen’s “aid” and sell it now, for trading when the trend is in one’s favor is far easier and far wiser than it is to intervene contrary to the trend.
I would expect a pull back to 83.35, then a resumption of the trend for the Yen to Weaken. I have a target of 86.50 in the short term.

Talk In The Street~November 15th

The dollar on the  FOREX MARKET as the new trading week begins is mixed, for it has risen proportional to some of its major and
its minor currency trading partners while it has fallen comparative to others. Try as we might, notwithstanding, we see
little in the way of consistency in how the dollar has reacted since the end of the G20 meetings, for it has fallen relative to the EUR and Sterling, but it has risen relative to the Swiss franc; in other words it knows not what to do relative to Europe generally. If there is one consistency it is that currencies that are “China related”‚Ķ that is currencies where there is more Chinese trade related interest than in others‚Ķ such as the Yen and the Aussie and Kiwi dollars‚Ķ have weakened the most relative to the US dollar; otherwise
incompatibility reigns.

Concerning the G20 meetings, the consensus is that the Presidency has suffered a series of defeats at the meetings, coming home with little that was on its agenda to accomplish. We’ll not debate too greatly with that judgement, for the US went to the meetings hoping
to come away with rather strict numeric rules regarding trade deficits, budget deficits and the like and hoping too to come home with some consensus amongst the attendees that China’s currency policies were wrong and needed to be accompanied too.
The US may not have wanted to have China named directly in the post-meeting communiqu√©, but it diindeed hope that there might be some talk of “undervaluation”of the YUAN  at the very least. It got nothing of the sort.

To that end then the meetings were a disappointment, and for President Obama, who only a year and one half ago reigned exultant, having been adorned with a newly granted Nobel Peace Prize, they were a embarrassment. Reality is a harsh mistress. From my perspective, however, these meetings are always overhyped and the best that one can accomplish is to know that the lines of communication are always made more open amongst the attending nations, and that’s all we got was lip service!
Euro $ projected Range 1.3500-1.3820

GBP$  1.6190 1.5850.