Best "trading psychology" book you have ever read?

L

lemarche

I am looking at reading my first one...

I have realized that I still struggle sometimes with "let the profit run" : when it hits a certain € amount I have to take it even though it could become a much bigger winner, and there s no signal to get out, just the "it could go the other way" in my mind...

What made me tick really is that I have just lost in a national trading competition. After realizing a +60% return in one and a half day, at which point I was first, by some... 59%... ahead of the competition (lasts 10 weeks), I got scared I guess of being first and made a point of blowing up the account...
And that would go back to "fear of success" or self sabotage, the kind you do when you don t take your losses or enter trade you "know" you should not enter.
 
The best practical books I read on trading psychology were "Trading in The Zone" and Disciplined Trader" by Mark Douglas.

As for letting or not letting profits run, know statistical metrics of your method so that you are sure which way is optimal.
 
Quote from lemarche:


I have realized that I still struggle sometimes with "let the profit run"
More...

In other words you do not know where your exit price is, which is a bad thing for any trader.


Here is a simple but powerful suggestion : just put a simple moving average on the chart and if 2 or more candlesticks close entirely below this moving average then exit your position.

This will allow you to ride the trend up to its limit while still protecting your profits. In fact you would be surprised to see how many huge, mega trends you can ride with this simple idea.

Of course you will have to do some testing to find the best value for your moving average.

See, trading does not have to be complicated :)
 
I quite don t agree ;), even though that rule is not a bad one in general for TRENDS in any time frame.

I don t agree because you may have a target to exit at X, but you are not God, and it may just so happen that X is just on the way to getting to Y which may triple your profit on the trade...

There are many reasons/set ups to enter a trade, and not all of them involve moving averages and/or trends, so X may have been set up for another particular reason. But sometimes, when you are at X AND with profits buffer, it is better to let the trade run to see if something "crazy" happens in your favor... And that s the difficult part, because most of the time there won t be any trend, and you will have to learn to loose some part of your profits to get those big earners in the future.

Anyway... this is not meant to be a post about entry/exits.
 
Quote from lemarche:

I am looking at reading my first one...

I have realized that I still struggle sometimes with "let the profit run" : when it hits a certain € amount I have to take it even though it could become a much bigger winner, and there s no signal to get out, just the "it could go the other way" in my mind...

What made me tick really is that I have just lost in a national trading competition. After realizing a +60% return in one and a half day, at which point I was first, by some... 59%... ahead of the competition (lasts 10 weeks), I got scared I guess of being first and made a point of blowing up the account...
And that would go back to "fear of success" or self sabotage, the kind you do when you don t take your losses or enter trade you "know" you should not enter.
More...

Lots of books out there...

You can read all of Brett Steenbarger and Mark Douglas work.

Non trading related, "The power of habits" is a great book too.

Then, meditation is a must to improve everything in your life imho.

But let's be honest how can you make 60% a day and not taking huge risks... blowing up might just be a normal event in this case...

PS: were you in "les talents du trading" ?
 
Quote from lemarche:

And that s the difficult part, because most of the time there won t be any trend
More...

Well if there is no trend this moving average technique will allow you to exit your trade quickly, hopefully with some profits or at break-even.

But if there is a trend, oh boy, you could really hit the jackpot !

So you win in both cases.

That said I strongly believe that no trading book can give the trader the discipline he needs to trade profitably, this is something he will have to acquire by himself from experience.
 
I can not say, I d rather stay anonymous here on ET ;)

Of course I was taking at least 5/10x times leverage, which I handle very well on equity contracts... Also I did not enter from the start with 10x times leverage but as the market was moving with me... Then, I did something stupid with Gold where, I let the price move against me below my entry price (position that I had built over a day or so), while carrying 30/40x leverage (I had made some good profits on equities already)... on Gold which is one of the most volatile contracts around lately... (I do not follow soft commodities)

So it doesn t make any sense to be carefull building positions to then blow up.
That s why I think it has to do with the fear of being "first" in that competition, what is more so far away from the second...

Why exactly that fear, now, I don t know...
 
I MOST definitely don t think so...

Psychology is obviously a HUGE part of trading for anyone who has traded before...

Discretionary first of course, and even automatic as the one that plugs/unplugs the machine is human...
 
Quote from lemarche:

I am looking at reading my first one...

I have realized that I still struggle sometimes with "let the profit run" : when it hits a certain € amount I have to take it even though it could become a much bigger winner, and there s no signal to get out, just the "it could go the other way" in my mind...

What made me tick really is that I have just lost in a national trading competition. After realizing a +60% return in one and a half day, at which point I was first, by some... 59%... ahead of the competition (lasts 10 weeks), I got scared I guess of being first and made a point of blowing up the account...
And that would go back to "fear of success" or self sabotage, the kind you do when you don t take your losses or enter trade you "know" you should not enter.
More...
======================
Mr Lem;
Trading contests are useful;
one can find out money management wisdom cause most use too much leverage + blow UP

Books????? Best by far Jack Schwager top traders books all 3 ;; + Proverbs of Solomon, multiple translations, warns against gambling, greed, laziness............................................................................................................................................................................................
 
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