Psychology, are you sure?
- Thread starter Alexis
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I thought TradingGal on page 1 of this thread covered this issue pretty well. I am not aware of anybody contradicting this statement.
Then, of course, if a person like Travis with '12 years of experience', whose brain doesn't allow for him to open a trade on a discretionary basis without short circuiting, then......well you guys know....
I know that repeating it each time could get me a lot of criticism and ridicule, but it's all true, so I am not going to lie about it - I was really this sick and stupid to keep on losing real money for 12 years. And I keep on writing it down, to remind myself of what I must never do again. Also, it could be useful to others, as it is a real experience - a bit extreme, but it might be close to what happens to others. I am an extreme case, not really because I didn't succeed (which is the case with the majority of traders), but more so because I kept trying and losing real money for 12 straight years. To be precise, I did take some time off, here and there, but always less than a year and due to lack of funds.
How could it happen? Profitability always seemed around the corner, from day one. Also, maybe I didn't care much about losing 350 euros a month (which totals the 50,000 euros I lost in 12 years). Also, I was bored and trading provided me with a lot of excitement. This is just my attempt to explain why I kept on losing real money and didn't consider paper trading. The reason why I didn't figure out a winning strategy in 12 years is a whole different (and much longer) story, which could have something to do with the fact that I am a lousy student and I don't like to read books or learn from others, and I want to learn everything by myself, by hands-on practice, and clearly this time it didn't work, so I guess I should have been more humble.
I must also add, once again, that with automated trading things have been conversely different and I've had two years of profits, ever since I started (I started developing trading systems in 2002, and started trading them in 2008). As usual, I developed my systems by hands-on practice (no books) and this time it did work. For better or for worse, during these 12 years I haven't read any books or manuals on technical analysis. I didn't want to make the effort because I always felt there was too many of them, and I thought that the majority of the authors were not profitable traders or else they wouldn't have written a book on it. I did read about 1000 pages of John Walkenbach's manuals on excel and vba though (to say that I am not lazy, but have a limited ability to read and learn).
How could it happen? Profitability always seemed around the corner, from day one. Also, maybe I didn't care much about losing 350 euros a month (which totals the 50,000 euros I lost in 12 years). Also, I was bored and trading provided me with a lot of excitement. This is just my attempt to explain why I kept on losing real money and didn't consider paper trading. The reason why I didn't figure out a winning strategy in 12 years is a whole different (and much longer) story, which could have something to do with the fact that I am a lousy student and I don't like to read books or learn from others, and I want to learn everything by myself, by hands-on practice, and clearly this time it didn't work, so I guess I should have been more humble.
I must also add, once again, that with automated trading things have been conversely different and I've had two years of profits, ever since I started (I started developing trading systems in 2002, and started trading them in 2008). As usual, I developed my systems by hands-on practice (no books) and this time it did work. For better or for worse, during these 12 years I haven't read any books or manuals on technical analysis. I didn't want to make the effort because I always felt there was too many of them, and I thought that the majority of the authors were not profitable traders or else they wouldn't have written a book on it. I did read about 1000 pages of John Walkenbach's manuals on excel and vba though (to say that I am not lazy, but have a limited ability to read and learn).
I agree, experience is a huge factor to your success in the markets. It's highly doubtful that any trader can really succeed by following a pure technical or pure fundamental approach. Eventually you find that your analysis proves to be wrong 90% of the time in the fullness of time.
Why is that? Why do you think most people suggest throwing your money at 100 mutual funds? It's because markets move, companies go bankrupt, some pull fraud, economic cycles put influxes on companies and many other factors make some of the biggest companies in the US fail. E.G. US Rubber, Lehman Brothers, General Motors, and etc.
Circumstances change, that's why we day traders are at an advantage because we only have to be right momentarily. That's the kicker, if your right for the duration of the time in your trade none of these factors matter.
That's why most people will never achieve the level of Warren Buffet, because Warren Buffet doesn't try to jump 10 ft bars he walks over 1ft bars. simply speaking he invests into the most predictable investments, with little debt, and consistent growth that usually outpaces the market average.
That leads me back to my original point, why is our decision regarding companies wrong 90% of the time in the fullness of time, it can be summarized in a simple statistic 9/10 companies fail in the first 5 years, of the remaining companies in the next 5 years 9/10 of those will fail to. So within 10 years 99% of businesses will fail.
The Dow Jones has also been subject to such fluctuations that is why a lot of companies have been taken off the market index. For instance, AIG, US Rubber, and General Motors. I cringe every time someone says the market will return a trader 10% compounded a year based upon the Dow index because it clearly isn't true because even the most selectively chosen companies to represent the most popular index that a lot of investors worship, also falls prey to the 99% failure rule. Thus the 10% is inflated making it look appealing to the novice who wants an easy shot at retirement but fails because it turns out that reality is harsh, and the financial industry is full of lies to bring in a fresh crop of losers just like the kings of Egypt needed a fresh pair of workers to build the old pyramids when the current workers were to weak to work.
