The Winning Trading Psychology - sure way for consistent profits

I never said , i am a master, and i will never be!!!

i am still 24 and expanding and will do it forever........

For newbies and others

If you ask for the Edge.....

J16 group is the best ! you will find those applications on every market traded publically.......

I hope some of you are gaining something......and am posting only for you....

Best Regards
Winston

[quote=oneuniverse;3419295]Hi,

The real solution is ..........

Edge + MM + Your Personal Psychology


oneuniverse, if I were to ask that my trading psychology is my problem, would you then say to me that my personal psychology is the solution to my problem, and add to that edge and MM? I do not get it.

[quote=FXSnipe;3419403]
See....I will tell you something....
Let's say if you had a wish to make your Punch- Real Hard Hit!
what would you do?
Practise? like? may be hit the wall regularly , or break the brick with you punch regularly.....in this process you are exposed to Real Environment and only that Real exposer will make you tough!

Same here dear

you have to expose yourself to live trading...blow out several small accounts ( hard hitting the bricks initially ) and then only you can shape your mind.

Anybody on earth wont shape your mind except yourself!
It's self realisation.......no one can do it for you, people will guide you!

So the solution is you need to get exposed to live trading gradually shaping your thought process so that one day it becomes a part of you!

I hope i did my best

Winston

[quote=oneuniverse;3419434][quote=FXSnipe;3419403]


See....I will tell you something....
Let's say if you had a wish to make your Punch- Real Hard Hit!

Winston,

Now you are talking, practice and esposure to one's gred and fear and how to handle it is the sure way to learn , traidng is like any other skill. I jsut though I shoulkd post this from Breet Steenbarger:
1) Trading affects psychology as much as psychology affects trading – This was really the motivating factor behind my writing the new book. Many traders experience stress and frustration because they are trading poorly and lack a true edge in the marketplace. Working on your emotions will be of limited help if you are putting your money at risk and don’t truly have an edge.

2) Emotional disruption is present even among the most successful traders – A trading method that produces 60% winners will experience four consecutive losses 2-3% of the time and as much time in flat performance as in an uptrending P/L curve. Strings of events (including losers) occur more often by chance than traders are prepared for.

3) Winning disrupts the trader’s emotions as much as losing – We are disrupted when we experience events outside our expectation. The method that is 60% accurate will experience four consecutive winners about 13% of the time. Traders are just as susceptible to overconfidence during profitable runs as underconfidence during strings of losers.

4) Size kills – The surest path toward emotional damage is to trade size that is too large for one’s portfolio. We experience P/L in relation to our portfolio value. When we trade too large, we create exaggerated swings of winning and losing, which in turn create exaggerated emotional swings.

5) Training is the path to expertise – Think of every performance field out there—sports, music, chess, acting—and you will find that practice builds skills. Trading, in some ways, is harder than other performance fields because there are no college teams or minor leagues for development. From day one, we’re up against the pros. Without training and practice, we will lack the skills to survive such competition.

6) Successful traders possess rich mental maps - All successful trading boils down to pattern recognition and the development of mental maps that help us translate our perceptions of patterns into concrete trading behaviors. Without such mental maps, traders become lost in complexity.

7) Markets change – Patterns of volatility and trending are always shifting, and they change across multiple time frames. Because of this, no single trading method will be successful across the board for a given market. The successful trader not only masters markets, but masters the changes in those markets.

8) Even the best traders have periods of drawdown – As markets change, the best traders go through a process of relearning. The ones who succeed are the ones who save their money during the good times so that they can financially survive the lean periods.

9) The market you’re in counts as much toward performance as your trading method – Some markets are more volatile and trendy than others; some have more distinct patterns than others. Finding the right fit between trader, trading method, and market is key.

10) Execution and trade management count – A surprising degree of long-term trading success comes from getting good prices on entry and exit. The single best predictor of trading failure is when the average P/L of losing trades exceeds the average P/L of winners.

That's one of the most sensible posts on trading approach I've seen.

