Redneck - I seem to have offended you. You are reading too much into it. I said that because I appreciate your posts regarding looking inside yourself for success and that long list of things you created. I just wanted you to know that someone out there likes some of your ideas. I should have not used the word mentor. I am sorry and apologize.
Psychology, are you sure?
- Thread starter Alexis
- Start date
Redneck - I seem to have offended you. You are reading too much into it. I said that because I appreciate your posts regarding looking inside yourself for success and that long list of things you created. I just wanted you to know that someone out there likes some of your ideas. I should have not used the word mentor. I am sorry and apologize.
Mindtrade
In trading (everything for that matter) it does not matter what we think â ever.
It only matters what we do â always.
What we do â in trading will either make, or lose us money. In life it will either make us a success, or failure.
You handled my âmeanâ post like a gentleman and professional â it is in you to do that⦠What you âdidâ in response to me was infinitely more important than what you thought.
It showed who you really areâ¦
Handle trading (or life for that matter) the same way â because it is in you â to do so⦠You have already demonstrated that Sir.
ASIDE
Ultimately it is up to each one of us â to always do what we must â in order to become a successful trader (or whatever in life) â no matter what we may think â no matter how much discomfort it brings â no matter how hard we must work â no matter how many times we fall down â no matter how many times someone tells us we canât
You will fail only when you quit trying â everything else is just part of the journey.
And just as everyone is different â so to our journey must be.
IN CLOSING
You posted the âmentorâ thing as a pure compliment â I knew it then, and I know it now.
And I Thank You from the bottom of my heart for such a wonderful and humbling thought Sir
However I could have easily hyped up the inferred ego, easily made a big deal over it, played off it⦠and ultimately allowed it to enter my head and adversely affect my trading.
You see last week someone offhandedly accused me of lying â and as I hold the âabsoluteâ truth as one of my core beliefs â I lashed out at him â and in the process my ego got out. And yes I lost some money later on that week
I did what I needed to do â to separate myself from the potential ego of your well intended compliment â and de-energized it so it would not have any affect on me â then I could go about trading the way I mustâ¦
I know I have an ego, I know it is my enemy (especially in trading). I know I will do whatever it takes to defeat it every flippin time it rears its ugly head
I hope you understand â Iâm just keeping it real Sir
Take care
RN
In trading (everything for that matter) it does not matter what we think â ever.
It only matters what we do â always.
What we do â in trading will either make, or lose us money. In life it will either make us a success, or failure.
You handled my âmeanâ post like a gentleman and professional â it is in you to do that⦠What you âdidâ in response to me was infinitely more important than what you thought.
It showed who you really areâ¦
Handle trading (or life for that matter) the same way â because it is in you â to do so⦠You have already demonstrated that Sir.
ASIDE
Ultimately it is up to each one of us â to always do what we must â in order to become a successful trader (or whatever in life) â no matter what we may think â no matter how much discomfort it brings â no matter how hard we must work â no matter how many times we fall down â no matter how many times someone tells us we canât
You will fail only when you quit trying â everything else is just part of the journey.
And just as everyone is different â so to our journey must be.
IN CLOSING
You posted the âmentorâ thing as a pure compliment â I knew it then, and I know it now.
And I Thank You from the bottom of my heart for such a wonderful and humbling thought Sir
However I could have easily hyped up the inferred ego, easily made a big deal over it, played off it⦠and ultimately allowed it to enter my head and adversely affect my trading.
You see last week someone offhandedly accused me of lying â and as I hold the âabsoluteâ truth as one of my core beliefs â I lashed out at him â and in the process my ego got out. And yes I lost some money later on that week
I did what I needed to do â to separate myself from the potential ego of your well intended compliment â and de-energized it so it would not have any affect on me â then I could go about trading the way I mustâ¦
I know I have an ego, I know it is my enemy (especially in trading). I know I will do whatever it takes to defeat it every flippin time it rears its ugly head
I hope you understand â Iâm just keeping it real Sir
Take care
RN
most posts about trading failure here are very deeply anylysised. trading failures can be many reasons. but trading success can be only one reason.
to my understanding, psychology is the major cultpit of trading failure. it is just like a driver's steering wheel. all others are the sons and daughters of this mother psycholgy.
jessie livemore went bankrupt several times, in ten years, he made 1.0million, then he did some stupid things (follow another trader's opinion, abandoned his own sound anaylsis), lost 0.9m in one year, there in no where almost another 10years, he recouped his 1 m loss, from there after several years he made 100m, then he did some stupid things again, he quickly lost his 100m in very short time, he totally lost confidence about himself, he commited suicide.
jessise livemore had sound tape reading skills, he could win almost every time when he was a kid (15~27), he beat the bucket shop all the town, and those bucket shop refused to do busiiness with him. why he abandoned his sure-money making method system?
