are emotions/psychology the most important factor in success?

SimpleMeLike said:
Hello Laissez Faire,

Another thing, no-one knows what a "trading system" is?

What exactly is a trading system and how can a trader trust a trading system to make +$1 Million dollars in less than 5 years to make trading even worth it.

All this emotions and psychology is completely and utterly bullshit. There is nothing wrong with our emotions and psychology.

The only problem traders have is they do not have a believable plan to make $1 million dollars in less than 5 years. This is just my opinion.
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When a trader is designing and back testing a trading system, s/he is basically making numerous decisions during the design phase about which criteria must be met. The trader then backtests the system to see if that gives positive expectancy.

If the trader is satisfied with the backtest's performance, and the system is based on how the market works, then the trading system basically becomes a shortcut to decision making during live trading.

Another way to look at trading system is through Ed Seykota's quote:
"A trading system is an agreement you make between yourself and the markets."

Unfortunately,for some traders their emotions become their "trading system". . . a recipe for disaster. Bit like driving a car based on one's emotions, ignoring red lights (eg. not honoring stop losses, position sizing, etc) . . traders like that won't last too long. :)
 
PPC said:
When a trader is designing and back testing a trading system, s/he is basically making numerous decisions during the design phase about which criteria must be met. The trader then backtests the system to see if that gives positive expectancy.

If the trader is satisfied with the backtest's performance, and the system is based on how the market works, then the trading system basically becomes a shortcut to decision making during live trading.

Another way to look at trading system is through Ed Seykota's quote:
"A trading system is an agreement you make between yourself and the markets."

Unfortunately,for some traders their emotions become their "trading system". . . a recipe for disaster. Bit like driving a car based on one's emotions, ignoring red lights (eg. not honoring stop losses, position sizing, etc) . . traders like that won't last too long. :)
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Good Morning PPC,

Thanks for the response.

That sounds like alot of work and thinking. I think building systems is too much work because have to think of trading idea, back test trading idea, then start over again again again again again again hoping to find a good trading systems. Then you have to hope the system works for the next 10 years to make you a millionaire. You do allll that work to bet on one system for the next 10 years. What if the system fails?

That is tooooo much work for one person to do. Been there and done that.

It is FAR more easier to just trade the charts manual and HOPE it all works out. I find it easier to just try my best and make the best guess.

NOONE has the answer. Best to stop looking.

Ed Seykota's opinion does not matter because he is not showing me how to make money in the markets. He is just talking theory.

I agree, using too much size and adding to losers cause me to lose alot of money. I agree with you on that part. All that other stuff I kindly disagree.
 
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PPC said:
I respectfully disagree with that order.

I believe that a trader must have a sound psychological profile especially on faster time-frames. Maybe end-of-day traders can get away with some emotional / psychological issues, but traders on fast intraday timeframes who are trading with high leverage need to have their shit together.

Here is why:

The biggest risk in trading is always the trader himself.

You can have the best trading system in the world, you can have the most detailed risk management plan, but one stupid highly leveraged trade triggered by euphoria or revenge can do your account and (your psychology) lots of damage. (been there done that myself)

Some traders are emotionally mature and naturally risk averse, and would not be susceptible to the above scenario as would be those traders with underlaying emotional issues who end up transferring their issues onto the market.

For example, Tom Hougaard likes to focus on profits and seems to like drama (and attention), while other traders like Paul Tudor Jones are the exact opposite, here is what Paul Tudor Jones said:

Ask yourself? “Mr. stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?” Change Trading style to, spend your day trying to make yourself as happy and relaxed as you can be. ~ Paul Tudor Jones~

I guess you really need to know your own weaknesses and fully trust yourself. If you don't, then the market will eventually find your every weakness and push your every button.

You cannot just ask questions and read about this, you need to trade (with live money) and find out for yourself. You have to step into the "boxing ring" and take a few painful hits to understand :)
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%%
Good points + yours usually are.
BUT that PTJ quote=trade was an obvious[by his own admission,waaaaaaaaaaaaaaaaaaaaay to big an overtrade on leveraged cotton.[Never play macho man with market LOL]
A regular business would require profits , +plan prefered;
no extreme risk moniter needed like leveraged markets-like cotton context.
Great reads here.
 
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ironchef said:
He is a pro, some pros are not as emotional trading OPM. It is just a job.
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Good points + good %.
Some are pros, but not in the SEC sense or data payments.
But many SEC rules are helpful;
they reduced exchange fees not to long ago+ would to God all govs would do that.
More , that way or MCD or whole grains , or whatever LOL:D:D.
I usually did not ask the RE agent for a discount\ usually\ the seller got to help with that LOL.
 
Simple answer: YES.

I am well aware of the approach that "if you had a clear system you trusted, you wouldn't need to deal with psychology. Psychology is just an excuse for traders who don't know what they're doing".

And it's true to some extent.

But ask yourself this:
WHY are you trading without a system you trust?
WHY don't you set clearer rules?
WHY are you risking money without knowing what you're doing?

And bingo - you're back to psychology.

Trading psychology - from repeated emotional-mistakes, to self-sabotage, and even fear-based rules (that are rationalized to make sense but are actually set to avoid pain and discomfort) - ARE THE SINGLE BIGGEST CAUSE OF TRADER FAILURE. PERIOD.
 
Zvi_WholeBrainTrading said:
But ask yourself this:
WHY are you trading without a system you trust?
WHY don't you set clearer rules?
WHY are you risking money without knowing what you're doing?

And bingo - you're back to psychology.

Trading psychology - from repeated emotional-mistakes, to self-sabotage, and even fear-based rules (that are rationalized to make sense but are actually set to avoid pain and discomfort) - ARE THE SINGLE BIGGEST CAUSE OF TRADER FAILURE. PERIOD.
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1. WHY are you trading without a system you trust?
Because it is the only system that works.

2. WHY don't you set clearer rules?
Because there are no rules I could set.

3. WHY are you risking money without knowing what you're doing?
Because it is instinctive, subconscious driven and I can't quantify it.

I ask myself these questions everyday since I started experimenting with day trading last year. It seems the only system that works for me is no system. I simply trade with my subconscious instinct. I can't quantify it. I tried to capture the essence with data driven rules, none worked.
 
PPC said:
Unfortunately,for some traders their emotions become their "trading system". . . a recipe for disaster. Bit like driving a car based on one's emotions, ignoring red lights (eg. not honoring stop losses, position sizing, etc) . . traders like that won't last too long. :)
More...
%%
LOT like driving an auto;
certain rules of road are important, like stops:D:D
And in USa, favor the right side:caution::caution:
 
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