Has anyone done this yet? I'm sure it has crossed people's minds before or been done.
This kind of experiment could shed great insights into one's own psychology and if done by several people we could learn about some universal problems in our trading psychology. We would do this on a demo account, though as with all lab experiments we would have to carefully correlate the results with reality. Though the fact that no real value of money is riding on this will make the experiment more powerful in describing trading psychology!
I guess the easiest way to lose money is by the spread, so that would have to not count. We could invert the spread or not count it at all.
We would also have to divide testers by their real trading records. People who lose money due to weak psychology, poor risk management, and poor understanding of the market would have to be distinct from those who have been consistently successful. We will say the former is Group A and the latter is Group B. We could also have a third group of people who have never traded at all.
My hypothesis is this: When Group A tries to lose money, most will be able to lose money! When Group B tries to lose money, they will also be able to lose money!
If this hypothesis is proved true, then it would certainly be great evidence in asserting the power of psychology in trading. You would think that it would be easy to invert your losing methods and become successful, but of course it is not that easy exactly because psychology is so powerful that we cannot conquer it merely with knowledge of it. Fears and desires are like intoxicants, you are no longer able to use your knowledge under their influence. It takes discipline, and methods of discipline, to conquer our fears and desires.
Process: I am going to see how fast I can blow out a $50,000 demo account. I would have to differentiate whether or not I am going to use poor risk management or just try to make bad trades based on inverting a method. I could easily take a humongous lot and close it as it moves enough pips to cover an inverted spread and more in the wrong direction. But this is exactly what some people do when they try to win, so perhaps I should let my losses run! Hmm....
One test wont be enough, I'll have to do this several times over a period of time to truly see if I can consistently blow out an account. I will think of a criteria to write down my thoughts and feelings as well as some emperical data. Then, at least for myself, I will be able to understand how my psychology can hurt me.
Any inputs? Thanks
This kind of experiment could shed great insights into one's own psychology and if done by several people we could learn about some universal problems in our trading psychology. We would do this on a demo account, though as with all lab experiments we would have to carefully correlate the results with reality. Though the fact that no real value of money is riding on this will make the experiment more powerful in describing trading psychology!
I guess the easiest way to lose money is by the spread, so that would have to not count. We could invert the spread or not count it at all.
We would also have to divide testers by their real trading records. People who lose money due to weak psychology, poor risk management, and poor understanding of the market would have to be distinct from those who have been consistently successful. We will say the former is Group A and the latter is Group B. We could also have a third group of people who have never traded at all.
My hypothesis is this: When Group A tries to lose money, most will be able to lose money! When Group B tries to lose money, they will also be able to lose money!
If this hypothesis is proved true, then it would certainly be great evidence in asserting the power of psychology in trading. You would think that it would be easy to invert your losing methods and become successful, but of course it is not that easy exactly because psychology is so powerful that we cannot conquer it merely with knowledge of it. Fears and desires are like intoxicants, you are no longer able to use your knowledge under their influence. It takes discipline, and methods of discipline, to conquer our fears and desires.
Process: I am going to see how fast I can blow out a $50,000 demo account. I would have to differentiate whether or not I am going to use poor risk management or just try to make bad trades based on inverting a method. I could easily take a humongous lot and close it as it moves enough pips to cover an inverted spread and more in the wrong direction. But this is exactly what some people do when they try to win, so perhaps I should let my losses run! Hmm....
One test wont be enough, I'll have to do this several times over a period of time to truly see if I can consistently blow out an account. I will think of a criteria to write down my thoughts and feelings as well as some emperical data. Then, at least for myself, I will be able to understand how my psychology can hurt me.
Any inputs? Thanks