Identifying your weakness

One of my weaknesses I realised the other day is that all the tools that I utilize to plan trades are imprecise and nothing more than a casual line in the sand where I anticipate a future event to occur.

I am a precision engineer by trade. The tools and methods I use are accurate to 1000 of a millimeter. Being out by a tenth of a millimeter can render an entire job useless so my mind has become conditioned to perfection…or intolerant of mistakes. This mindset is necessary because as long as you follow the rules and trust your equipment the result is always as expected. This creates a big challenge for me to overcome.

I have to ‘unlearn’.

I have to completely change my expectations. A mind conditioned to certainty and accuracy has to adapt to uncertainty and randomness. I can tell you this is difficult. 10 out of 10 jobs I do in the workshop are perfect, in trading 5 out of 10 is an achievement! I’m like wtf?

Simply telling myself to become zen with random doesn’t gel with me, because unfortunately I have a resolute brain which will requires a crowbar and heavy lifting hydraulic equipment to get it to change its way of thinking. This is my challenge and something I am determined to overcome.

Whats your weakness?

Detail orientation. I often only think about something at the high level without exploring the details; details are important in this business.

Also laziness.

Do you do TA and PA? My guess would be that’s the course of the uncertainty and your frustration; why not try something else.

It is very much difficult to identify your weakness. And if you are able to identify it, you can be a very successful trader.

What I was trying to illustrate is the illusion of control. In our daily professional lives we conduct ourselves according to a complex set of rules that enable us to make a living and support our families/lifestyles. Think about it, every single thing you do is governed by rules.

Then we discover the markets.

Insert record scratch noise here

The market obeys no set of rules. To make things worse, you have to impose strict rules on yourself in a system that has unlimited opportunities to make money. The mindset that is so effective for you in your daily life becomes a severe hindrance in your approach to the market.

A charismatic person with influence and power over people is a blabbering wreck in front of the charts.
A successful company owner that runs things with an iron fist is a newborn baby in front of the charts.
An intellectual with countless degrees behind him is is reduced to imbecile in front of the charts.

You get my drift? Why do so few people make it as traders? I don’t know yet but I believe that it is all in the mind. Once you figure out how your mind works, you will be heading in the right direction to be good at this.

Awsome read thanks for your post, It’s like I have written the post myself I read what you wrote and everything in it points to me an exactly where I am now at with my trading. Technically my trading is very good mentally I need tons of work I think this hurdle will be the hardest to get over.

Why do so few people make it as traders? I don’t know yet but I believe that it is all in the mind. Once you figure out how your mind works, you will be heading in the right direction to be good at this.

Excellent thread!
I think nr 1 reason is that people don’t want to be 100% accountable for their own trading.
2nd is that you can come a long way with “plan the trade, trade the plan” and stay disciplined. but eventually we will be faced with our flaws such as greed, fear and other parts of us. We can all agree that greed is a bad thing in most cases, but to admit it and not act out those flaws in the markets is very difficult.
Humans in general don’t want to change, mainly because we can pretty much go on with our entire lives without having to face our flaws. However, in trading, you get to face them head on every day (all depends how many trades you have of course) That is the reason why people fail in the markets. At least that is what I think :slight_smile:

This is precisely the approach that many new traders have. There is a clear tendency to assume that lines, patterns, formations, etc [U]dictate [/U]what the market [U]will [/U]do next because that is what I learnt they are there for. But, as you say, markets do not even know, let alone care, what lines, patterns or formations are on your chart. They move according to the real, actual supply and demand for the currencies concerned.

Maybe a kind of illustration would be if you imagine the road network inside a big city. There are thousands of road signs, traffic lights, roundabouts etc which are (almost) always observed by road users because they are rule-based, i.e. these signs [U]dictate [/U]the flow of the traffic within the city. But if you removed all these signs then the traffic would tend to naturally form its own normalities concerning priorities and practices, especially at key points like major junctions, etc.

In trading, your lines do not [U]dictate [/U]the price flow like some kind of traffic signals. Rather, you are identifying the key junction points and flows in the “road network” and analysing what the free-flowing “traffic” (price) usually tends to do in such situations (simply based on what it has previously tended to do). In other words, you are only predicting the most likely outcome based on previous observations of similar situations.

The key to this is (as Lexys always [U]strongly [/U] emphasises) to drop the “rules” expectation completely and replace it with “probability” and then concentrate heavily on your risk/money management (which, apart from slippage, etc [U]is[/U] 100% under your own control). In this way, you are approaching the market with a probability that it [I]might [/I]do as expected maybe, say, 60% of the time and when it does I earn “X” pips and when it doesn’t I only lose “Y” pips (where Y<X).

As for my weaknesses? Well those are too many to mention! :slight_smile: But two are very relevant to my trading:

  1. People are made very differently, and I am a developer by nature. Even if I have a trading method and layout that I am entirely happy with, I cannot leave it alone and drudgingly trade the same thing day after day. I am constantly “evolving” it. I even wake up at night with a thought about what if I tried “this” or added “that”. So my charts rarely look the same from one week to another - which is not a good thing. This is not because they do not work, it is a compulsion to change and develop. In fact, my pleasure from trading is more related to seeing how these changes perform than in actually making money from them!

