the age at which myclient thought that he would also die.) When it didn't happen, he gave upthe whole notion. Deciding to build up his stamina, he asked me for sometips on how to become a runner, since he knew I had been running foryears. In a sense running was a new skill for him and definitely a new wayof expressing himself. So we went running together. Of course, what hefound out was that he couldn't run. Not that he couldn't take the steps inthe fashion of a runner; it is just that every time his heart rate started toclimb, he would stop dead in his tracks, even though his intent was to keepon going. His beliefs about dying from exercise still had a great deal ofpower in his mental environment. This belief acted as resistance, workingagainst his conscious intent to run. Consciously, he was giving his bodyinstructions to keep on going; his conflicting belief, however, was saying."No way, pal; you're staying right here until your heart rate goes down." Inthis situation it was very easy to determine what component of his mentalsystem had more power over his behavior.
The third reason why you would want to learn to change from the insideinstead of forcing the environment to conform to your psychologicalmakeup relates strictly to trading. The markets are just too big for oneperson or even a group of individuals to prevail for long. That is, if youdon't have the financial power to move prices in your direction, then you aregoing to have to learn how to flow with and constantly adapt to the outerconditions.
The choice is you can either adapt or continue to experience some verypainful lessons. A quick hint: the intensity of your emotional discomfortand pain you experience as a trader is an excellent indication of how muchyou will have to change to trade without fear and be consistentlysuccessful.
You might ask, "Why consider the market from a psychologicalperspective at all? Doesn't the market behave as it does regardless of what asingle individual thinks or feels about it?"
My answer is this: "The market behaves as it does because of theinteractions of hundreds of thousands of people. And since all theseindividuals are members of the human race, regardless of national origin,
33religious conviction, or what have you, they will all have one thing incommon—the psychological structure of the human mind." Thispsychological structure behaves in certain highly predictable wayswhenever it encounters stress or split-second decisions. In the market, thefear of losing one's fortune is every bit as intense as the fear of losing one'slife from an attack by a wild animal.
However, even though we all participate collectively, the market is not thesame for all of us. Every move the market makes has a different meaningand impact on each of us as individuals. And every trader's experience ofthis movement is the result of his individual mental process of inputtingenvironmental information (perception) and all the unique internalpsychological factors that affect his behavior. So, even though two or moretraders can agree on what the current price is, they will not be sharing thesame experience of how that price is impacting them personally.
The meaning you place on any particular price change is the result ofyour beliefs. As a trader you constantly have to define what is high and whatis low relative to your beliefs about the future. That is the only way you canmake money: buy low and sell it back at a higher price (in the future) orsell high and buy it back at a lower price (in the future). As long as pricescontinue to move, that movement will create opportunities to buy low andsell high or sell high and buy low, and these opportunities are available forall traders. You create the game in your own mind based on your beliefs,intents, perceptions, and rules. It is your own unique perspective and no oneelse's and the secret is, you can and do choose how you perceive events.Even if you are not aware of exactly how to control and change yourperception to make other choices available to yourself, you are stillchoosing, even if it is out of ignorance.
Until you learn the appropriate skills, your success as a trader will hedetermined by a number of psychological factors that often have little ornothing to do with the markets.
UNSUCSESSFUL TRADERS
There are many reasons why traders are not successful. These reasons can bebroken down into three broad categories.
Lack of Skills
The trader is generally not aware that the trading environment is differentfrom all other environments. Trading has the appearance of something thatshould be easy to do coupled with the possibility of making vast amounts ofmoney in a relatively short period of time.
The trader will thus create some inflated expectations of success.Adherence to these inflated expectations without the appropriate skills equalsdisappointment which equals pain which equals psychological damage which
34equals fear. Fear diminishes the trader's ability to be objective, execute histrades, or learn about the fundamental nature of the markets.
Of course, it is possible to make money without the appropriate skills.However, without these skills the trader will invariably lose what he madeback to the markets plus more. The result is disappointment, pain,psychological damage, and fear.
People generally don't know how to repair psychological damage and as aresult don't know how to release themselves from their fear. To compensate,we learn some very sophisticated ways of covering our fear up. In society wecan get by and even be successful with a facade of confidence because peoplewill generally support each other's illusions about themselves. The market,however, has no vested interest in supporting anyone's illusions abouthimself. If a trader is feeling fearful, he can try to cover it up all he wants buthis trading results will readily reflect his true feelings.
