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Psychology is nothing

  • #21
  • Nov 9, 2007 9:19am Nov 9, 2007 9:19am
I also forgot to mention that history does repeat itself. If you don't stay within your means and knowledge of your own abilities, you'll revert back to what you used to do. So stay fresh.
I dream, therefore I become.
  • #22
  • Nov 9, 2007 9:23am Nov 9, 2007 9:23am
Quoting blueruby
I agree.

My point is, when you gain certainty, you'll have control over the feelings.

Some people think that if you just control the feelings, you'll be a good trader. Not so. You have to know how to trade.

Even having a good system is not enough. You have to know many things that can't be written into a system.

My post on requotes is an example of one of those things, for me. It may not be true to everyone else, but it is true for me, and from now on, there will be no emotions when I'm faced with that particular thing.
To sum up this whole mind blowing thinggy... just one word:
DISCIPLINE
Hard to acquire... but achievable.

p/s: No body actually answer my question yet... where actually you guys got that figure of 95% thinggy? If you know... where to find it? Any survey... research... solid data? Why every year just the same... 95% I am still sleepless about this. Seriously!
  • #23
  • Nov 9, 2007 9:26am Nov 9, 2007 9:26am
Quoting Malaysia
Seems like you actually KNOW that 95% thinggy? People... enlightened me... please... where you guys actually got that figure 95% from? Any hard prove? Seriously... I need to KNOW this... is it really true?

Anyway... if trade without psychology... might as well leave it to the ROBOT. Then again... I don't "TRUST" the robot.

As long as I am human being... I am very happy with whatever psychology I got.
The 95% is just one more thing that lots of people say. Never seen it verified. Here is an excellent writeup with more info.

http://www.forexfactory.com/showthread.php?t=20253

I would believe that 90 - 95% of accounts get blown, but there is probably no way to track how many of those people move to another broker, as I have twice after blowing accounts and how many traders actually fail.

And, what constitutes failing? What if a person tries futures, loses his money, comes back in a few years and tries stock options, then a few years later goes to forex, blows 2 accounts then becomes profitable?

Or, if he doesn't make it, how many failures does that count as?

And, if he winds up like most people, with his money is in mutual funds making a decent return, did he fail? (As a trader, I say yes, as an investor, no).
  • #24
  • Nov 9, 2007 9:31am Nov 9, 2007 9:31am
Quoting Malaysia
To sum up this whole mind blowing thinggy... just one word:
DISCIPLINE
Hard to acquire... but achievable.
You can only have discipline ONLY if you KNOW what to do!

When you KNOW, and then DO it without hesitation and without think-think-think no, yes, maybe, hmmm.... Then that is discipline.

Until you have knowledge, and rules to follow, the only discipline is not to trade at all. Then learning is very slow or impossible.
  • #25
  • Nov 9, 2007 9:38am Nov 9, 2007 9:38am
Quoting blueruby
Yes, me too, bro.

I've been at it one year full-time, and I'm now at the point where I feel I am able to learn and really know.

Before this, it was mostly confusion, and I've been pretty tired of people saying it was just in my head, when there is no solid teaching on how to trade, so many scams, and everyone who is honestly trying to help, they all say different things, often the opposite.
Exactly....As of me starting to write this reply I had nearly +600 showing on my first GJ trade today a bit less now and I have opened and closed several others along the way and have made way in excess of this amount.

I know this is an exeptional day and I'm sure many people have made these amounts, but my point is I could not have done this without what I have learnt in my short trading career.

The setup to short was obvious (to me), and it soon became clear that momentum was strong and it would continue.

Sure Psychology plays a big part when your starting out, its bound to do you don't know what your doing.

To me its all about knowledge thats what make you successful.

Something else that may also play a part is whether a person has the apptitude to trade much like you would need to be say an engineer, some will never learn it.

A bull and bear headed persistance to stick at it and not give up is another another usefull attribute. Maybe this is the Psychology part, having the discipline to stick at it.

I'm ranting now and at risk of not knowing what I'm ranting about.
  • #26
  • Nov 9, 2007 9:45am Nov 9, 2007 9:45am
Quoting blueruby
You can only have discipline ONLY if you KNOW what to do!

When you KNOW, and then DO it without hesitation and without think-think-think no, yes, maybe, hmmm.... Then that is discipline.

Until you have knowledge, and rules to follow, the only discipline is not to trade at all. Then learning is very slow or impossible.
You really make me laugh Who is here actually start from scratch and suddenly KNOW all the knowledge of trading. What gave you such knowledge in the beginning? Your mistakes... where did you got your mistakes... from trading in the first place. Everyone have to START somewhere.
  • #27
  • Nov 9, 2007 9:58am Nov 9, 2007 9:58am
Quoting clockwork71
I believe psychology is what drives the market. It is also what drives your actions.

