Psychology, are you sure?
- Thread starter Alexis
- Start date
Thanks, mindtrade, for your feedback. I had the same experiences as you, where you say:
"I decided to trade it live this month but NOT ONE day did I follow the system completely. I traded discretionary and it has almost blown out my account. I have now stopped trading futures and is sim testing my strategy live for a few months. I feel like I lack faith in the system so it makes me think I can do better. The truth is I have done 1000% worse when I look back at the trades. It is a deeply routed problem I have I kept telling myself I would not interfere but I would do so anyway. It has made me aware of my personality flaws."
Things you say that make me think deeper are: "lack of faith in the system". Forward tests help you solve this problem. In other words, let it run and record its trades and see how good they are.
You have done "1000% worse"? Let me tell you. The system makes 100% percent in one month, and I lose 50% (the equivalent $) in 2 days. Then the system miraculously manages to make another 50% in two weeks, then I step in and lose 33% (the equivalent $) in one day (achieved by reversing one of his signals, because it was going short in what seemed an oversold market, and yet it still would have made money). How did I achieve these horrible results? Simple. I tend to pick tops and bottoms, way too early, and once it goes against me, I double up - basically I never learned any profitable discretionary method. My method is following my instincts, which results in doing the opposite of what works. I end up letting losses run (even doubling up losing positions) and cutting profits short.
You also say "It is a deeply routed problem I have I kept telling myself I would not interfere but I would do so anyway. It has made me aware of my personality flaws". I agree and have the same problems. What I am doing to fight this sick behaviour is this. I turn it on in the morning, before 8.00 (CET), and do not touch it nor look at it until 23.00, when I shut it down, and take care of saving data and so on. I don't know whether it will work. If it doesn't, it will mean that I want to lose, pretty much. By now it's clear that the system is better than me. The system keeps getting better (because I work on it, rationally, meticulously, tirelessly), whereas my discretionary trading never got any better. I know the markets better, but my trading doesn't get any better. My tendency as a discretionary trader is to blow out my account every month - and I think it will never change. Just like I have always been scratching my head, and I think I will keep on doing it all my life. Just like some people smoke, and never quit. Other people are overweight, and can't get in shape. There are some weaknesses we all have. I believe that everyone of us has some problems that depend on his will, and that they don't solve because they really actually do not want to solve them deep inside. Like you can't beg for money in the street even if you needed money, or like you can't be rude, even if it were reasonable to be rude. There are things that our mind keeps us from doing. I think it applies to everyone. The trick in my opinion is to avoid them rather than trying to force yourself to become a different person. If you can't trade discretionary because you tend to do the wrong things, simply do not trade discretionary - that's what I am trying to tell myself.
"I decided to trade it live this month but NOT ONE day did I follow the system completely. I traded discretionary and it has almost blown out my account. I have now stopped trading futures and is sim testing my strategy live for a few months. I feel like I lack faith in the system so it makes me think I can do better. The truth is I have done 1000% worse when I look back at the trades. It is a deeply routed problem I have I kept telling myself I would not interfere but I would do so anyway. It has made me aware of my personality flaws."
Things you say that make me think deeper are: "lack of faith in the system". Forward tests help you solve this problem. In other words, let it run and record its trades and see how good they are.
You have done "1000% worse"? Let me tell you. The system makes 100% percent in one month, and I lose 50% (the equivalent $) in 2 days. Then the system miraculously manages to make another 50% in two weeks, then I step in and lose 33% (the equivalent $) in one day (achieved by reversing one of his signals, because it was going short in what seemed an oversold market, and yet it still would have made money). How did I achieve these horrible results? Simple. I tend to pick tops and bottoms, way too early, and once it goes against me, I double up - basically I never learned any profitable discretionary method. My method is following my instincts, which results in doing the opposite of what works. I end up letting losses run (even doubling up losing positions) and cutting profits short.
You also say "It is a deeply routed problem I have I kept telling myself I would not interfere but I would do so anyway. It has made me aware of my personality flaws". I agree and have the same problems. What I am doing to fight this sick behaviour is this. I turn it on in the morning, before 8.00 (CET), and do not touch it nor look at it until 23.00, when I shut it down, and take care of saving data and so on. I don't know whether it will work. If it doesn't, it will mean that I want to lose, pretty much. By now it's clear that the system is better than me. The system keeps getting better (because I work on it, rationally, meticulously, tirelessly), whereas my discretionary trading never got any better. I know the markets better, but my trading doesn't get any better. My tendency as a discretionary trader is to blow out my account every month - and I think it will never change. Just like I have always been scratching my head, and I think I will keep on doing it all my life. Just like some people smoke, and never quit. Other people are overweight, and can't get in shape. There are some weaknesses we all have. I believe that everyone of us has some problems that depend on his will, and that they don't solve because they really actually do not want to solve them deep inside. Like you can't beg for money in the street even if you needed money, or like you can't be rude, even if it were reasonable to be rude. There are things that our mind keeps us from doing. I think it applies to everyone. The trick in my opinion is to avoid them rather than trying to force yourself to become a different person. If you can't trade discretionary because you tend to do the wrong things, simply do not trade discretionary - that's what I am trying to tell myself.