  2. Impatience. When I enter a trade according to my method I expect the price to move accordingly immediately. I then get very frustrated when it doesn’t and start to doubt the validity of the trade. I cannot count the number of times that I have sat for seemingly hours watching my position sit teasingly 2-3 pips minus and refusing to go beyond my entry point, and then, when it finally offers the chance to get out with a few pips profit, with great relief and a big grin I close it - just before it promptly drives straight though to my anticipated target level on the very next bar!

Maybe the biggest weakness of all is simply being human. We all have it - it just manifests itself in different ways in different people :slight_smile:

Yuuuuup. Thats me.

Some excellent points their Manxx. I especially like:

This I agree with 100%. But how?

How do you remove expectation (your hopes) and substitute with probability (zero emotional attachment)? You have to observe your two states of mind. Here is my personal observation:

Out the market: Zen god sipping dew off of a ginko leaf, feeling warm and safe as an outside observer in my amazing universe seeing all the obvious opportunities to make money.

In a trade going against me. Not even recognizable, I have become a paranoid wild eyed unhinged fruitcake hanging on every tick, while swearing an oath that if it just gets back to breakeven Ill never enter such a stupid trade again.

What makes the phsycho come out and how do I ‘remove emotion’ like everyone says? How do I get calm as a hindu cow whilst in a trade? Two things about myself:

  1. A trade size I was unwilling to lose.
  2. I was hoping.

Where does the hope come from ? Its because I had no conviction with my method as I had no statistical data proving to me that more often than not my trade ideas would work. I was operating in a vacuum, without the necessary data how could I possibly have faith in myself and my entries? I had not done the basic groundwork that was required to give me confidence I needed.
So I started taking screenshots of EVERY trade I took and making notes:

  1. why did I enter where I did?
  2. Did you stick to your method?
  3. What did you learn?
  4. How would you have done it differently?
  5. Was it a good trade but just unlucky or were you being a compulsive idiot again?

(The above questions I got from Lance Beggs twitter post. No affiliation)

I soon uncovered a lot of mistakes just by examining myself and the trades I was taking. This gave me something to work with. I now have the tools to see when Im going wrong and when Im not sticking to my method. I also have faith in what Im doing because my statistics show me that more times than not, my trade ideas work. It helps the emotions because Im working with a probability now, when a trade doesnt work out it is still irritating but doesnt mean so much because it fits with my probabilities.

I have personally only just started on this road of self discovery. I still have so much to learn about trading but I can tell you that the path so far has been brutal. Psychologically it feels like I’ve been mauled by a grizzly. We all have our own paths and this is mine so far. It does get easier, I feel like recently I have turned a corner and importantly I believe again! I share this because Ive always been a closed book but trading…well it is changing me in ways I never expected. I now put myself out there without fear, if I am going to take on the markets and be successful I must put my insecurities and biases behind me and become a winner in every other aspect of my life.

Apologies for rambling at the end there! I would love to hear about your journey and hopefully you read something in here that helps you on yours.

It is excellent that you understand this about yourself. Half your battle is done just by recognizing this fact. Best of luck with your journey!

I agree with you 100%. Trading forces us to confront ourselves. Once you stop sabotaging yourself, the 7 trillion dollar market can become your personal bank account :smiley:

I agree, knowing your weakness is very important start.

I don’t think so that its difficult if you have a trading journal you can identify your weakness. Simply go through it and check what habits of yours are making money and which are causing loss, then eliminate those bad habits.

Weakness is not only with trade, many trades has weakness that is not seen with trading journal like their greed and the trading done with anger.

Greed, anger and fear are always associated with emotions however anyone faces such issues should try to figure them our by trying to set them aside while trading. Trading journals can be helpful in evaluating where we had made mistakes and off course emotional issues are also the reasons which effect our trading.

It takes time to know your weaknesses, i found 2 of my bad habbits and they are greed and after a loss and being down about the loss, i change my setup.
After about 2 years of trading i found them…
Its like you guys say, keep a journal and you find your weakness faster.
I found mine after keeping a journal for about 6 months.
But the most difficult part is finding something to counter them. Everytime you trade you have to recognise them and counter them.
And in my experience (i can only speak for myself here) even after years they still are there and every trade you have to fight hem.
(sorry about my English, its not my native language)

Lack of emotion control is the biggest weakness for the traders in the Forex Market, if they can’t control then they will face losses.

Yes emotions are rarely controlled. people are not aware of these emotions until they face loss. The other weakness is inability in analysis making. Just less people are good analysis making most of the beginner traders do trading as they open trading terminal without market watch and using other analysis tools.

I think for most traders it is poor emotional management. Especially greed as many of them use high leverages when they don’t have enough experience to manage those leveraged positions.

One good way to analyze and critically identifying your weakness is by keeping a trading journal. This way you could look back at failed trades especially where you derailed and went wrong.

Well, my weakness is obssessive compulsive behaviour.