One that is thoroughly tested and consistently profitable, as opposed to something that is nothing more than a list of good ideas (e.g., "Be More Disciplined").
Psychology? ...so much wasted time.
- Thread starter dartmus
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One that is thoroughly tested and consistently profitable, as opposed to something that is nothing more than a list of good ideas (e.g., "Be More Disciplined").
Care to show me one
Testing means nothing when it comes to live trading!
Consistent profitability is extremely difficult if the trading time horizon is shortened..in other words..it is far harder to make money daytrading than it is to do so with long term position trades..if you do not know the reasons why..then you do not have enough experience!
I do agree that adequate planning..as with any successful business..is a requirement for successful trading..but..as with all things in life..it is no good planning something if the desired outcome is not possible..so..realistic goals and objectives must be recognized and understood..and then the hard part..a commitment to achieve same by means of a simple "plan of action"!
Discipline is self restraint and control..and this is achieved by having the correct plan of action..but..the plan of action is not an easy thing to get right..and..the main reason why..is because most who try do not understand the basics of risk management and the associated risks with the chosen market!
In summary..most who try fail to do the required basic research to see what they are getting into..so..how can they devise a plan around something that they do not understand..simple really..yet so hard for most to understand and see!
I agree. Therefore they must first understand what they're looking at so that they know what to look for. This is accomplished through observation, data collection, analysis, hypothesizing, experimentation, review, i.e., the standard scientific method. Only a few will do this of course. But those who do will understand.
But, getting back to the thread, psychology has nothing to do with it.
We can not say that without using the same approach to trading..as in..we need to see the "data" that shows the effect of psychology on traders results!
At first..looking at the definition as follows..
http://www.dictionary.com/browse/psychology
noun, plural psychologies.
1.the science of the mind or of mental states and processes.
2.the science of human and animal behavior.
3.the sum or characteristics of the mental states and processes of a person or class of persons, or of the mental states and processes involved in a field of activity:
the psychology of a soldier; the psychology of politics.
It is very hard to imagine that 1. 2. and 3. above do not affect trading results for those who participate!
Why can we not add the following!
the psychology of traders; the psychology of the financial markets
One can add whatever one pleases, but the market couldn't care less about the trader's mental state.
If psychology were as important as often thought, mental health professionals would make superior traders. This is not the case. Resorting to "psychology" is merely a rationalization for not constructing a robust trading plan.
I am not sure about that!
Let us look at it another way..does a person who tries out trading need to be aware of the studies carried out on traders or the markets in order to understand what risk management is all about..and what a price chart shows?
I would say No..as the person can easily understand risk management with the use of a simple spread sheet..and can understand what a price chart shows by looking at it..or..maybe in this case..we can say..can the trader really understand what the price chart shows..and if not..why not!
Is it possible..that..all of the information that the trader has been exposed to has distorted his view of the price chart..causing the trader to think about things that do not really matter..and if so..why so..surely this has to be included in psychology!
Let us have a look and see what we think..as the best way is to look at what is important..not just words!
What caused the price to drop from the most recent high..and to drop so violently compared to recent movements!
Had psychology anything to do with it?
And now look what has started
http://www.marketwatch.com/story/bad-news-stock-marketthe-hindenburg-omen-is-back-2017-08-17
What caused the price to drop from the most recent high..and to drop so violently compared to recent movements!
Had psychology anything to do with it?
And now look what has started
http://www.marketwatch.com/story/bad-news-stock-marketthe-hindenburg-omen-is-back-2017-08-17