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Trading psychology: is it being overdone?
- Thread starter Thunderdog
- Start date
Quote from Cheese:
Gnome, the point is the simple one of keeping bet size low relative to your capital.
Also no withdrawals from capital+profits. Crucially you must have a very reliably predictive system so that you are usually not taking a loss on any day. Capital keeps growing relatively as does you bet size .. increasing but still in the same ratio to your capital.
It is up to what any trader wants to do: I am just travelling from A to B. Start point to target accrued capital.
True but you got to know when to be a pig for some of those opportunitic times......
Look at it this way...
Put... like $100,000 in a mutual fund. Get a 15% return every year. So you make, in simple terms, $15,000...
Now let's say you get a deal from the mutual fund that tells you what they buy and want you to execute the trade. Same performance, you make $15,000...
Now, let's say you develop a system that consistantly returns 15%. You execute the system and fortunately the system hasn't faded and you make $15,000...
OK... now you are a discretionary trader. You trade hear and there, depending on the market. (Well, considering you've got rules and stuff, not random ) You trade for a year and end up making $15,000.
Next roll a dice and Buy or Sell if the roll was even or odd. Eventually make $15,000 at the end of the year.
Completely, cluelessly, and randomly pick trades. You make $15,000 at the end.
....
Now, any one get the point of all this?
Hint: Instinct. Not only human but all animals.
PS. People should stop reading trading psychology books...
Put... like $100,000 in a mutual fund. Get a 15% return every year. So you make, in simple terms, $15,000...
Now let's say you get a deal from the mutual fund that tells you what they buy and want you to execute the trade. Same performance, you make $15,000...
Now, let's say you develop a system that consistantly returns 15%. You execute the system and fortunately the system hasn't faded and you make $15,000...
OK... now you are a discretionary trader. You trade hear and there, depending on the market. (Well, considering you've got rules and stuff, not random ) You trade for a year and end up making $15,000.
Next roll a dice and Buy or Sell if the roll was even or odd. Eventually make $15,000 at the end of the year.
Completely, cluelessly, and randomly pick trades. You make $15,000 at the end.
....
Now, any one get the point of all this?
Hint: Instinct. Not only human but all animals.
PS. People should stop reading trading psychology books...
yes or no depending on your psychology
IMHO to understand why someone engages in this business is a key to understand what consequently happens to her/him. i for myself thought a long time ago that once you have a system it is easy money. i completely underestimated the difficulties to get there and i completely underestimated the amount of stress you suffer once you are there. no matter how my performance is or will be, i was wrong. no matter what, the assumption that this business is any easier than any other was plain wrong.
i for myself feel i changed after many years of working under pressure. i made three weeks holidays last year. and in the third week i felt that things became different. i had the feeling that my senses awoke. as if my system was usually constantly forced to spend a lot of energy to balance the amount of stress opposed to me and now was suddenly released and could be more in what one might call "the moment". after the holiday i gradually lost it again.
i think daytrading is an extreme example of what our society is about. many people experience the same thing, in many different jobs. trading has the additional aspect that you by definition depend on uncertain events outside of your control. that per se means stress.
the only thing that i know helps is meditation, since it works very quickly and addresses the problem at its source: your consciousness.
peace
i for myself feel i changed after many years of working under pressure. i made three weeks holidays last year. and in the third week i felt that things became different. i had the feeling that my senses awoke. as if my system was usually constantly forced to spend a lot of energy to balance the amount of stress opposed to me and now was suddenly released and could be more in what one might call "the moment". after the holiday i gradually lost it again.
i think daytrading is an extreme example of what our society is about. many people experience the same thing, in many different jobs. trading has the additional aspect that you by definition depend on uncertain events outside of your control. that per se means stress.
the only thing that i know helps is meditation, since it works very quickly and addresses the problem at its source: your consciousness.
peace
Interesting piece Mind .. don't know whether I agree with you fully.
Online trading to make money keeps you independent which is a big plus for most traders.
People in offices or other work seem to get fu*ked up all the time with stress either from co-workers or taking orders from the boss.
Choices, huh?
Online trading to make money keeps you independent which is a big plus for most traders.
People in offices or other work seem to get fu*ked up all the time with stress either from co-workers or taking orders from the boss.
Choices, huh?
Quote from MrJohnGalt:
Look at it this way...
Next roll a dice and Buy or Sell if the roll was even or odd. Eventually make $15,000 at the end of the year.
Completely, cluelessly, and randomly pick trades. You make $15,000 at the end.
....
Now, any one get the point of all this?
Hint: Instinct. Not only human but all animals.
PS. People should stop reading trading psychology books...
Hello, Mr. Galt. Instinct teaches us to take the most efficient path. Hence, JMartinez' opportunistic pig. Here is one more article for your leisure reading:
http://www.deanlebaron.com/book/ultimate/chapters/mkt_eff.html
You have a good one.