Limiting Beliefs
Most people have a whole assortment of beliefs that argue against theirsuccess as a trader. Some of these beliefs you may be consciously aware of,most of them you may not be aware of. In any case, you cannot negate theirsignificance in how they will determine and affect your behavior as a trader.
Many traders will try to circumvent confronting these limiting beliefs bybecoming an expert market analyst. It doesn't matter how good a market analystyou become; if you don't release yourself from the effects of these beliefs, youwon't be successful to the extent these limiting beliefs have power in your mentalsystem. There are many market gurus who can predict market moves withuncanny accuracy but can't make money as a trader. Either they don't know thenature of beliefs and how they affect and determine behavior, or they don't wantto confront the issues surrounding these beliefs. You have to want to do it ornothing will happen. And if you choose not to, you will be subjecting yourself tothe same recurring cycles of negative experiences again and again until you eitherdecide to work through whatever issues are necessary or lose all your money andhave to give it up.
Lack of Self-Discipline
If the type of environmental conditions exist that are beyond your skill level torespond to appropriately (without doing harm to yourself), then you will need toinstitute some rules and limitations to guide your behavior until you learn howto act in your best interests. When you were a child your parents didn't let youcross the street by yourself because the consequences of your inability to crosssafely might have precluded your getting a second chance. When you were ableto make the appropriate distinctions about the nature of traffic, your parentstrusted you enough to cross the street on your own.
Until they trusted you, they always feared the possibility of your getting hit bya car. As a result of their fear, they restricted your freedom of movement,
35regardless of the opportunities that may have existed for you across the street.Your interaction with the trading environment works the same way. Thedifference is that no one is stopping you from standing in the middle of the street(metaphorically) to get hit by a truck. You are the only one who can stopyourself. After you have been hit once or twice, it might not be so easy to crossthe street, regardless of how good the opportunities look on the other side.
What makes it even more difficult (continuing with the traffic metaphor) tostep out into the street is when you further realize that the cars and trucks cancome at you in a seemingly random fashion. All of a sudden you're lying on thestreet not even knowing what hit you because you thought you were beingcareful.
36PART II
The Nature of theTrading Environmentfrom a Psychological
PerspectiveIn Chapters 1 and 2 the material presented outlined some of thedifficulties of trading. In the next six chapters, I will get much more specificby explaining the characteristics of the market environment from thepsychological perspective of the individual trader. From this perspective itwill become clear to you how the market environment is much differentfrom the cultural environment you learned to function within. This willconfront you with some very unusual psychological challenges.
My primary objective is for you to understand clearly why any degree ofsuccess as a trader is so elusive, attained by so few, and why you may need tochange some deeply ingrained cultural attitudes and beliefs to functionsuccessfully in the trading environment.
38CHAPTER 3
The Market IsAlways Right
If all trading stopped at any particular price, what would this last postedprice represent? At the most fundamental level, this last price (or anycurrent price) would represent the consensus belief about value, relative tothe future, of all the traders who are in the market in that moment. Thecurrent price is a direct reflection of the beliefs of all the traders who chooseto act as a force on prices by putting on a trade. So, when there are twotraders, one wanting to buy and one wanting to sell at a price and do so, theyhave made a trade, and they have also made a market.
All that is needed to make the market right are two traders willing to tradeat a price. Regardless of the criteria they used to determine value, howrational, irrational, meaningful, or meaningless by your or anyone else'sbelief system, if two traders are willing to express their belief in futurevalue by making a trade, they have made a market. Unless the trade can beundone, it has to be right by virtue of the fact that it was made.
What you wanted, thought, believed, or expected is of no consequencein the overall scheme of things unless you can trade with enough volumeto control the market and move prices in the direction you deem to becorrect. To do this, you would personally have to represent a buying orselling force strong enough to absorb all the counteracting buying orselling represented by the traders who didn't happen to agree with you, atany given moment, with enough financial power left over to bid or offer theprice where you want it to be.
39For an observer of market behavior, each trade that is made and the typeof movement it creates in prices can tell you something about theconsistency of the market and potential for movement in a direction—if youcan discern the meaning and put that meaning within some frameworkdefining opportunity. Price movement creates opportunities to buy low andsell high, or vice versa, if you can perceive what is likely to be high and lowrelative to some point in the future. Movement in any given direction isequivalent to the amount of force that is being applied to create thatmovement.
