Is it really about discipline and emotional control?

[Ernie Mccracken]

OP: Nice graph. What's your edge? Tell me about your trading style.
Trader: Oh, what works for me won't work for you. It can't be taught.
OP: My style is making money. If you are able to reliably make it, that's my style.
Trader: Here, read this article about self control and discipline.

Are the 0.01% of successful traders profitable because they practice good MM, don't chase, etc.? Out of hundreds of thousands of failed traders, that's the reason?

Observations
1) Winners have the requisite personality traits, but also a legit edge. Most seem to be very small, but relatively consistent.
2) Even the smallest edge can be exploited for big bucks.
3) Probably a lot easier to behave like a model trader when unicorn-esque edge actually exists
4) All traders claim to have an edge. 4 of them actually do. 3 of those 4 systems won't work in 2 years.

Conclusion: Losing systems and false edges doom a trader to failure long before they get the chance to screw it up with bad mechanics. And yet, all anyone wants to talk about is putting prudent stop losses on every trade. I think I'm a quant trader who's too slow to be a quant trader.



*It should be noted that I'm a crappy trader and know nothing, so no need to rehash that.

 

[Logic]

To me, this is what trading is about:

1) Find a trading system that works, signal-wise.
2) Find a positioning and sizing system that works, money-management wise, with your trading system.
3) Have the mental discipline and emotional control to abide by both of these systems.
4) Profit.

Step 1 is very easy. There's thousands of systems out there that work.

Step 2 is less easy, but is quite manageable if you know to look for it. There are many systems that work.

Step 3 is hard, because we're all human and subject to emotion, especially the idea that we're "better" than our systems.

If you fail at any of these three, you won't be able to trade successfully and get to step 4. It's much easier to accomplish step 1 and 2, because there's a lot of variations that work, which is why it might seem like step 3 is the most important. But really, they're all equally important.

 

[Handle123]

I believe for younger traders there are much more than failure of discipline and emotional control that fail at trading. Whether you use only Price Action, TA, or a combination of both, unless you can also recognize how to adapt to changing volatility, you will fail.

"Adapting" to market conditions is why many systems stop working. Say you built a method that risks 3.00 points in ES with a target of 5.00 points, this might work overall very well. But if Ave True Range suddenly increases 200%, many don't have in their Money Management Rules to adapt to these changes with either wider Protective Stops and Targets, or stop trading altogether. Whether price has very tight daily ranges (which many have never learned how to trade), or very huge ranges that trend traders require, a good trader must know how to Adapt.

Another problem I see often, many code their ideas and then test them, it shows huge backtested profits, then forward test them a few months, then they start trading them by automation and lose. They think a sample size of 300 is enough, when they should be doing 1000 days for back and forward testing.

Trading is not just having all your rules in concrete and can never change them. Yes, you do have to have your discipline and emotions in check, but you also have to adapt when your most important indicator is going down, your account.