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Psychology is nothing

  • #61
  • Nov 9, 2007 3:32pm Nov 9, 2007 3:32pm
Quoting Mr demark
... But i think Psychology is everything in this market since it is the reason price moves...
If there was no fundamental driver to trigger the psychological response whould prices still move? I think fundamentals move the market and over/under-reaction (emotion, or belief based systems) creates momentum and pullbacks, that then crete additional responses.

Having said that, I think the complexity of underlying reaction is to complex to trade or even pinpoint for that matter.

In the end we have to be able to trade and profit from our convictions or they relly don't have much meaning.

Maybe instead of debating if the markets are driven by psychological factors, we should be talking to the people who trade psychological (belief based) models... And listen to how they determine the broad based belief of the market at any given time...
Trade Small. Be Patient. Learn to Survive.
  • #62
  • Nov 9, 2007 3:32pm Nov 9, 2007 3:32pm
Quoting Mr demark
HOLY SHOOTS!

how did that end up there?

hahah.. I drove it up and over!!! thats how I manage risk on the weekends... LOL
Trade Small. Be Patient. Learn to Survive.
  • #63
  • Nov 9, 2007 3:46pm Nov 9, 2007 3:46pm
I don't want this to get to far off topic so if you would like to see the whole jeep rock sequence I put it in my journal...

http://www.forexfactory.com/showthre...89#post1708889
Trade Small. Be Patient. Learn to Survive.
  • #64
  • Nov 10, 2007 1:21am Nov 10, 2007 1:21am
I was surprised at how much irritation I felt with the OP.

I felt he clearly hadn't been trading long or he would have been through the periods where what he knew stopped working and his resilience and adaptation became important. Where understanding himself and the other players in the market would make a difference.

But then I remembered that its not the emotion that causes the problem in trading - its what you do when the emotion arises.

So I wish you all good luck guys and gals. Some will need more than others
  • #65
  • Nov 10, 2007 1:25am Nov 10, 2007 1:25am
I was surprised at how much irritation I felt with the OP.

I felt he clearly hadn't been trading long or he would have been through the periods where what he knew stopped working and his resilience and adaptation became important. Where understanding himself and the other players in the market would make a difference. So I was irritated that in his ignorance he would deceive others.

But then I remembered that its not the emotion that causes the problem in trading - its what you do when the emotion arises.

And those who are not prepared for those emotions when it becomes important will be less adaptable and less fit. But, after all, the market is just evolution in action. So they will feed the fitter and thus do us a favour. So thanks to the OP.

I wish you all good luck guys and gals. Some will need more than others
  • #66
  • Nov 10, 2007 9:16am Nov 10, 2007 9:16am
Quoting Mr demark
Nice view. But i think Psychology is everything in this market since it is the reason price moves. But emotion on the other hand, which comes under the broad umbrella of psychology...plays a smaller role especially for experienced people.
What if you had 1000 computers controlling a few billion dollars, all programmed with different strategies to catch a move.

As the market moved up, all started to buy at different decision points, for different reasons, using different algorithms, strategies and indicators.

As they all came into the up move, what would the market do?

Then, as they all took profit at different times, what would the market do?

What role would psychology play in this scenario?

Do you think the big traders, the banks, the institutions, the programmed traders, let psychology enter into the equation?

Just a few questions for thought.

You're right, the title should have been "emotions" that might be more accurate.

However, maybe we should re-evaluate the role psychology has in moving the market.

Especially since traders who are emotion driven will enter and exit at the wrong times consistently, some times exactly at the wrong times. I know, I've done it. They say you can't pick tops and bottoms perfectly, well, I've done it on occasion -- in the wrong direction.
  • #67
  • Nov 10, 2007 9:18am Nov 10, 2007 9:18am
Quoting Lou
In terms of taking advice from someone, you should not listen to a single thing this so called teacher has to say. Her statements reveal that she is not a professional. A failure actually in terms of students' learning.
If someone on my staff had an attitude like this person they would be booted out faster than you can spell 'irresponsible' .

Just needed to set this straight. Now back to the friendly trading discussion.

Lou
Yes, no kidding. I probably would have given her a good reaming but I was kinda sick. To think my kids were in the hands of people like this was overwhelming.