trading skills are learnable. but self-control is not learnable. I did lots of those stupid things too. I know my trading methods are sound. but just as many struggling traders, do things when they are not allowed to do. see a setup, maybe second guess (that is a fear). see profit, take it immeaiately afraid it will vaporize. see loss, cut too quick even it do not reach my planned stop loss because I do not want loss. even feel tired or sick of the day, still keep trying trading, created lots of scratches, hope to make a red day to become a green day, or try to make a bad executed trade (take profit too early) look good, do lots of scalpings after I felt I leave money on the table. a strong ego to show others how easy he can make money..... I know I commit those crimes both conciously and subconciously, but still commited it. what drive me to do those stupid things? the only reason is myself, subconciuosly I may not listen to concious mind. is it curable?
I doubt it. this morning, I was seeing the short level of sweet crude at 70.5, I do did it, but toke profit too early, started to think "bottom picking", but I was not comfortable about bottom picking (I have lots of bad experience in bottom picking), picked a little bit too early, shoke out. then started to buy it again when it really turned around or reversed, it should be a sound holding spot, but I kept peeking the quote, end up got out too quickly, then started to do lots of scalping again (I do not want to do scalping)....after the day closed, I felt I was very angry about myself, why i did scalping (too much commisions for the IB firm, they do not work, while collect money, another unrelated emotional issue)
to my understanding, psychology is the major cultpit of trading failure. it is just like a driver's steering wheel. all others are the sons and daughters of this mother psycholgy.
jessie livemore went bankrupt several times, in ten years, he made 1.0million, then he did some stupid things (follow another trader's opinion, abandoned his own sound anaylsis), lost 0.9m in one year, there in no where almost another 10years, he recouped his 1 m loss, from there after several years he made 100m, then he did some stupid things again, he quickly lost his 100m in very short time, he totally lost confidence about himself, he commited suicide.
jessise livemore had sound tape reading skills, he could win almost every time when he was a kid (15~27), he beat the bucket shop all the town, and those bucket shop refused to do busiiness with him. why he abandoned his sure-money making method system?
trading skills are learnable. but self-control is not learnable. I did lots of those stupid things too. I know my trading methods are sound. but just as many struggling traders, do things when they are not allowed to do. see a setup, maybe second guess (that is a fear). see profit, take it immeaiately afraid it will vaporize. see loss, cut too quick even it do not reach my planned stop loss because I do not want loss. even feel tired or sick of the day, still keep trying trading, created lots of scratches, hope to make a red day to become a green day, or try to make a bad executed trade (take profit too early) look good, do lots of scalpings after I felt I leave money on the table. a strong ego to show others how easy he can make money..... I know I commit those crimes both conciously and subconciously, but still commited it. what drive me to do those stupid things? the only reason is myself, subconciuosly I may not listen to concious mind. is it curable?
I doubt it. this morning, I was seeing the short level of sweet crude at 70.5, I do did it, but toke profit too early, started to think "bottom picking", but I was not comfortable about bottom picking (I have lots of bad experience in bottom picking), picked a little bit too early, shoke out. then started to buy it again when it really turned around or reversed, it should be a sound holding spot, but I kept peeking the quote, end up got out too quickly, then started to do lots of scalping again (I do not want to do scalping)....after the day closed, I felt I was very angry about myself, why i did scalping (too much commisions for the IB firm, they do not work, while collect money, another unrelated emotional issue)
As I said, this should be done by everyone. First of all, paper trade. If you can't find a way to be profitable with paper trading, then do not start trading real money. Take this advice from someone who never followed it and lost money for 12 straight years.
Second of all, if you can't learn to make money (with paper trading) with discretionary trading for one reason or for another, then go for trading systems. With those you can't fail either. First you back-test them. Then you forward test them (paper trade them). If they work, then you use them.
In ten lines, I just told you how to make money with trading, and for sure not lose any money. Only problem: it's hard. It's hard to develop a manual ("discretionary") method and harder to apply it, harder to develop an automated system and easier to apply it (all you have to do is let it run). Then also it is hard to paper trade. Because you could be impatient to make money, when you still think it's easy to make money. That's when you still think you're gifted and you see things that others do not see.
In truth you may see things right, but one thing is seeing a bottom and another thing is to make a trade that will make money. You may enter too early, exit too early. In those rare events you were wrong, you may never exit... so many things may turn you from the smart person you think you are into the guy who blows out his account. I always thought I was more intelligent than average so I thought I must be able to make money pretty easily in the markets, and yet I was wrong - I lost money for 12 straight years, to the point that I now gave up discretionary trading. Maybe I lost exactly because I think I am smarter and that I should be able to make money pretty easily. But I can't get rid of that, and I don't know of how many other things I can't get rid of, that are stopping me from making money. But what I can do is to stop altogether from discretionary trading, and put all my efforts into building better and better automated trading systems, because those work for sure.