For example, if prices penetrated all-time lows, the fact that you mayhave believed that they would not do it is meaningless, unless you canpersonally trade with enough volume to move the price back above the oldlow. You have to consider that for prices to have penetrated all-time lows,there must have been more traders who believed that the current price wasabove what they considered to be of value, at least enough to where theybelieved the all-time low was a selling opportunity or they would not havesold. For prices to follow through and continue to go lower would indicatethat there are more traders willing to act on their belief that prices are highand as a result sell than there are traders who are willing to buy at thoseprices (all-time lows).
What you believed about value and your reasons for believing it may beof highest quality, but if the market doesn't share your belief, it doesn't reallymatter how "right" you are based on your superior reasoning process orwhat you believe to be the quality of your information, because prices aregoing to go in the direction of the greatest force.
The point here is that right and wrong as you may traditionally think ofthem don't exist in the market environment. Academic credentials,degrees, reputations, even a high I.Q. don't make you right in thisenvironment as they would in society. Traders, acting on their belief in thefuture by putting on a trade, are the only force that can act on prices to makethem move. Movement creates opportunity to make money, and making moneyis what trading is all about. This is also true for the hedger trading to protect thevalue of his assets.
Each individual trader will define what market condition represents enoughof an opportunity to put on a trade for whatever reason suits him. Regardless ofhow wrong you think he may be, if the net result of the collective actions of allthe traders participating is moving prices against your position, then they're rightand you're the one who is losing money.
The market is never wrong in what it does; it just is. Therefore, you as anindividual trader interacting with the market—first as an observer to perceiveopportunity, then as a participant executing a trade, contributing to the overallmarket behavior—have to confront an environment where only you can bewrong, and it's never the other way around. As a trader, you have to decide whatis more important—being right or making money—because the two are notalways compatible or consistent with one another.
40CHAPTER 4
There IsUnlimited Potential forProfit and Loss
The most effective manner to illustrate the "unlimitedness" of the marketenvironment is to compare it to gambling. With any gambling game youwill always know exactly how much you can win or lose each time you play.You decide exactly how much you want to wager, you know exactly howmuch you can win as well as lose, and you may even know the mathematicalodds of either possibility.
This is not the case in market environment. In any particular trade younever really know how far prices will travel from any given point. If younever really know where the market may stop, it is very easy to believe thereare no limits to how much you can make on any given trade.
From a psychological perspective this characteristic will allow you toindulge yourself in the illusion that each trade has the potential of fulfillingyour wildest dream of financial independence. Based on the consistency ofmarket participants (ratio between buyers and sellers) and their potential toact as a force great enough to move prices in your direction, the possibilityof having your dreams fulfilled may not even remotely exist. However, ifyou believe it does, then you will have the tendency to gather only the kindof market information that will confirm and reinforce your belief, all thewhile denying vital information that may be telling you the best opportu-nity is in the opposite direction.
If you are in a losing trade, the market could be moving farther andfarther away from your entry point, increasing your potential loss by themoment. While this is happening, however, you may only be able to
41imagine it coming back in your favor, instead of confronting the possibilityof the market continuing against your position. This type of thoughtprocess will continue until the sheer magnitude of the loss overwhelms you,and the possibility of the loss increasing is suddenly more pertinent than thepossibility of the market coming back. You finally exit the trade neverintending or ever imagining you could have allowed yourself to take such alarge loss.
From a psychological perspective, the possibility for unlimited profits,happiness, power, and so on, whatever it means to you when you imaginemaking all the money you ever wanted to make, can be extremelydangerous. The possibility may in fact exist, but how realistic it is in anygiven trade is another matter.
There are several psychological factors that go into being able to assessaccurately the market's potential for movement in any given direction. Oneof them is releasing yourself from the notion that each trade has thepotential to fulfill all your dreams. At the very least this illusion will be amajor obstacle keeping you from learning how to perceive market actionfrom an objective perspective. Otherwise, if you continually filter marketinformation in such a way as to confirm this belief, learning to be objectivewon't be a concern because you probably won't have any money left totrade with.
42CHAPTER 5
Prices Are in PerpetualMotion with No DefinedBeginning or Ending
The markets are always in motion; they never stop, only pause. As long asthere are traders who, for whatever reasons, are willing to buy higher thanthe last price and, as a result, bid the price up, or traders willing to sell forless than the last price and offer the marker lower, prices will remain inperpetual motion. Even when the markets are closed, prices are theoreticallyin motion. For example, what price traders may be willing to buy or sell aton the opening the next day does not have to be at the price level themarket closed at the previous day.