Think of it this way: If you have ever taken a stupid trade (God knows I have been guilty.) then knowing is not enough. The Psychology failed you.

(The above assumes that you broke a rule, etc. and not that you just happened to miss something. Errors do happen.)

So I would submit that both are key. Of course you can get lucky, and have nerves of steel. Hell, my first trade ever was profitable. IN THE SOUTH AFRICAN RAND! (Was this brilliance? Hell no. It was luck.)

The point is you need a healthy dose of both I believe. Because even when you know what to do, your psyche has to believe it too. I can look at charts all day and tell you where they "should go", but that doesn't mean in the heat of the moment I always get it right. I might get shaken out, etc.

Any idiot can read a chart. It takes a special idiot to ignore that feeling of absolute terror you can get.

But, yes.....I see both points here.

Now quit starting inflammatory threads.

Clockwork "I'm gonna kill the Kiwi Dollar" 71
I still take stupid trades, because I'm not a good trader.

If it's not a good trade, it means I missed something. That is happening less often. Don't take it for granted that any idiot can read a chart. There's a lot of information there. I still have trouble seeing.

This morning I realized I had bought just below resistance. When I noticed that, I took 1 pip and got out. The market brokeout and I would have hit my target, but I considered it a win, because I saw my mistake and did the right thing. The trade was less certain at that time so I pulled the plug. No feelings involved.

But I had to know the right thing to do, and then have the discipline to do it instead of staying in and hoping, wishing, cursing, waiting, agonizing, grieving, .......

Yes, if you know it's not a good trade, and take it anyway, then there's a problem.

But I'm not a good enough trader to be at that point!!!

Inflammatory? Moi?
  • #28
  • Nov 9, 2007 10:00am Nov 9, 2007 10:00am
p/s: No body actually answer my question yet... where actually you guys got that figure of 95% thinggy? If you know... where to find it? Any survey... research... solid data? Why every year just the same... 95% I am still sleepless about this. Seriously!
[/quote]

In general, 95% is the assumption marketing psychology since statistically 100% is not possible.

it's all marketing, 25.95$, 19.95$...
  • #29
  • Nov 9, 2007 10:06am Nov 9, 2007 10:06am
Quoting Malaysia
You really make me laugh Who is here actually start from scratch and suddenly KNOW all the knowledge of trading. What gave you such knowledge in the beginning? Your mistakes... where did you got your mistakes... from trading in the first place. Everyone have to START somewhere.
I'm sorry you don't understand what I'm saying. Most of what you post agrees with what I just got through saying.
  • #30
  • Nov 9, 2007 10:07am Nov 9, 2007 10:07am
errrr.... how we categorize an evil scientist? a stupid smart person?

translation: the world is full of dilemma, yes, we all has proved our word, but there is almost no thing in the world that works well on everything
  • #31
  • Nov 9, 2007 10:08am Nov 9, 2007 10:08am
Quoting scalpt
p/s: No body actually answer my question yet... where actually you guys got that figure of 95% thinggy? If you know... where to find it? Any survey... research... solid data? Why every year just the same... 95% I am still sleepless about this. Seriously!
In general, 95% is the assumption marketing psychology since statistically 100% is not possible.

it's all marketing, 25.95$, 19.95$...[/quote]

Aaaaaa... Oooooo Cheers mate That's make sense!!! Assumption marketing psychology. Now I can finally sleep like a baby You enlightened me
  • #32
  • Edited 10:25am Nov 9, 2007 10:14am | Edited 10:25am
Quoting Wolf.
Exactly....As of me starting to write this reply I had nearly +600 showing on my first GJ trade today a bit less now and I have opened and closed several others along the way and have made way in excess of this amount.

I know this is an exeptional day and I'm sure many people have made these amounts, but my point is I could not have done this without what I have learnt in my short trading career.

The setup to short was obvious (to me), and it soon became clear that momentum was strong and it would continue.

Sure Psychology plays a big part when your starting out, its bound to do you don't know what your doing.

To me its all about knowledge thats what make you successful.

Something else that may also play a part is whether a person has the apptitude to trade much like you would need to be say an engineer, some will never learn it.

A bull and bear headed persistance to stick at it and not give up is another another usefull attribute. Maybe this is the Psychology part, having the discipline to stick at it.

I'm ranting now and at risk of not knowing what I'm ranting about.
Wow, that's great! Glad you caught that move. Interbank's feed went down for a full hour, which included the first part of the move down, so I didn't trade it. I didn't have chart data - no analysis, and didn't want to chase it, so I sat out.

I guess that's discipline. Of course now I wish I had just jumped in -- well, no I don't. If you trade sloppy and make money, then you think you can always do that, and it leads to a lot of trouble.