Second of all, if you can't learn to make money (with paper trading) with discretionary trading for one reason or for another, then go for trading systems. With those you can't fail either. First you back-test them. Then you forward test them (paper trade them). If they work, then you use them.
In ten lines, I just told you how to make money with trading, and for sure not lose any money. Only problem: it's hard. It's hard to develop a manual ("discretionary") method and harder to apply it, harder to develop an automated system and easier to apply it (all you have to do is let it run). Then also it is hard to paper trade. Because you could be impatient to make money, when you still think it's easy to make money. That's when you still think you're gifted and you see things that others do not see.
In truth you may see things right, but one thing is seeing a bottom and another thing is to make a trade that will make money. You may enter too early, exit too early. In those rare events you were wrong, you may never exit... so many things may turn you from the smart person you think you are into the guy who blows out his account. I always thought I was more intelligent than average so I thought I must be able to make money pretty easily in the markets, and yet I was wrong - I lost money for 12 straight years, to the point that I now gave up discretionary trading. Maybe I lost exactly because I think I am smarter and that I should be able to make money pretty easily. But I can't get rid of that, and I don't know of how many other things I can't get rid of, that are stopping me from making money. But what I can do is to stop altogether from discretionary trading, and put all my efforts into building better and better automated trading systems, because those work for sure.
Quote from Alexis:
Hi everyone,
Just wanted to share a thought with you all. I recently read, from a fellow ET member, that :
"Psychology is 90%, Money management and Analysis are 10%"
That. Again.
I was sharing my anger about this topic with a colleague and he had a funny, yet interesting, answer:
"yeah, tell them we have been consistently making money for decades, that we do an awful lot of analysis and stats in here but that we never felt the need for a shrink in the room!"
Bottom line is, analysis and risk mangement are 99% of the job. If you trust your strategies, there is no room for thinking or doubts.
testing -> validation -> trading.
A problem? Drawdown?
re-testing-> re-validation -> back to trading
This is a never ending process.
But why on earth would anyone cease to trust a validated strategy (you gyus validate your trading ideas, rght?) in the middle of a position and start doing something else? Markets are real-world, they are not in our head.
Hope I don't offend anyone,
Alex
I disagree completely. You have to consider the psychological impact of a long period of DDs that any system can encounter.
In fact, it is especially pertainent in this case, as a string of losers will haunt you even more after having had a strong equity curve.
Also, how are you going to back-test a long term discretionary system based on S/R? You can't, so psychology will play a greater role in each trade you take.
:eek: I agree. Unless the system is completely automated, (and maybe even if the system is completely automated... I believe) there is still chance for drawdowns and losing streaks for the trader.
It takes a lot in the area of psychology to keep trading despite the adversity.
As for RN Trader, I believe you write pretty well... most of the time.
Yes, but consider the "maximum drawdown" of a system. If the maximum drawdown is 10%, and the system is losing 50%, it doesn't mean you need psychology to withstand the drawdown, but that there's something wrong with the system, which is not performing as expected and so you should stop using it. So, no psychology needed here.
If, on the other hand, the drawdown is not exceeding the maximum drawdown, you should be prepared to accept it, or else you shouldn't start trading a system that has a maximum drawdown too big to accept. No psychology needed here either.
Once again, as Alexis said, "If you trust your strategies, there is no room for thinking or doubts".
Psychology is needed instead to figure out what is wrong with you, in case:
1) you are trading discretionary when you don't have a profitable method and have been losing money for years (my case). Why not paper trade? You need the excitement? Psychology is needed here.
2) you are not letting your automated strategy run despite positive back-tests and forward tests: boring? you don't trust statistics? why did you develop a trading system to begin with? Then even discretionary trading wouldn't make sense, because it should also be based on a system, whether it's conscious or not.
If, on the other hand, the drawdown is not exceeding the maximum drawdown, you should be prepared to accept it, or else you shouldn't start trading a system that has a maximum drawdown too big to accept. No psychology needed here either.
Once again, as Alexis said, "If you trust your strategies, there is no room for thinking or doubts".
Psychology is needed instead to figure out what is wrong with you, in case:
1) you are trading discretionary when you don't have a profitable method and have been losing money for years (my case). Why not paper trade? You need the excitement? Psychology is needed here.
2) you are not letting your automated strategy run despite positive back-tests and forward tests: boring? you don't trust statistics? why did you develop a trading system to begin with? Then even discretionary trading wouldn't make sense, because it should also be based on a system, whether it's conscious or not.