Liberty Market Investment
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Some people say that the profitable trading is 90% mindset. If method was unimportant, then trading robots would, on average, outperform human traders. In any case, it's impossible to quantify the relationship that exists between Elder's three Ms: method (the strategic rationale behind entries and exits), money management (position sizing), and mindset (the emotional qualities needed to consistently execute the method). If one is to trade profitably, then all three are essential prerequisites: method = 100%, MM = 100%, mindset = 100%. Any weakness in mindset negates the efficacy of method, but mindset in itself can not compensate for deficiencies in method. Overleveraging can cause irretrievable drawdown despite having a profitable method (more info here). Hence all three are 100% important.
Let’s look at our Public Practice Session traders. Here is a typical day of one of our top public traders.
All the necessary stuff that contributes to successful trading is there: precise stops and reasonable exits. Coupled with high discipline, those skills get him as high as being the third top public trader.
Now let’s look at the same trading day by another trader, the one showing poorer performance.
Would you say that the the single reason that makes this trader unprofitable is the wrong mindset? I definitely wouldn’t. All three trades were not successful due to poor trade management: it is obvious that the stop loss level has been dragged to breakeven too soon. The trades simply had no room to breathe.
Now part of the reason why could be the mindset, but a rather simpler explanation is a lack of good risk/reward ratio as a basis of their trading system.
To conclude, the "90% mindset" myth is possibly perpetuated by traders who attribute their failure to an obvious inability to remain disciplined, but while the ill-discipline was in fact masking an impotent method.
Let’s look at our Public Practice Session traders. Here is a typical day of one of our top public traders.
All the necessary stuff that contributes to successful trading is there: precise stops and reasonable exits. Coupled with high discipline, those skills get him as high as being the third top public trader.
Now let’s look at the same trading day by another trader, the one showing poorer performance.
Would you say that the the single reason that makes this trader unprofitable is the wrong mindset? I definitely wouldn’t. All three trades were not successful due to poor trade management: it is obvious that the stop loss level has been dragged to breakeven too soon. The trades simply had no room to breathe.
Now part of the reason why could be the mindset, but a rather simpler explanation is a lack of good risk/reward ratio as a basis of their trading system.
To conclude, the "90% mindset" myth is possibly perpetuated by traders who attribute their failure to an obvious inability to remain disciplined, but while the ill-discipline was in fact masking an impotent method.