I wish I could have followed my rules and still caught the move.
  • #33
  • Nov 9, 2007 10:18am Nov 9, 2007 10:18am
Quoting mbqb11
I agree with Raczefx
Yes, but you know how to trade! You have many techniques and setups that serve you well, or at least it would seem so, from reading your posts.

Maybe at that point you think it is all psychology, but you're taking all your knowledge for granted.

If psychology is everything, and technique is unimportant, then why won't you share your stop-hunting technique?
  • #34
  • Nov 9, 2007 10:37am Nov 9, 2007 10:37am
Quoting Malaysia
Seems like you actually KNOW that 95% thinggy? People... enlightened me... please... where you guys actually got that figure 95% from? Any hard prove? Seriously... I need to KNOW this... is it really true?

Anyway... if trade without psychology... might as well leave it to the ROBOT. Then again... I don't "TRUST" the robot.

As long as I am human being... I am very happy with whatever psychology I got.
Just a couple of my own thoughts on all of this; if Psychology (real behavioral analysis - not the crap the gurus try to sell) worked in trading, we'd see many, many more hedge funds rooted in Behavior Finance Theory with Doctors of Psychology as the lead trader. Its the same problem the medical industry has with divorce; Psychologists on the whole have a higher level of divorce than other medical professions and the average national divorce rate hear in the US (Source: The New England Journal of Medicine as quoted in White Coat by alum Ellen Rothman). Psychlogist, above anyone, should be able to cope with the stresses of marriage and understand, know and implament the actions that will make is successful: But understanding AND knowing is not enough in marriage or trading... There is going to be something else that ultimately decides the winners over the losers and I'm not so sure that it might not just come down to a statistical anomaly.

Part of the problem with this argument is, and I've seen it many times in the last seven years is; most of the traders who are arguing over what it is that makes successfull trading possible, haven't been doing it long enough to have a valid argument. If you took a poll here you'ld find the average trader has only been in FX for a few months. Yes there will be some who've been at a couple years and even fewer still who have been at it for several years. If the 95% dropout rate wasn't accurate; this board would have 10,000 individual trader watching it as opposed to a couple of thousand; there should be more of the "Old Guard" around who have been doing it longer and are still active, but they aren't out there, not in any significant numbers. People tend to treat something like its brand new, because they are new to it, but FX has been around for a while... Finding a statistically significant number of people who have been trading it for five, six or even seven years is very tough.

Right before I left FXStreet we started a trading competition; to be honest this data would be to discreet to be significant, but I think the number is worth noting. We had fifty traders sign up with live accounts to win a change to manage a real portfolio. After four months (the contest conclusion) only 2 traders had positive returns in their accounts. That's a 96% failure. Again the sample is too small but its an interesting reflection.

Thats just my take...
Trade Small. Be Patient. Learn to Survive.
  • #35
  • Nov 9, 2007 10:47am Nov 9, 2007 10:47am
Quoting FXAnalytics
Right before I left FXStreet we started a trading competition; to be honest this data would be to discreet to be significant, but I think the number is worth noting. We had fifty traders sign up with live accounts to win a change to manage a real portfolio. After four months (the contest conclusion) only 2 traders had positive returns in their accounts. That's a 96% failure. Again the sample is too small but its an interesting reflection.

Thats just my take...
This is a solid prove... even though not solid enough... I am content with it. Cheers Bro Another one enlightened me
  • #36
  • Nov 9, 2007 10:57am Nov 9, 2007 10:57am
I think this sort of topic will be universal where money (however much or little is involved).
For example I did some 5min "scalping" with a friend last night, who's only knowledge of currency dealing comes from me. kind of like the blind leading the blinder.
So I showed him some potential areas of sup and res on the hourlies then we went to the 5min and took a short on the Euro, fading a break above 700 of the high at 730.
Now as the market fluctuated it sparked a discussion on psychology and profit taking we saw the trade go up 25 pips then retrace, however my friend was unwilling to get out with less than 25 so waited, the market came back and we closed the trade for 25pips profit. After that we went in the other direction for 12 pips.So 37 pips from about 2 hours of scalping and 2 trades.

The result is irrelavent however because had either of us been trading alone I am sure we would have made much less. The fact that we nursed each trade discussing our own psychology and the perceived psychology of the market surrounding the double top and round number which we were trading, contributed to our success on those trades. I have even heard of people talking to cuddly toys when trading to elucidate their feelings and ideas, to an inanimate object.

For me this kind of behaviour shows that ones psychological reaction to the market is of the utmost importance. The way that we behave when our wallet is under threat matters.

So I agree that if we don't have any idea of how to "fill the tank", then our performance will suffer, but if we talk ourselves through the process our chances might just be that much greater.

