The Way to Trade. John Piper

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СКАЧАТЬ you are full of yourself there is no room to learn anything else.

      43. We meet another trader who becomes a mentor. He introduces a new (to us) technique (Market Profile) which immediately “fits.” This is because we now have the right attitude.

      44. We build on our successes. Systems improve, results improve, and our mental attitude improves, fear becomes less of a problem.

      45. We decide to see a trading coach/psychologist (Adrienne Toghraie) and have an initial meeting in Switzerland.

      46. We make a big profit by letting profits run. We have managed to do what every successful trader must. Can we repeat this trick?

      47. We start to move away from fear, and start to become risk orientated.

      48. We realize that mental attitude is all. We see that it is vital to be relaxed, we reduce position size, again!

      49. We spend a few days in the USA working in a group with our trading coach/psychologist.

      50. We begin to make money with consistency.

      51. We get a little overconfident, again! But this time we realize the fact and the damage is limited. But we learn, again, to remain humble.

      52. We start to trade almost subconsciously some of the time. We are becoming expert.

      53. We know there are still many challenges ahead but we are confident that we will deal with them.

      54. Money ceases to be a problem, we truly live in a world of abundance.

      55. We find that our lives improve across the board and that we are achieving in a wide range of areas.

      SUMMARY

       Two different ways of looking at the same journey: the Trader’s Evolution and the 55 Steps.

       Greed orientation to fear orientation to risk orientation; greed orientation leads to losses and traders become fearful. They then need to persevere and develop the skills to become risk orientated.

       The 55 Steps (every mistake in the book) depict a stylised journey which John Piper has undergone to get where he is today.

      Chapter 3: THE HUMAN BRAIN

      This chapter looks at two brain models which are useful when considering the way traders react to markets and why.

      In 1996 I published a series of articles by Tony Plummer entitled “The Troubled Trader” (see Appendix 2). These articles were based on the concept of the “triune” brain. I also read the book Trading Chaos by Bill Williams which proposed another “three part” brain model. Both of these models are useful for the consideration of traders because they identify trading problems and trading solutions.

      Actually Bill Williams would say that is the wrong way of looking at it. Problems do not require solutions they require transcendence. Personally I would say that these models are essential and they have allowed me to go one step further and produce the Trading Pyramid. Perhaps that is a form of transcendence.

      Background reading to this chapter is The Disciplined Trader by Mark Douglas, the series of articles by Tony Plummer (see Appendix 2) and Trading Chaos by Bill Williams.

      First let me explain some of the concepts from the book Trading Chaos. Traditional “problem” solving can create a pendulum effect. A simple example is the discipline loop which traders often go through. We acquire the discipline to follow our trading methodology, we start to make good money, we then get over-confident, we start to diverge from the discipline, we start to do badly, we are humbled, we re-learn the discipline once again, we start to do well, we again become over-confident, and so it goes. This pendulum effect is seen in the real world again and again. To succeed we have to go beyond that state, this means we have to transcend that state. Bill Williams calls this “problem solving” process a “Type One Structure,” transcendence he calls a “Type Two Structure.”

      He likens the comparison between these two structures to the difference between Euclidean geometry and the new “Chaos” approach to the world. I have to say I find the links to Chaos Theory in his book somewhat tenuous, but it still includes some excellent material. There is plenty about “fractals” but then they have been around for years.

      Structure of the brain

      Getting back to the human brain. Tony Plummer’s model is in three parts: the instinctive part, the emotional part, and the thinking part – see Figure 3.1. As we evolved from the primeval swamp, or wherever it was we came from, these parts formed in turn. So the brain stem derives from our reptile heritage and is millions of years old, this provides our instinctive drives. The limbic system derives from our basic mammal heritage and involves emotional input, this too is very ancient. Of more recent development is the “neo-cortex” which involves reflective thought processes and imagination.

      The problem is that trading triggers many instinctive and emotional reactions and because these reactions are so deeply buried within the functioning of our brains it is difficult for us to override them. Hence a simple activity, trading, becomes very difficult to do well. In fact this does prompt the thought that by trading we are trying to cram a square peg (ourselves) into a round hole (the trading environment). However true this may be, I would argue that by so doing we learn so much about ourselves that the process (unpleasant though it may be at times) is extremely worthwhile. Money may be the smallest of the gains we make.

      I have rather sketched over the “triune” brain as discussed by Tony Plummer because this is fully covered by his article in Appendix 2.

      Bill Williams’ three part brain is rather different and gives rise to different considerations. He divides the brain into the three parts: the “core,” the “left hemisphere” and the “right hemisphere”. He doesn’t particularly focus on the negative aspects of each part but more on their positive aspects. This falls in line with his Type Two Structure.

      To summarize a lot of detailed material (it makes sense to read the book itself) the function of these three parts can be stated as follows. The “idiot” left hemisphere has strictly limited ability but provides the “programing” for the “core” which goes and does what needs to be done. Of the million bits of information available at any one time the “idiot” left hemisphere (which is normally in charge) can handle around 16 bits, the core can handle the lot. Hence what we do well we do subconsciously because the left hemisphere has trained the powerful core to do the job.

      Fig 3.1 The triune brain

      So the left hemisphere is “in charge” and here rests the ego which is filled with fear – primarily fear that it may become redundant. So it is always worrying, on the basis that if there is something to worry about it is still needed – illusory though this may be.

      So what of the right hemisphere? Here we have the home of the 3 I’s: Inspiration, Intuition, and Imagination (and perhaps also Insight). Some say the power of the right hemisphere is infinite, that it is a direct link to the “God Force” (call it what you will). СКАЧАТЬ