Thank you for the link.
Trading psychology: is it being overdone?
- Thread starter Thunderdog
- Start date
Thank you for the link.
I wrestled with this for a while- the fear that in order to become successful at trading I would have to become a robot.
This was a very real fear for me, as I have a very wide emotional range and I deeply appreciate being able to experience the incredible highs and aching lows of life. Denying my emotions would be akin to denying the grand experience of life itself, and what would be the point of that?
After a time I realized that my emotions were actually much more of an asset than a liability, even in the trading arena. To the degree that a successful discretionary trader is also a clinical psychologist analyzing the market's moods, it helps to have a high level of emotional perception. The key, in my opinion, is not to limit your emotions or artificially suppress them, but to condition yourself so that you are able to withstand the natural swings of your emotions and not act destructively during the course of those swings.
If you are rigid in your attempts to suppress highs and lows, you're like a sheet of fiberglass with projectiles constantly being bounced off of it. Over time you become dented and weak, and if a projectile comes fast enough, you will shatter.
What I propose is to become elastic instead, like a cartoon trampoline. Instead of blocking the emotions which are so vital to human experience, you embrace them fully, positive or negative. And then when they dissipate, you snap back to your original position.
To succeed with this approach, a few things have to happen though:
1) You have to derive your ultimate self worth from something other than trading and have a life purpose greater than trading. Neither trading nor wealth nor status can be your principle benchmark, or you will be too stressed by the need for self gratification and (what others perceive as) success.
2) You have to truly love the game. Not just enjoy it or be deeply motivated by the financial rewards of it, but truly love all aspects of the game itself, for its own sake.
3) You have to deeply appreciate the hardness of the game, which, in a sense, means appreciating your setbacks and losses. When the going is tough, you have to look at it the way a professional cyclist looks at a grueling hill: as a challenge that is more exhilarating and satisfying than any flat stretch.
4) You have to be willing to walk away. This means having other things you are passionate about to focus on while you rest and recharge from time to time.
On a deeper level, it means recognizing that trading is A path, not THE path, to financial and emotional fulfillment. For every ten people who think trading was meant to be their career and life's pursuit, I would venture that at least eight or nine of them are wrong. (For those who think it is a source of ultimate happiness, all of them are wrong.)
p.s. If I were one of the X-men, I would be Wolverine. Adamantium bones mean he can never be crushed, and the power of self-healing means he can always feel and experience everything that comes at him, and come back with full strength all the wiser for it.
p.p.s. before seven figure account balance: chop wood, carry water. after seven figure account balance: chop wood, carry water.
Well, with the PTSA and being a robot is kinda fine right now.
I find other pleasures in life that allows me to be "normal". One is going out clubbing (not for drinks only but meeting people and dancing and etc.) or martial arts.
Basically, I came to a conclusion that I should work hard, play hard, and rest hard.
I find other pleasures in life that allows me to be "normal". One is going out clubbing (not for drinks only but meeting people and dancing and etc.) or martial arts.
Basically, I came to a conclusion that I should work hard, play hard, and rest hard.
As someone who has both traded for years and taught traders for years, I can assure you that trading psychology is definitely not something to make fun of. I always tell newbies that they can't know whether they'll be able to trade profitably until they start trading, no matter how profitable the method is, and the reason is psychology/emotions. I've never had one of them come back and tell me I was wrong. It might affect some more than others, but there's definitely something there.
Interestingly enough. one of the main causes of having emotional problems while trading is a lack of confidence in one's method, which in turn is caused by a lack of required backtesting. This is also the reason so many traders keep jumping around from one method to the next. If they'd backtest a method enough before they started trading, i.e. enough to be confident that this really works, and has worked for quite a while, they'll probably fail.
The lesson, boys and girls: backtest, backtest, backtest.