What are usually thought of as three simple decisions of enter, hold, orliquidate a trade become a perpetual process of deciding how much isenough from both a profit and a loss perspective. If you are in a profitabletrade, is there ever enough? Greed stems from a belief that there is neverenough or there won't be enough. In an unlimited environment that is inperpetual motion, isn't there always the possibility of getting more? Theappetite of true greed can never be satisfied; it will always leave the greedyones with a feeling of lacking regardless of how much they have acquired. Ifyou are in a losing trade, you won't want it to exist because it representsfailure, so you can just act as if it doesn't, by convincing yourself that you arein a winning trade that hasn't gone in your favor yet.
The "how much is enough" question can be answered in an infinitenumber of ways relative to your beliefs on the value of money, what youneed it for, how important it is, can you really risk it, how secure do youfeel, and what is enough today may not be enough tomorrow because of
43other factors in your life—all relative questions that have no definitiveanswers and change with the changing environmental conditions. Having toconfront these personal issues as a trader will only contaminate yourobservations of market movement because they have nothing to do withmarket direction and the potential or lack of potential of any particularmarket move. This is why successful traders have always statedemphatically, "Only trade with money you can afford to lose," meaningmoney that has little or no value in your life. The less meaning the moneyhas, the less potential there is for your personal "how much is enough"issues to contaminate your perception of market movement.
Thus, if you allow it, the market can always tempt you into thinking theremay be more to be had in a winning trade and always give you something tohang on to in order to justify your hope that it will come back and make youwhole, if you are in a losing trade. Succumbing to either one of thesetemptations subjects you to the possibility of some very negative andpainful consequences.
The market environment is also unstructured in such a way that, from apsychological perspective, there is no beginning and there is no ending.What I mean by this statement (before you think that it's not true, the marketopens and closes at a specified time every day) is that from the perspective ofthe individual trader, the game only begins when you decide to enter andends only when you decide to exit irrespective of market openings andclosings.
You have the freedom to structure the game inside your mind in anyparticular way you please. You can get in whenever you want for whateverreasons are good enough to justify your actions. You can get out wheneveryou want. In fact the game only ends when you have decided that you'vehad enough and take the appropriate action to end it. The psychologicalimplications to the individual confronting these conditions are staggering.
Entering a trade will involve all your beliefs about opportunity inrelationship to risk, missing out, needing a sure thing, and not being wrong.Exiting a trade will involve all your beliefs about loss, greed, failure, andcontrol.
Considering the unlimited potential for profit, entering the market willbe much easier for most traders than will be getting out. This is becauseexiting the trade will require that you confront your beliefs about greed,loss, and failure in relationship to the constant temptation of the possibilityfor unlimited profits.
These individual psychological issues are completely independent ofobjective market action. And even more significant, as I will explain inPart IH, your beliefs about loss, being wrong, failure, and control willoperate independently of your conscious intent. For example, think of thelast time you perceived an opportunity to profit and the fear of beingwrong, or losing, and so on, immobilized you, keeping you from putting onthe trade.
44To the extent that these issues exist as a component of your mentalenvironment, they will determine the effect they have on your perception ofmarket activity, the decisions you make, and your ability to act on what youdecide.
However, one of the most significant and potentially damaging factorsrelated to this no beginning and no ending characteristic of the marketenvironment is that it allows you to be a passive loser. The best way toillustrate this concept is to compare the markets with any form ofgambling games. For example, with blackjack, horse racing, or craps theplayer has to make a conscious choice to play and decide before the eventexactly how much he will wager. The event begins and ends according tothe rules of the game, and the risk of loss is limited to the size of the wager.
Each new event is a fresh start, where the odds of winning may bedetermined by mathematical probabilities and the rules of the gameautomatically take the player out after each event. When the game ends, theplayer knows exactly what the outcome is and then must make a consciousdecision to participate again. Therefore, the structure of the game forces theplayer to be an active loser. To subject himself to the possibility of losingany more money than he has already lost requires that he place a wager for aspecified amount. He has to actively participate to lose and do nothing tostop losing. Obviously, if the player does nothing, he will not be subjectinghis assets to the possibility of loss.
