Have you had benefits from psychological work in your trading?

SimpleMeLike said:
Hello Laissez Faire,

Great discussion

I can only speak for myself on this.

What helps me mentally in this trading business is:

1. Having Alot of money in savings account. Have all the personal things I want in life. Family is happy and satifisfied. My career is great. My house is great and in good condition and all the remodeling is done. My health is good. I am eating good. My dogs are good.

2. I have 2 times the amount of trading capital in the bank. So if my trading capital is $20,000, I need $40,000 in my savings just sitting there. And I only go risk $20,000 for the trading.

3. All other long term investing is set and in place. 401K maxed out to government limits, all invested in SP 500 index.

4. Only debt in my life is car not and house mortgage.

5. NOONE knows about me getting ready to risk $20,000. NOONE, not even my family or friends.

Once all 5 is compete, then and only then, I proceed with risking $20,000 to trading business.

Why is this?

Because scared money, do not make no money.

When I am trading day to day, I need ALL fear of losing the $20,000 gone from my memory. I am at war, and all my mental ready to make money.

I do not need NO mental distractions at all. And if all 5 is not done before, my risk of losing money while trading goes up.
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Great post. Keeping your house in order and not trading with scared money is no doubt important. I imagine those who are well capitalized and wealthy could approach trading almost similar to trading in a simulator.

So, keeping your house in order, trading with money that wouldn't bother you to lose and with low leverage should take care of many psychological issues and pressure.

I'm sure there's more to it, though, but you no doubt outlined the most important foundation here.
 
Laissez Faire said:
It’s also possible that there are traders who have a basic methodology that’s working, but mental limitations or issues or personality traits prevent them from executing it successfully?
I think what you believe about the market also is important. For example, some like to think of the market as something evil and which is out to punish you, i.e., the view that the market will always inflict maximum pain. Is that really a helpful view?
Why not consider the market a very friendly place that’s there to help you get rich by giving you abundant opportunities every single day lately?

Finally, trading small or smaller seems to be the biggest and easiest hack in terms of keeping your emotions in check.
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Strange the way sometimes small works well + better\ just dont forget about it:D:D
Some times it feels like the market tries to trick or get you\ but really how many traders/investors have goal of trying to trick or get some one.?? NOT many/ because most want a profit.[ Imagine briefly, a silly written trading plan , dont make a profit, just inflict pain or trick some one, how silly can someone get??]
Actually i was thinking of one of my first trades many years ago; i was afraid the market was going to reverse as soon as i got in\ as if= ''ok we see some one just did an odd lot,, so ALL market traders + investors+ funds REVERSE:caution::caution:'':D:D
Cant really separate emotions from trading;
but for sure, can separate stupid stuff + unreasonable from trading.
 
Laissez Faire said:
Great post. Keeping your house in order and not trading with scared money is no doubt important. I imagine those who are well capitalized and wealthy could approach trading almost similar to trading in a simulator.

So, keeping your house in order, trading with money that wouldn't bother you to lose and with low leverage should take care of many psychological issues and pressure.

I'm sure there's more to it, though, but you no doubt outlined the most important foundation here.
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Hello Laissez Faire,

That is correct.

Lets be honest. If you had $500,000 in the bank in your saving, and no debt, and a wife happy in her career, and you happy in your career, and another $50,000 to go trade with, you would not have NO mental issues.

The only issue I have and working on daily is trading skill or verification of an trading edge.

Most people just take the $500,000 and get busy trading with no expeirence. After about $300,000 in losses, the mental issues start.
 
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SimpleMeLike said:
and you happy in your career
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Someone who has a full time career and also trades on the side is not a pro trader, they are a hobby trader.

Of course such a person will not have as many mental issues when trading.

But at the same time they wont make anywhere near the amount of money as a focused professional trader does.
 
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SimpleMeLike said:
Hello deaddog,

Thank you for the advice.

Just to make sure I perfectly understand what you are saying buddy.

Are you saying if I want to buy a car that cost $30K, do not get a loan from car dealership for $30K?

Are you saying instead get a personal loan for $30K with interest, invest it to make another $30K to buy the car cash? Then give $30K back to the bank.

Is that right or am I confused?
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Not quite. The 30k you are paying for the car is money you are pissing away. Drive it off the lot and it has depreciated 10%. The longer you keep it the less it is worth.

Borrow money to buy stuff that apprciates or at least has a chance to appreciate. You got a home without a mortgage and you borrow to buy a car? You got investments? Sell the investments, buy the car, borrow to buy new investments. At least they have a chance of appreciating and the loan interest is deductible.
 
Um I am not so sure about plenty of money thing. I think more accurately, if one had an excess of say, 200-300K cash flow (profit) a year guaranteed, it would be like sim.

Once you make a bunch, the issue is cash flow-generation and capital preservation. A bad martingale loss would set one back pretty hard loosing what you have made, which is almost worse.

An old school (Pre-5 rings- Musashi), is that you need to be so proficient it is deeply burned into you mind and body, that the right thing is second nature. Of course it was hard to keep your cool with 50+ guys with swords, spears and bow-arrows on a battlefield. So trading should be easy right?

Also sometimes it is more about being right or wrong than making money. We have all been there.
 
SimpleMeLike said:
Have all the personal things I want in life. Family is happy and satifisfied. My career is great. My house is great and in good condition and all the remodeling is done... 401K maxed out to government limits, all invested in SP 500 index.
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Why would anyone in that situation want to be a trader, if they have such a great life already?

Attempting trading will only reduce happiness for them.

As such people tend to discover pretty quickly.
 
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deaddog said:
Not quite. The 30k you are paying for the car is money you are pissing away. Drive it off the lot and it has depreciated 10%. The longer you keep it the less it is worth.

Borrow money to buy stuff that apprciates or at least has a chance to appreciate. You got a home without a mortgage and you borrow to buy a car? You got investments? Sell the investments, buy the car, borrow to buy new investments. At least they have a chance of appreciating and the loan interest is deductible.
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Managing your personal balance sheet is part of running your "trading business." Money is fungible. You should borrow at the lowest rate you can with the longest maturity, easiest pre-payment penalties, and tightest recourse.

If some car salesman will lend me 75k for my wife's car at 2% over 7 years, non-recourse, with no pre-payment penalty, i will take that every day of the week and keep that 75k in my brokerage account to earn. The fact that the car depreciates the moment I drive off the lot is irrelevant. I still own that specific asset no matter how i finance it.
 
Many cars are appreciating assets these days.

Wife recently totalled her car, insurance company paid out 10% more than i paid it for three years ago.
 
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