Phil
Interestingly enough. one of the main causes of having emotional problems while trading is a lack of confidence in one's method, which in turn is caused by a lack of required backtesting. This is also the reason so many traders keep jumping around from one method to the next. If they'd backtest a method enough before they started trading, i.e. enough to be confident that this really works, and has worked for quite a while, they'll probably fail.
The lesson, boys and girls: backtest, backtest, backtest.
Phil
Splphil, yeah, good diagnosis.
Trading psychology is nevertheless overdone. The reason is you must create (or find) a system that is predictive and very reliably so for your chosen market (ie DOW). Sure backtest, backtest, backtest.
Next you have to play it and then from that experience really get behind it with confidence .. now you are on the yellow brick road to the Holy Grail.
Conversely if you have never or not yet arrived at a decent system to rely on then your emotions will be hell in a handbasket most of the time. Who wouldn't get fu*ked up being jacked about all over the shop on the choppy seas of the various market gyrations each day?
Trading psychology is nevertheless overdone. The reason is you must create (or find) a system that is predictive and very reliably so for your chosen market (ie DOW). Sure backtest, backtest, backtest.
Next you have to play it and then from that experience really get behind it with confidence .. now you are on the yellow brick road to the Holy Grail.
Conversely if you have never or not yet arrived at a decent system to rely on then your emotions will be hell in a handbasket most of the time. Who wouldn't get fu*ked up being jacked about all over the shop on the choppy seas of the various market gyrations each day?
Lemme say this... there are no system that are predictive because system performance is based on market moves and it's objective extraction of the market. This is the same as saying markets are predictive. Also, predictive isn't a simple matter of 0 or 1 ( working or not working , yes or no ), what needs to be addressed is how and what changed.
If you don't get into the detail of how and what (noting that I'm not saying why). There's no point in analyzing the market or in this case systems.
// Wooohoooo!!! I didn't swear towards a stupid reply... Did I just write stupid? LOL
Thanks, I'll take it as a compliment.
Well, it looks like Cheese is looking for me to do some liguistic analysis so here I go...
1. You mention a few interesting things in your first paragraph. You write the you find a predictive (which is BS) and you choose your market and backtest x 3. OK... I've covered the predictive part but what do you mean by you choosing your market. As a system trader, do you choose markets? In the sense of diversification and as a trader regardless of the style, you trade what the market gives you. There is no sense of choice in the sense. Do you ever choose in trading? Isn't it a matter of recognition and reaction?
Also, backtesting has it's flaws. Just because you have a good backtested system, taken it to the extreme ... a linear paramater optimized system, it has no value in the future. But what is more important in backtesting is the conclusion derived rather than the action of backtesting itself.
2. OK... funny use of a phrase... "Holy Grail"... Well, obviously.... you use that "phrase" and you expect something like it. No explanation needed.
3. Third paragraph really shows your style of trading. Overall, you use the word "system" to express trading as an object or a possesion. Compaing to others in ET, most use "methodology" or "style"... though this comes from a large demographics of discretionary trader. There are some who can do both, but the logistics tend be in a neutral sense especially in an psychological themed thread. But you stuck to using "system" as your expression, which gives me a large conviction you have tried to trade discretionary but failed and faded to system trading.
....
Well, that's my little analysis of you. As a conclusion, I think you haven't traded real money profitably. You might have but if you've actually put the effort and trades, in a successful result, there wouldn't be an expression referring to the "Holy Grail". I don't have any rational conviction but I feel you do or have traded but is optimistic and hoping / waiting for your big break.
Well, regardless of the truth... I really hope people in ET start attacking or maybe flame in a rational manner. Well, maybe you're too stupid to do so considering your "critisizm" of me being a loser...
Actually there are predictive systems based on market moves and swings . Like an experienced tennis, racquetball, pelota or ping-pong player , experienced trader or analyst can position himself ahead of market and wait for a price arrival .
Do you get a bad bounces on a bad surface ? Does opposing player( market) put spin on the ball ? Sure , it happens a lot but that does not mean that action and reaction mechanics ceased to exist .