Regards,

Ed.
  • #37
  • Nov 9, 2007 11:05am Nov 9, 2007 11:05am
Quoting Ted1983

Regards,

Ed.
___________________________________________
"The most powerful force in the Universe is compound interest" Albert Einstein
That quote from Albert Einstein Really enlightened me Oh... I am so enlightened tonight
  • #38
  • Nov 9, 2007 11:09am Nov 9, 2007 11:09am
I don't think that I even have a psychology myself :
  • #39
  • Edited 1:09pm Nov 9, 2007 11:12am | Edited 1:09pm
Yes, thanks Ted.

I guess I concede that once you know how to trade, and you have some setups you know are good, psychology would have to enter in.

It could be quite tricky.

How would you refine your system, or outright change it to fit a changing market, if you didn't break a rule? I suppose you could analyze without actually straying from your system, and if stats proved out, then change the system. But, over how long of a time? We know we're not supposed to keep changing the system after every string of failures, could lead to chasing one's tail.....

How do you know if what you're doing is scientific, or if your mind is fooling you?

Now, if you're not doing what you know is the right thing to do, then that's a problem. It would be like my friend going into panic every time at the gas station, even after she knew how to fill the tank. Then that's psychology.

I'm not to that point yet. I'm still working on mastering the technical aspects of trading.

I'm also kinda surprised at how few people get the point of the original post.
  • #40
  • Edited 11:35am Nov 9, 2007 11:31am | Edited 11:35am
Quoting Ted1983
I think this sort of topic will be universal where money (however much or little is involved).
For example I did some 5min "scalping" with a friend last night, who's only knowledge of currency dealing comes from me. kind of like the blind leading the blinder.
So I showed him some potential areas of sup and res on the hourlies then we went to the 5min and took a short on the Euro, fading a break above 700 of the high at 730.
Now as the market fluctuated it sparked a discussion on psychology and profit taking we saw the trade go up 25 pips then retrace, however my friend was unwilling to get out with less than 25 so waited, the market came back and we closed the trade for 25pips profit. After that we went in the other direction for 12 pips.So 37 pips from about 2 hours of scalping and 2 trades.

The result is irrelavent however because had either of us been trading alone I am sure we would have made much less. The fact that we nursed each trade discussing our own psychology and the perceived psychology of the market surrounding the double top and round number which we were trading, contributed to our success on those trades. I have even heard of people talking to cuddly toys when trading to elucidate their feelings and ideas, to an inanimate object.

For me this kind of behaviour shows that ones psychological reaction to the market is of the utmost importance. The way that we behave when our wallet is under threat matters.

So I agree that if we don't have any idea of how to "fill the tank", then our performance will suffer, but if we talk ourselves through the process our chances might just be that much greater.

Regards,

Ed.
Ed thats an interesting account but I think you might be making my argument just a little if you look at the text closely. Your experience with your friend was a single instance; you would need to log thousands of those for it to be significant and one of the interesting things we see when traders (be they hedge funds, CTA's or private) is, they don't recount what doesn't work or when they fail. Part of the problem with the Hedge Fund industry right now is we can't get a good handle on the attrition rate because many funds just simply stop reporting... We never know if they've gone belly up or what has happned.

The other thing we do as traders is hang on to anything that supports what we believe, even if we don't have good evidience that it works. There are no doubt many traders here who strongly believe that pschology is extremely important in trading, they may not exactly know why, or they read something and it made sense to them and they've adopted it as a belief. That's not a bad thing, but it can be (if it costs you money in the end).

Here is what we should really be asking ourselves, if we want to prove that psychology (and possibly talking to stuffed animals) has merit (I'll tell you what I do in a minute )... How do we trade it and how can we test it.

Lets assume that we all, as a group can agree on a series of psychological triggers in the market (it will help if we have someone with a PHD in the field), We could probably use any of the high volatility events like NFP and identify price action before and after and then measure the market response as positive or negative before and after as well, from that data we should be able to extract both long and short term success of the markets reaction to the release... Now to be certain this will get very complicated (as it should) because you are going to have additional pscholigical events just before and after that also impact the crowds behavior and the importance of the release (you should already be seeing the difficulty with these models in the market).

I've got tons of data and have access to more; enough to derive something statistically significant, so I'm more than willing to help in the project.

Lets not wonder or argue, lets model, because in the end the only thing that matter is... Can you trade it. Maybe we'll end up with something that clearly identifies a specific action or reaction is tradable.

Again I think we need some kind of pro to help us identify the psychological triggers... Someone who understands Conservatism and Representativeness as well as the dynamics of Belief-based Models. Once we have a mechanism for accurately (or somewhat accurately) Identifying the trigger, we can then extract the correctness of the reation over time.

If you're interested in digging into it let me know...

What inanimate object do I "talk" too? My keyboard; I keep about six spairs in the closet for those conversations. LOL

Okay... less debate without proof, let's grind out some number (in between trades of course). Even if you disagree with the results, you'll have facts that you can pick apart and formulate a real argument from.
Trade Small. Be Patient. Learn to Survive.
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