Glad to hear you say that the standards are high somewhere.
  • #68
  • Nov 10, 2007 9:22am Nov 10, 2007 9:22am
Quoting FXAnalytics

Didn't mean to imply that anyone was arguing

It's kind of like the person who drives a rubicon with a 3" Pro Comp SA lift and the guy who drive one with a 4" LA kit. They will sit and "debate" all day long about the benefits of each approach. Lower center of gravity vs more flex and so on... Of course while they're arguing I'm just crawling by making them all look foolish in my old beater
Argue, debate, let's not worry about semantics.

Awesome pic. Yeah, sometimes I wish I had built up my own ride, it would surely do more. But, overall it's a great Jeep, doesn't give me any surprises on the road at speed, which was, I'm sure, the main concern of the design team, hence the many compromises.....

I plan to keep it forever, someday it will be lifted and tricked out. One more thing on the list for when I'm making lots of bucks in FX....
  • #69
  • Nov 10, 2007 9:33am Nov 10, 2007 9:33am
Quoting kiwi_trader
I was surprised at how much irritation I felt with the OP.

I felt he clearly hadn't been trading long or he would have been through the periods where what he knew stopped working and his resilience and adaptation became important. Where understanding himself and the other players in the market would make a difference. So I was irritated that in his ignorance he would deceive others.

But then I remembered that its not the emotion that causes the problem in trading - its what you do when the emotion arises.

And those who are not prepared for those emotions when it becomes important will be less adaptable and less fit. But, after all, the market is just evolution in action. So they will feed the fitter and thus do us a favour. So thanks to the OP.

I wish you all good luck guys and gals. Some will need more than others
Learn to trade, you won't need psychobabble or luck.

And, you'd better get a handle on those feelings of irritation. Veiled insults are the same as lashing out.
  • #70
  • Nov 10, 2007 9:52am Nov 10, 2007 9:52am
The thing that brought this whole thing on is that, after a painful year of full time Forex, things just recently seem to be starting to click.

It's like, when I read something, I can say "AHA" and apply it to my trading. Or I can reject it. Until a person gets enough experience, they can't afford to do either, really.

I can think to myself, "Hey, I did this the other day and it was profitable. I'll make that part of my plan. That DEFINITELY works!"

Without that year of trying hundreds of different things live, and doing it wrong a LOT, I feel I would still not be able to sort through all the mixed advice and pick out one thing and say "THAT IS TRUE!"

Or, "YES! That is one thing that I've been doing wrong! Consistently!"

Each time you have one of those moments, you've just learned one secret of your own. You wouldn't be able to show it to another without sitting at the tube for weeks and waiting for that one thing to appear so you can show them how to do it. It's about how it happens in real time.

That secret becomes part of you, part of your system. When that situation comes up in the market, you will not sit and wonder and worry if you're doing the right thing, you know how to handle it correctly and just do it with certainty.

Emotion should not be an issue. If they still are with some people, then I guess those folks won't agree with me.

I'm from an engineering background. If I know something is statistically valid, I will do it regardless of how I feel about it.

Psychology had nothing to do with that secret being discovered. It's a trading technique.

The other day when I discovered one thing, I knew I had something that will make a huge difference in my trading. If I could pick up just one of those per week, I will be doing very very well in a few months.

In the meantime, trading buddies send books about "reprogramming your mind for success" and all, and they're great stuff.

But, I need to learn to trade.

Alex Elder says if you lose, go to AA but pretend it's "Losers Anonymous".

How does that teach you to trade?

These "secrets" I speak of, could be picked up in scores by working with a competent mentor who was willing to spend live time with you. But, who's going to do that?
  • #71
  • Nov 10, 2007 10:03am Nov 10, 2007 10:03am
I was talking to a professional trader a few weeks ago, a good friend.

Told him I was about at my wits end. He tried to help. He referred me back to something he'd taught me awhile back, his "bread and butter" system. I told him I tried, and couldn't trade it.

He said the reason systems don't work is because traders don't follow the rules. Whoa! A challenge I knew I could win hands down.

We pulled up charts and I showed him false signal after false signal after false signal that his system generates.

Each time, he told me why he wouldn't have taken that trade, and pointed out the good ones that he would choose to take.

He looks at charts, he's like a machine! He sees patterns and setups everywhere. It's automatic. He does it without thinking, and trades without thinking about it, basically, so he called this "trading mechanically".

I actually had to convince him that this was discretionary trading. I explained, "no, mechanical is ...." and recited back his rules for his system. Then he understood that not anybody could just trade a "profitable system" and make money, and that it was not emotion or personal psychology that was screwing up his students.