If the player is losing consistently, he will need to confront his beliefsabout loss and failure to quit playing altogether. This could be difficultbecause he can always rationalize that, based on the odds, he is bound to wineventually and that he can always quit after the next game. But he does notneed his own mental structure to end any particular game because it'sautomatic.
This is very much different from the market environment where you canbe a passive loser. Once you put on a trade, you have to activelyparticipate to end your losses. You don't need to do anything to continue tolose, and the market could go against your position indefinitely. If for anyreason you choose not to act or can't act, you could lose everything you ownand more. Depending on the size of your position and the volatility of themarket, this could happen very quickly. The only way out is to confrontyour personal issues about greed, loss, and failure. What specific issues orcombination of them come into play in each trade will depend on whetheryou are in a winning or losing position.
Since, all of us seem instinctively to avoid confronting any issue thatcould cause pain, such as getting out of a winning trade too soon orhaving to admit we were wrong to get out of a loser, the easiest way out ofa situation like this is to convince ourselves (indulge ourselves in theillusion) we are in a winning trade that will never end or gather all theevidence possible to suggest that we really aren't in a losing trade.Therefore, in either case we will have no reason to confront the forces
45inside of us that keep us from objectively perceiving what the market istelling us about the possibilities and potential for profit in any givenmoment.
The markets make it extremely easy for you not to have to confront thesevery tough psychological issues. For example, if you focus your attentionon price movement at the tick-by-tick level, the market can graphicallydisplay billions of combinations of behavior characteristics and pricepatterns to get from one point to the next. It is very easy to use this type ofinformation to support any belief, rationalization, justification, distortion, orillusion you need to want to have about where it is going in the future.
Most traders will attempt to simplify price movement by thinking theprice can only do three things. Go up, go down, or stay basically the same.Some traders may even carry this distorted logic to the point where theybelieve there is a 50/50 probability for success in any give trade. This ofcourse couldn't be further from the truth. For example, let's say thatprices stayed within a 10-tick trading range for an entire trading session, ifyou take into account each tick, how many price patterns is it possible for themarket to display going from the top to bottom of the range and then back again?I'm not a statistician, but I'm sure it's at least millions. To illustrate this a littlefurther, if point A is the bottom of the range, prices could have changed up onetick, down two, up one, down three, up two, down one, up one, down two, upthree, down one, up two, down one, up one, down one, up two, down one, upthree, down one, up two, down one, up three, down one, up one, down one, uptwo, down one, up three to point B, ten ticks up from point A. This isobviously a very shortened version of the way prices usually move, but it doesrepresent one pattern out of millions of possible pattern combinations, and eachpattern you identify can repeat itself at some point in the future.
If you are a buyer at point A, what are the odds the price will stay above yourentry point? What are the odds that the price will be above or significantlyabove your entry point tomorrow or the next day without having gone belowyour entry point first, by two ticks, five ticks, or ten ticks, before it goes back upagain above your entry point? Once prices go below your entry point, what arethe odds they never go above your entry point? What are the odds they never gobelow? To answer these questions, you would have to know a great deal aboutthe consistency of the market and its potential to behave in certain ways. In anycase, relative to most traders’ emotional disposition to deal with this kind ofmovement and within the context that most people think of as 50/50 odds, itdefinitely doesn't apply in the markets.
To illustrate another point, if you got short halfway between points A and B,which ticks would you have the tendency to place greater weight on in terms ofmarket information? The down ticks naturally. They confirm what you believeand the up ticks don't Yet each in relationship to one another can tell yousomething about the consistency of the market and its potential to move in anygiven direction. How can you begin to assess that potential accurately if youplace a greater significance specifically on the information that confirms what you
46want or believe? In effect, you would be using the information to suit your hopes,dreams, wishes, and desires instead of perceiving it in a manner to assess themarket's actual potential to do any of the foregoing.
Thus, what you have in the market environment is a deadly combinationof the market forcing you to confront difficult personal issues to survive,an event that produces information in a wide variety of forms that can beused to support any illusion, distortion, or expectation, therefore, making iteasy to avoid confronting these potentially painful issues. Furthermore theevent continues on until you come to terms with whatever is inside of youto end it. Unless your brokerage firm liquidates your position, you are theonly one who can make it stop.
Among many other factors, to become a consistently successful traderyour objective has to be to learn how to let the market tell you what it maydo next and how much is enough. This is extremely difficult when youconsider there is absolutely no relationship between what the market maydo next and your personal belief system on what it means to lose, what itmeans to be wrong, greed (fear founded in a belief there will never beenough), and revenge.
