Monetary Aspect and Edge: Dividing point
- Thread starter WDGann
- Start date
Personaly I don't think a trader needs to worry too much about the psychological side of the coin until he KNOWS he has some sort of proven methodical/technical edge...
You can be the most disciplined trader in the world and without a proven "method" or some kind of built up intuition through long years of experience -- she will still eat your lunch (maybe just a little slower)...
PEACE and good trading,
Commisso
Originally posted by WDGann
Yes... tounge... is yours native... j/k
Sorry... I'm doing something else... very short posts.
Oh did not mean to be insulting at all -- it's just that sometimes it is hard to understand what you are pointing at
Comisso
Again Gann I am not trying to be insulting, but you do realize that the word monetary relates to the "fruits" of ones actions -- not the actual actions themselves right?
I think most would have understood what you were pointing at if you used the word "technical" instead of "monetary" -- would you like me to edit your post in the hopes that your intial question may come off a little more lucid to the other contributors to the thread?
PEACE,
Commisso
OK, I'm done with what was pre-occupying me. Yes, I'm a native tongue(correct spelling ).
The topic in detailed form would be. Because we tend to separate the psychological aspects and the technical aspects. It would be nice to discuss about the relationship between the two and how the 2 aspects reflect onto each other.
For example:
There are a lot traders in here who may have the knowledge but do not have the niche to make it to an edge. This is a conflict of psychology and technicals. What do you think?
Another one, there are traders who have an edge but can't trade it. What do you think?
).The topic in detailed form would be. Because we tend to separate the psychological aspects and the technical aspects. It would be nice to discuss about the relationship between the two and how the 2 aspects reflect onto each other.
For example:
There are a lot traders in here who may have the knowledge but do not have the niche to make it to an edge. This is a conflict of psychology and technicals. What do you think?
Another one, there are traders who have an edge but can't trade it. What do you think?
I think the balance point between the technical (objective) and the psychological (subjective) sides of trading come down to avoiding certain all-too-common trader death traps. I've thought of a few of these death traps and the stereotypical trader personalities that go with them. All of them represent flaws in a combination of the psychological and the technical aspects of trading.
<b>Death Trap 1: The Confident Idiot:</b> This benighted soul is personally sure that they have a sure thing, but they don't. They pursue a set of trading rules that either grind their account into dust (i.e., gold dust for the broker) or they take on excessive risk (anyone for being fully margined on TYC overnight???).
<b>Death Trap 2: The Fearful Savant:</b> This trader has an edge -- trading rules that have positive expectancy & acceptable risk. But this trader cannot or will not execute these rules. They do trade, but tend to botch the entries and exits. They know the system would work, but they just can't pull the trigger on the entries or stay disciplined on the exits.
<b>Death Trap 3: The Quanti-plegic:</b> Afflicted with paralysis by analysis, this trader knows about death trap 1, and is rightfully afraid. Unlike the fearful savant, they may not have a working system and they certainly will not trade. So, their fear leads them to perpetual testing, backtesting, and looking for yet another indicator. Sadly, they may overcomplicate their trading system to the point that it is overfitted. The result: in attempting to avoid Death Trap 1, they create a system that backtests beautifully, creates confidence, and send them straight to Death Trap 1 (confidence in broken system).
<b>Death Trap 4: The Butterfly Trader:</b> No relationship to options trading, the butterfly trader flits from trading technique to trading technique. They try something for a day, if it does not work, they try something else the following day. They start with hopes, end with losses and then flutter on to the next trading style. They may justify their fickle style with the old adage about the market changing, but they often abandon even those methods that have a true edge. Even good trading methods are left abandoned with the first losses or if they do not create instant gratification.
I'm sure other will think up other death traps.
Happy AND Profitable trading to all,
Traden4Alpha
<b>Death Trap 1: The Confident Idiot:</b> This benighted soul is personally sure that they have a sure thing, but they don't. They pursue a set of trading rules that either grind their account into dust (i.e., gold dust for the broker) or they take on excessive risk (anyone for being fully margined on TYC overnight???).
<b>Death Trap 2: The Fearful Savant:</b> This trader has an edge -- trading rules that have positive expectancy & acceptable risk. But this trader cannot or will not execute these rules. They do trade, but tend to botch the entries and exits. They know the system would work, but they just can't pull the trigger on the entries or stay disciplined on the exits.
<b>Death Trap 3: The Quanti-plegic:</b> Afflicted with paralysis by analysis, this trader knows about death trap 1, and is rightfully afraid. Unlike the fearful savant, they may not have a working system and they certainly will not trade. So, their fear leads them to perpetual testing, backtesting, and looking for yet another indicator. Sadly, they may overcomplicate their trading system to the point that it is overfitted. The result: in attempting to avoid Death Trap 1, they create a system that backtests beautifully, creates confidence, and send them straight to Death Trap 1 (confidence in broken system).
<b>Death Trap 4: The Butterfly Trader:</b> No relationship to options trading, the butterfly trader flits from trading technique to trading technique. They try something for a day, if it does not work, they try something else the following day. They start with hopes, end with losses and then flutter on to the next trading style. They may justify their fickle style with the old adage about the market changing, but they often abandon even those methods that have a true edge. Even good trading methods are left abandoned with the first losses or if they do not create instant gratification.
I'm sure other will think up other death traps.
Happy AND Profitable trading to all,
Traden4Alpha