PS, the reason I knew his "bread and butter" system right off the top of my head was that I programmed it for him. It was the worst EA I'd ever done. He doesn't win with it solely because of his great attitude, he wins because he knows how to trade the market.
  • #72
  • Nov 10, 2007 10:08am Nov 10, 2007 10:08am
What a very weird thread indeed
  • #73
  • Nov 10, 2007 10:20am Nov 10, 2007 10:20am
Quoting Gwan
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
I think "evil scientist" works just fine, you can't say it any better than that.

Ethics and intelligence are two different things, often not related.
  • #74
  • Nov 10, 2007 11:06am Nov 10, 2007 11:06am
Quoting blueruby
I was talking to a professional trader a few weeks ago, a good friend.

Told him I was about at my wits end. He tried to help. He referred me back to something he'd taught me awhile back, his "bread and butter" system. I told him I tried, and couldn't trade it.

He said the reason systems don't work is because traders don't follow the rules. Whoa! A challenge I knew I could win hands down.

We pulled up charts and I showed him false signal after false signal after false signal that his system generates.

Each time, he told me why he wouldn't have taken that trade, and pointed out the good ones that he would choose to take.

He looks at charts, he's like a machine! He sees patterns and setups everywhere. It's automatic. He does it without thinking, and trades without thinking about it, basically, so he called this "trading mechanically".

I actually had to convince him that this was discretionary trading. I explained, "no, mechanical is ...." and recited back his rules for his system. Then he understood that not anybody could just trade a "profitable system" and make money, and that it was not emotion or personal psychology that was screwing up his students.

PS, the reason I knew his "bread and butter" system right off the top of my head was that I programmed it for him. It was the worst EA I'd ever done. He doesn't win with it solely because of his great attitude, he wins because he knows how to trade the market.
blueruby: I agree quite much with everything you have said on this thread.

WTB: actually it's not weird at all, but rather most of other posts in this and other forums are weird.
  • #75
  • Nov 10, 2007 12:08pm Nov 10, 2007 12:08pm
Quoting blueruby
Psychology is nothing
This statement is an absolute
Knowing is the entire game.
As is this one
Sounds like a paradox to me. You're trying to make a case for quantitative analysis, but even the best quants from MIT don't know everything. Case in point: the sub-prime scam caught many hedge fund quantists by suprise. I have articles to back up that statement too.

I know a rather “blond-between-the-ears” PhD who was a spoon-fed brat from birth, she was the youngest child, everything was handed to her, pretty much.

Well, the first time she went to fill up the car daddy bought her at a self-service gas station, she experienced a range of emotions from frustration to terror. She didn’t know where to put gas in, didn’t know how to work the pump, didn’t know how much to put in, etc. It was a nightmare.
This part sounds like part of Paris Hiltons' memoirs

I guess that comes full circle. A person would have to be crazy to want to be a professional trader!
Maybe not so much crazy, but lots of money and a big ego will go a long way on this business.

Paris Hilton would likely make a good trader, simply because she doesn't need to know anything and hasn't a clue about psychology. She could just trade and trade and trade until she learned how.

Am I missing something here? How's that for psycho-babble?
  • #76
  • Nov 10, 2007 2:24pm Nov 10, 2007 2:24pm
Quoting WTB
What a very weird thread indeed
LOL I could find some nice substitute words for weird:
  • #77
  • Nov 10, 2007 4:17pm Nov 10, 2007 4:17pm
Quoting blueruby
Learn to trade, you won't need psychobabble or luck.

And, you'd better get a handle on those feelings of irritation. Veiled insults are the same as lashing out.
LOL.

I know how to trade. And there were no veiled insults.

Just a hidden story. It provides an opportunity for people to see the kings clothes or decide that he is naked. Clearly you think he is naked.

Good luck in future. If this thread represents your true thoughts then you will need it.
  • #78
  • Nov 10, 2007 5:33pm Nov 10, 2007 5:33pm
Quoting blueruby
Psychology is nothing

Knowing is the entire game.

Do you feel fear, greed, worry, or any other emotions when you, for example, fill up your car?

I know a rather “blond-between-the-ears” PhD who was a spoon-fed brat from birth, she was the youngest child, everything was handed to her, pretty much.

Well, the first time she went to fill up the car daddy bought her at a self-service gas station, she experienced a range of emotions from frustration to terror. She didn’t know where to put gas in, didn’t know how to work the pump, didn’t know how much to put in, etc. It was a nightmare.

Was the problem all in her head? Did she need psychological counseling to deal with these feelings? Did she need motivational books and tapes? No.