The reason people fail is because they don't know what they are doing, nor do they understand the mechanics of the market.
To put it another way, they walk around in a dream.
Rather than attaching labels, they need to educate their way out of the silly situation they put themselves in when confronting the market.
Fortunately most people never progress past the SIM with perhaps a handful real trades, all abysmal, to back up this post.
jjf
To put it another way, they walk around in a dream.
Rather than attaching labels, they need to educate their way out of the silly situation they put themselves in when confronting the market.
Fortunately most people never progress past the SIM with perhaps a handful real trades, all abysmal, to back up this post.
jjf
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
First - Whatever you call it - analysis, strategy, edge - if you don't have this, you are going to the casino to try your luck against the house advantage. Play long enough and you are almost 100% going to lose over time.
Psychology will not help you here
Second, even if you have an edge, you need top-rate money & trade management. Even gamblers who DO have an edge will usually lose if they do not manage their bets (trades). famous experiment where a number of Econ Ph.D. students were given a gambling strategy that had an edge. But 95% of them lost all their money due to poor money management.
Psychology will not help you here
Third, in other words, without an edge you wll never win. Without money management, you will blow your winnings. Psychology and other things are a distant third
A loser as a discretionary trader stays a losing trader, no matter what. This travis dude claims all these stuff about systematic trading but you're still doing the same ol' shit. Forward test (out-sample) has very little viability.
I've done my homework. Where's yours?
http://www.elitetrader.com/vb/showthread.php?s=&postid=2527534#post2527534
For some reason, this travis dude sounds like a luny. It's interesting how the dude repeats what other anti-psycholoy posters have mentioned in the past but his methodologies (advices about his own automated trading) is nothing but a hypocritical approach of what he praises.
Tell me, travis dude... what is the confidence you have that your systems will work. All you've done is backtesting(out-sampling+) to gain a 2nd opinion about your trading decisions but all your claims resort to the same initial problem. You decide to go live with your models using the same instinct that has lost your money...
I'll ride along with what you mention about WILL. You've never had the WILL to make money and seems like you never will, not matter the style it is discretionary or automated...
Not to mention... I'm an anti-psychobabble believer. I've been saying this for over 5 years and finally people are starting to agree with me. I guess all that "contribution" in ET helps... Hopefully, there will be a day when the psychology forum gets killed by Baron.
OK... I'm being a bit cruel. (I haven't cursed like I usually do...
) But my point is, no one seems to catch on with your ironies so I'm nice enough to provide a new perspective and a chance to re-evaluate yourself towards what you have written. Of course, this goes with the people who's posted stuff agreeing with travis. Some people need to be more skeptic. Material you agree with or something you can relate to != it's a good post. It only shows a few of us that you're just another struggling trader.
I've done my homework. Where's yours?
http://www.elitetrader.com/vb/showthread.php?s=&postid=2527534#post2527534
For some reason, this travis dude sounds like a luny. It's interesting how the dude repeats what other anti-psycholoy posters have mentioned in the past but his methodologies (advices about his own automated trading) is nothing but a hypocritical approach of what he praises.
Tell me, travis dude... what is the confidence you have that your systems will work. All you've done is backtesting(out-sampling+) to gain a 2nd opinion about your trading decisions but all your claims resort to the same initial problem. You decide to go live with your models using the same instinct that has lost your money...
I'll ride along with what you mention about WILL. You've never had the WILL to make money and seems like you never will, not matter the style it is discretionary or automated...
Not to mention... I'm an anti-psychobabble believer. I've been saying this for over 5 years and finally people are starting to agree with me. I guess all that "contribution" in ET helps... Hopefully, there will be a day when the psychology forum gets killed by Baron.
OK... I'm being a bit cruel. (I haven't cursed like I usually do...
) But my point is, no one seems to catch on with your ironies so I'm nice enough to provide a new perspective and a chance to re-evaluate yourself towards what you have written. Of course, this goes with the people who's posted stuff agreeing with travis. Some people need to be more skeptic. Material you agree with or something you can relate to != it's a good post. It only shows a few of us that you're just another struggling trader.I think personal psychology is quite important in dealing effectively with the markets. It takes mettle to deal with its vagaries day in and day out, no matter how incisive (and systematic) a trader's approach may be. Perhaps the problem arises when people think that one can substitute for the other. I think that both need to be present in order to succeed in trading. I think that the people who underestimate the importance of personal psychology as it relates to peak performance either underestimate their natural gift or have not yet encountered a significant challenge for any length of time, particularly one that encounters a fair degree of uncertainty.
Perhaps your timing was off.