I can anticipate a lot of readers saying to themselves "I can understand theloss, being wrong, and greed issues, but where does revenge come intothis?" This can best be illustrated by going back to the gambling gameexample. In a gambling game you can only lose what you decide to risk.You bet the money and it's difficult not to accept the responsibility for anylosses. As a trader, however, you could easily lose far more than youintended to risk, based on your inability to perceive the possible or yourinability to execute a trade to get out of your position, or a combination ofboth.
You may have been willing to take responsibility for what you originallyintended to risk on a trade (although most traders are not willing to takethis responsibility, which I will demonstrate further on); however, it mightnot be so easy to take responsibility for losing more than what you intendedto risk. This is where the revenge factor comes into play. If you don't takeresponsibility for what you lost, then who or what can you blame—themarkets, of course. The markets took your money. If the markets took fromyou more than you originally intended to risk, then you will likely feelcompelled to get it back.
For example, is a 10-tick profit enough in the trade you are currently inif you lost 20 in the last trade? The market may be giving the objectiveobserver a very clear indication that where the price is now is all that isleft in the move and the highest probability for success is to take profitsnow. If you lost 20 ticks in the last trade and you only intended to risk 5 and themarket is now offering you 10, are you going to take it. If you believe in "gettingback,” 10 won't be enough regardless of what the market is doing or telling you.You will need at least 15 and preferably 20 to make you whole.
Your last trade obviously has nothing to do with the potential that exists in
47the market at any given moment. When you feel compelled to get back, it putsyou in an adversary relationship with the market. The market becomes youropponent, it is you against it, instead of being in harmony with it. The marketcan't take anything away from you that you don't allow; if you lost money or lostmore than you intended to risk, you gave your money to other traders.Ultimately, however, revenge creates an adversary relationship with yourself. Ifyou're the one who gives your money to the market, you are also the one whogives yourself money out of the market. If you are angry with yourself for lettingthe last trade get so out of hand, whatever the market is offering you "now" interms of an opportunity won't be enough. From a psychological perspective, youwon't take the opportunity for a profit or otherwise because you haven'taccepted the last trade as being all right. In effect, you will be denying yourselfthe current or next opportunity to punish yourself for the past mistake. In realityyou can't get back at the market, and a belief in revenge only allows you to getback at yourself.
There is a direct correlation between your ability to let the market tell you whatit is likely to do next and the degree to which you have released yourself from thenegative effects of any beliefs about losing, being wrong, and revenge on themarkets. Not being aware of this relationship, most traders will continue toobserve the market from a contaminated perspective until they either make theassociation through trial and error or become aware of this relationship througha book such as this. In any case, by the time those who figure it out do so, theyhave usually subjected themselves to so much psychological damage that it addsa much more difficult dimension to the process of becoming successful.
This is the principal reason why this book had to address the areas of personaltransformation in such depth: you need to know if there is any damage, how toidentify it, and most important, how to release yourself from it.
48CHAPTER 6
The MarketTs an UnstructuredEnvironment
Unlike structured social activities that have defined beginnings and endingsand rigid rules to guide your behavior, the market environment is more likea river constantly flowing, with no beginning or ending with almost nostructure. Once you jump in the river, it can change directions at anymoment. It may have been flowing north when you jumped in; however,without any notice, it can start flowing south. It's unstructured to the pointwhere you make up all your own rules to play by, with a great deal oflatitude to do so.
You will have to decide if and when you're going to jump in and withhow much force. If you are already in, you have the option of increasing theforce you apply at any time or of decreasing it. There are no rulespreventing you from jumping out at any moment to change your intendeddirection to flow with the market, or you can jump out and stay out, andthe market just keeps on flowing.
In an unstructured and unlimited environment, it is essential that youestablish rules to guide your behavior. You will need to create definitionand give yourself direction. Otherwise, you will feel overwhelmed with toomany possibilities. Without these rules one of the most likely possibilities isthat you will create devastating losses for yourself. The big psychologicalproblem here is, if you make up and have to play by your own rules, youalso have to take total and complete responsibility for your actions as wellas the outcome of your actions. The degree to which you do assumeresponsibility is the same degree to which you can't shift it to the market
49and be its victim.
The typical trader will do most anything to avoid creating definition andrules because he does not want to take responsibility for the results of histrading. If he knows exactly what he is going to do and under what