The Psychology of Trading, Brett E. Steenberger
It also provides a step by step approach in reaching this flawless execution. Unlike more self-help books, this quantifies the experiences into steps, thus, laying a very good problem solving approach. The problem solving approach is a more practical approach, and includes the baby steps required to make it happen.
Some important things I picked up where I can significantly relate my experiences are being stubborn about the algorithm even though my gut is on the opposite side, being impatient when I want to buy spot, overlooking the broader spectrum, ignoring news altogether, and completely building an approach on PA and stochastic calculus.
While my approach of ignoring news and building completely based on PA and stochastic calculus is profitable and sustainable, now, it is time to expand my playbook mentally. I will have to take a more symbiotic approach of discretion and algorithm to increase my profits on a monthly basis as the book suggests.
The author also has provided me some new data to assess, i.e. overnight moves. So far, with my stochastic calculus it looks like the author is correct, but I must backtest it before getting involved into it.
Body language and pains when the position is wrong, is so natural to me now. I do reduce position at such tickers, but I will have to start pivoting more on such signals. I can only do that if I continuously fill in my database with the emotional/physical trigger in my trading journal. This way, even if I fail as a trader, I will end up with enough data to write a book on trading psychology. Jokes apart, if I do this, I think within a quarter I will be able to identify and separate trigger points in my database into significant and critical ones. This will be a huge improvement on the current state of the algorithm.
In hindsight, had I read the book earlier - just by a week -, I could have profited more from my stochastic intraday algorithm based on his breakout pattern analysis. It is a missed opportunity and the only thing I can do now is to not FOMO into, because apart from AAPL, GOOG, AMZN, all other stocks are in the mid-range of their breakouts. This is an important experience from the book to have learned.
I will have to impersonate myself as a Pavlovian dog, and reward myself fortnightly with treats on executing everything correctly. This is the best way to move forward and exploit these neuro-linguistic triggers from our own experiences. This is going to be tough to execute - particularly the emotional experience move - because I am a data centric rude rationalist. Hence, do it slowly, and try to not get irritated with it. Start with ETHEUR as the hedge and test bed for this. Then we can possibly scale it to other assets.
Some trigger points I can identify is dreaming about profits in both trading and betting. Whenever I get busy with calculation I end up losing or taking a big loss. This is the tell tale sign to withdraw or reduce size. This is the thing to start with, and then take it onto other neuro-triggers from thereafter.
Some other good practices to be taken from the book are journaling the internal dialogue, and looking at drawdown times as tuition fees to the markets.
It will be good in the future is all I know, and the journey is going to be well worth it.