Trading Psychology is BS

I have yet to see any money manager (Trading Stocks, Securities, Bonds, Currency, Playing Poker, General Investor, etc…) not agree that the mental discipline required in such a situation was not important. Every successful person that I have ever read about will agree to one thing. Mental attitude and mental discipline are key to success in any venture, especially ventures as stressful as asset management. This all falls into what experts call psychology. In the forex forums we say “Trading Psychology” the actual term is irrelevant. The meaning of that term is what is important.

We seem to be veering more toward the term 'discipline', which I think is a far more appropriate term than 'trading psychology', I notice that posters who try and define this term end up chugging in ever decreasing circles. Discipline is of course a necessity for succeeding at anything.

I would like to try and focus the thread if possible on the often floated view (in my opinion myth) that discipline will turn a losing system into a winner.

I agree with that statement 100%. It is a myth to believe mental discipline, attitude or raw belief will turn a losing system into a wining system. However, I do believe that with proper mental discipline will allow you to look at the situation in a more rational light and remove yourself from that situation. Ie. Stop using that system.

I read another thread where a gentleman talked about how a system would work given proper money management and discipline. I do believe most of the systems posted will work. Not because they are some great secret, or some perfect system. I believe they all work for distinct individuals because all of them have an element of discretion to them. This is a mental element for sure. This is also why none of the systems work for everyone, and why none of the systems have working EA’s.

All and all I believe it is not necessarily the systems that are the biggest factor in the people who succeed. I believe it is the discretion they place on each trade. They may not be 100% aware of this, but every trade they make take into account many other factors that they “System” does not factor in. Things like “What did the market do last week, or month?” “What news is out today?” etc. The human brain is a very complex computer if you will. I do not believe there is a perfect system you can just follow the rules to and win. I believe you need to actually look at many factors to determine your move. When you become proficient at that (Not a lot of people do to be honest and I am not one of them yet) you will be a profitable trader. I do believe it takes a lot of mental discipline to do that.

Will discipline make a losing system into a profitable one? No.

Do I believe most systems work if you place the correct money management, and external factors into account? Yes I do.

Well, Craig, there are lots of (can I say crazy) people that risk their money on what the European Psychic Advisor tells them. "Miss Cleo said go long..."

Some people's egos are high and mighty until they realize that without an edge, its luck. I was one of those people for about a year.

Although discipline is a great topic to focus on, I just want to call out all of the "feel good" traders out there basing their trades on chart patterns and astrology.

When using astrology you realy have to be careful when mars is rising and Uranus is descending....

I prefer the ouija board myself, works great in a trend, for ranging markets I use tea leaves with pagen sacrifice for confirmation.

Actually I have found gutting my clients and studying their entrails to be most revealing.

Hmmm.....well I have been reading this thread with a little interest. It reminds me of where I was once. Angry, frustrated, sad. I was never going to get this right.

I am a technical trader. My charts would bore most of you people. They consist of bars, S/R lines, and MAYBE a trend line. A you are right, I am a "feel good" trader.

I feel good that I average 4-6% a month. Every month. I also feel good that I haven't had a losing week since November of last year. Thank God for "mystic" type trading. Because NOBODY in the market notices that triangle that EUR/USD is in right now.

I am sure someone here will make a stupid comment about how 5% a month is nothing, and I should go ahead and trade stocks. For that person, I thank you. Since I do not know you name ahead of time, I will call you "Liquidity". The Foreign Exchange isn't any different than any other type of trading. Even if you can leverage yourself at $10 a pip on a $1000 account doesn't mean you should. Do yourself a favor and try compounding a $2000 account at 5% a month for ten years. THAT is the "Key to the mint" as they say.

Psychological aspects abound to trading. I would venture most of the people here losing are not letting trades breathe like they need to at times. They can't handle being down 50 pips, or whatever. (This also speaks to leverage and money management.)

But truthfully, it sounds like a lot of people here would just as soon place random trades. (I can see another "coin flip" thread starting here.)

To find out if you are psychologically "alright" with trading, try putting one on, and leaving for the day......let it run. I had a great one the other day in the EUR while at the zoo with my little boy. It made me something like 150 pips.

That my friends, is trading.

Trade to live, not the other way around. Best advice I ever read.

Your "feel good trading friend",
Clockwork

You must be in a different part of the world. Here in the heartland, we prefer chicken bones.

Trading Psychology IS BS. In a sense that it does not give you a winning system. And most systems here most definately do no have an edge. If they did, a simple EA would make money. Look for a real edge and your trading willl get much better. After you find your edge, work on your discipline.

Someone should start another rave thread something along the lines: Where are the winning strategies?!? oh wait, there is one already

my 2c..

with the right trading Psych AND an edge-system you will make money consistantly.
Without the proper one, you will fail longterm trading manually.

This is why most Hedge-Funds are running multiple high or low frequency auto-trading systems (cleared on reuters and/or ebs often)

Cheers,
PP

The term "Trading" covers a broad spectrum of financial positioning regareless of the instrument. Meaning the psychological aspects will also challenge you across a broad spectrum... and the spectrum is long, indeed.

Your emotional gyrations are rooted in your equity management of whatever it is you trade. Bottom Line! Since we are in a Forex forum with members who's accounts are typically with a retail forex broker we will talk about the gearaing offered. The higher your gearing the greater the emotional response it will elicit, thus impairing your ability to think rationally and make discerning decisions within your trading plan (if you even have one to begin with) and maintain proper discipline to mange your trade.

Whatever your trading technique, you should be an independent thinker. With proper equity management and an sound "psychological profile" (this is a very broad reference), it really doesn't matter how you skin the cat, you should be profitable.