This summarizes why flexibility in the markets is absolutely necessary. A trading system should never be fully technical. Trading should also never be full fundamental. Eventually you get wiped out. You've got to keep a close eye on your trading in a fundamental, technical, and economical aspect. Simplify but leave as much detail in to make an educated trading decision. Experience is what will leverage your flexibility in trading and in the markets.
If you do not pay attention to 6 month charts because your trading 10 day charts you will make a mistake. Likewise if you only pay attention to charts and not to fundamentals like favorable reports. You will to either lose money or potential profits. A system is necessary to keep your consistency but a system is not always going to guarantee your success in the markets. Having specific criteria may work for a while but when things change so must your criteria for a trade.
For instance a trading system in a bull market should have a major difference than a trading system in a bear market. Your trading system should always be on the side of the stronger side. Your trading system should always be fine tuned to the circumstance your in.
For instance it would make no sense for a trader to design a daily trading system that only works in evenings when that very trader has a day job to work at. All trading systems should be fine tuned to a traders own specific circumstance.
A trader should always have an unbiased view point, and if your viewpoint is starting to become skewered, unrealistic, and flat out egotistical it is up the the intelligent trader to stop trading to avoid losses, due to ego.
A trader must be self-contained and reduce emotions and have realistic expectations for what might work out, a trading system is a general guideline however a trader must look at the specific trade and see whether or not he may be wrong regardless of what the trading system may dictate. The system can go wrong; so it's best to keep your eyes open and if you have profits but some other factor is making your trade susceptible to other factors not covered in your system it is wise to pull out of a trade. Especially when your trading system was designed in mind to trade during times of higher volume, yet your trading at a time when theirs low volume for e.g. August to September.
A trader, must remain flexible, use their trading system as a guideline but never call it full proof, a system can be designed for different circumstances, never use one system and call it all encompassing, you won't make money by using the same system in every circumstance. Systems must be designed for specific market conditions in mind.
summary:
-Design Trading Systems for different circumstances
-Reduce Risk by factoring in factors during a trade that may have not been considered in your trading system and react accordingly based upon these assumptions systems are guideline however the trading world is not static it's fluid
-Have a realistic expectations for trades, do not be greedy, however let your profits run but not to long because those profits can run away from you especially if their volatile trades
-Have an unbiased viewpoint while trading
-Always know that your decisions will be wrong 90% in the fullness of time, when your day trading your here to be right for a short period of time and then leave. Whining about lost profit is unprofessional. It's unrealistic to expect perfect timing, understand that you will be wrong 90% of the time if you want a perfect trade. What matters is your bottom line and the fact that your trades are profitable most of the time. Like the old wall street axiom pigs get fed hogs get slaughtered.
Theirs much more to trading, and I haven't even covered fundamentals, technical analysis, economical outlook, finding relationships between the three.
Trading is the worlds most elaborate casino, the biggest, the wildest, and by far the most profitable when you can get it right. All of this will come with experience. No matter how pretty of a painting you paint over trading. Your here to make money and make your opponent lose. It's just like a casino a zero sum game. In zero sum game's you should be flexible and willing to do things others aren't in order to have things others won't have.
Good night
I can see that at least 3 of the best traders in the world are NOW participating on this thread. What is not a coincidence is that one of them trained the other two.
So we have Stevesbg and Ugo Cerletti.
Who is the paranoid and who is the schizophrenic?. I can't tell.
Did your subconscious betray you? or was it that you lost connection with your Thorazine drip?.
Both are "proffessional traders" from a "commercial" office (not to be confused with us "retail traders" at any rate).
Ahhhhh. The wonders of the internet cyberworld...anyone can be whatever they want to be...virtually. And that includes me and my boiled white rice.
I guess tonight I will celebrate with some sake.
Don't worry about my previous post Ugo: I'm not referring to you two, when I speak of the best traders in the world. Please tell that to Stevesbg. I'm sure he'll be pissed.
Pissed. I am laughing.
Anyone interested can Google the name "Ugo Cerletti"
Its a joke between me and "Whisky" (another member and a mod here).
And now the joke's on you champ
Since we are in the psychology thread, with your latest post everyone gets a better look at how an Internet troll/stalker operates......
You're doing a great job...keep it up
Oh and please a lot more recipes for cooking rice.....
Anyone interested can Google the name "Ugo Cerletti"
Its a joke between me and "Whisky" (another member and a mod here).
And now the joke's on you champ
Since we are in the psychology thread, with your latest post everyone gets a better look at how an Internet troll/stalker operates......
You're doing a great job...keep it up
Oh and please a lot more recipes for cooking rice.....