She needed to know how to put gas in the car. Once she knew this, the emotion was gone from the experience, past and future.

(She may have had to figure out for herself how to do it, in which case positive attitude would have played a role, and kept her from giving up and sitting in her car in despair. But that's as far as that goes.)

What's it mean to us?

Of course the market will always have unknowns. On any trade, you could have made more or lost less, and therefore you are wrong on every trade to that extent. You can't know everything, but you can know what to do.

If you have seen a particular market pattern enough times to know it, or if you have been correctly taught how to handle that particular situation and have confidence in that teaching, there will be no emotion involved. You simply do what you know you need to do. It may be right in this particular instance, and it may be wrong, but you are confident that, statistically, this is the thing you must do, so you just do it.

Only when you know, can you have “ice in your veins”.

Now to go one farther, there’s nothing we see in the market that hasn’t happened before.

A newbie looks at charts and is confused. A pro looks at charts and see trade setups. He knows his favorites, can easily spot them, he knows how to stay focused and watch for the confirmation. He knows exactly when his system says to enter this setup, how to manage the trade, and when to exit. This is based on his being taught, his research, &/or experience. He is the system. He is confident. He is profitable.

What he does is no more complicated or difficult to him than putting gas in a car. There is a sequence of steps to go through, and a few things to be careful of and that's it.

We’re told day after day, by literally hundreds of people that trading is mostly psychological. If you’re not profitable, it’s just in your head.

That reminds me of a grade school teacher I had a conversation with once. She said, “If he can’t read we give him an easier book. If he can’t read that we give him an easier one. If he can’t read that we send him upstairs to have him evaluated, he must be ADD or something.”

In other words, it wasn’t her job to teach him to read. If he can’t read, he must be mentally ill!

I guess that comes full circle. A person would have to be crazy to want to be a professional trader!
Hi Blueruby'

This is one of the most enlightning posts at the start of a thread that I have probably come across so far (well actually the first two lines say it all).

Maybe some people need to read it again! I mean no direspect but some of these, what can I call them lets say 'educated' people (they obviously are due to articulated way they replied) have totally missed the point of Blueruby's initial post. Unless its me if it is I'm sure Blueruby will let me know.

Is this thread wierd absolutley not but some of the replies are (again no offence).

Could Paris Hilton learn to trade, could be wrong but I don't think so. But then again she probably earns more than most of us put together on FF and is probably brighter than she lets on lol.

Any trade has an apprenticship period of at least three years with many more years of experience to become really profficient. When the penny drops and you gain the knowledge that is the edge, the pyschology or emotion comes from not knowing what your doing.

That is my thinking at this stage of my trading career and maybe time will prove me wrong but I will continue to learn (trade live) and gain the knowledge to understand what is happening and trade accordingly.
  • #79
  • Nov 10, 2007 5:53pm Nov 10, 2007 5:53pm
Quoting blueruby
The other day I went to click out of a trade, and got a requote. I quickly clicked again without checking what I was doing, and the trade closed.

When I checked history to log the trade, I saw that I got 1 pip less than I meant to. Blasted requotes! I had clicked the OK button and let them take my pip. Damn brokers.

Well, today it happened again, and I said no. Greed came into the picture. I waited to get that one pip back. The end result of the trade was that I lost 2% of my account rather than take 1 pip less.

From now on, I will not hesitate. If it's time to get out, it's time to get out. I will always OK the requote.

If I lose a pip, that's the cost of doing business.

I know now.

Sounds a lot like your grade school story.
  • #80
  • Nov 10, 2007 6:55pm Nov 10, 2007 6:55pm
Quoting Wolf.
Any trade has an apprenticship period of at least three years with many more years of experience to become really profficient. When the penny drops and you gain the knowledge that is the edge, the pyschology or emotion comes from not knowing what your doing.

That is my thinking at this stage of my trading career and maybe time will prove me wrong but I will continue to learn (trade live) and gain the knowledge to understand what is happening and trade accordingly.
Psychology is the science of mind and behavior.

That includes learning strangely enough. And decision making.

There is a lot of ignorance in this thread. But ignorant traders are good for the market ... and I would encourage Paris to join some of them and bring her money to the markets and help people that way.

If you're learning to trade well then you might benefit from reading a book called "Enhancing Trader Performance - proven strategies from the cutting edge of trading psychology." Its all about learning well and relearning when the inevitable problems occur later.

As always, good luck; some of you will need an awful lot of it to avoid the 95% (perhaps 19 out of 20?)
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