For all the edge only and nothing else matter indiviuals on this thread you can slice it up anyway you like but if you are not mental strong enough to deal with the up and down of this market you will experience some psychological damage, one poster said he lost a 80k account and I'm sure there are many other who have lost much more and just as many who lost less but it still weighted heavely on there pyschic wth some form of impact, and until you get you mind right for this business it will continue to happen, let say some guy step into this business and get lucky for a month or two brimming with confidence and his his edge only, And we all no that even a edge will get dull sometime and not perform as expected, and it just so happen around this time when it seem all is good this guy edge fail him and he lose everything if his mental make up is not right he may become a casualty of the game (he was not aware that it also a mental game. but how could he know there was never anything jolted him into realizing it was needed) until he blew a major account. I feel when your winnings seem to only be contributed because of your edge you tend to take for granted or over look all the other variables that is also keeping you a float in the business, as the orginal poster stated MM+Edge+Psychologic(emotions) they all are the ingrediant to suceed in this business. One can dismiss the importants of if they choose but I like to see how well one can come back if he blows a 7figure account because he believe only in his edge and never truly cultivated his mental game and MM game. I honestly think he will be psychologically damaged as well as deviastated to what means I can't say but I can say this why would any one jack around with his business and not work on your whole game so you will be more effective in this business, and let me say for the record I was a full time realestate investor, which became easy all I had to do was find propertes buy low and sell high I made my money when I bought it and just held on until I sold it, I felt like I could step into this business with the same sucess well hell I was in for a rude awaking and now realize how little I was able to control myself instead I let self control me, I two have blown a sizable account or three, so speaking for myself this is also a mental game as much as what? physical I think not unless pressing a button with your fingers is consider physical work..

I like this thread and I'm sure it helping other like myself, but unless some one can show he has been very profitable for many for years in this business and say the Mental game is overated I will keep working on mines.

There I said.

Jerome

Jerome, Agreed.

I am very surprised how a 4 years trader refers to MM as nonsense statement!! and written by someone with very little to no trading experience. yes i am almost a year in this business

If you did not eliminate your paralyzed momements( overdrading and overleveraged ) with MM then how you did it? I wonder your experience how keep going on without good MM skills.

[u]I know it doesn't cuz I have been there.... it's as if you're paralyzed, you know what you're doing is wrong and will blow your account but you cant stop. /U]

I ve been there too when i was overloading my positions and i was a huge% up , and my emotions where like yo-yo, very bad habit, a sure account killer. Unnecessary, when instead of a week you can do it in a month and more only because of MM and patient. Purely MM i must say nothing else at the end!! ( to my view so far) Now if MM does nt eliminate all those horrible feelings as you imply what is it then? I respect your experience and i will count your statement (MM= nonsense) if you have other alternative proven option to present! So far i am convinced MM as a top priority for a trader to consider most.

Thank you

Someone may find this useful. I have.

Hi Dazz!

seems interesting!

will go through by this weekend!

Keep coming......

Best Wishes
Winston

see....over rated depends a lot on individual, the key is Balance between Edge , MM, Right Perspective or Psychology.....if any of the factors are out of balance will disturb the Ecosystem of trading!

Best Wishes
Winston

trading is 90% psychology. The more I improved this area the better I performed. There is no edge but this. There are no statistical or quantitative edges, as soon as they appear they are closed. I defy anyone to prove they have a way of profiting from the market based on some formula that guarantees an edge. At any price level there are just as many reasons to trade the other way, both technical and fundamental because both are subjective. This is not a casino game where fixed odds are possible. If trading results were not psychological, winning traders would be close to 50% of participants. This is not the case. Losing traders lose hand over fist and continue this pattern. Most market participants lose money and in leveraged forex that includes nearly all participants. Even in the 10 year raging bull market in equities upto 2007, only 30% were making money and of those how many do you think are in the black today? They fail because of emotions. Rising above this barrier is a psychological task. The work is extremely difficult and takes alot of time and effort. Nobody wants to face themselves out of fear of what they may find. Most people live and die sweeping such enquiry under the mat. J16 will be of little to no benefit without giving the area of your own mind the attention that is needed to profit from trading.

Thank you for the thread opener and participants. Very well thought out discussion and very helpful for better understanding my own emotional footsteps.

I am sure most of you know about this but I see there is no mention of this in FF forum and I thought this can help some of you.

This is excerpts from Jamie Saettele’s Sentiment in the Forex Market. Even though his point is regarding about human’s herding mentality, the description about the human brain helped me to recognize and understand my problems.

HOW THE HUMAN BRAIN WORKS

In The Wave Principle of Human Social Behavior, Robert Prechter cites the research of Paul MacLean, former head of the Laboratory for Brain Evolution at the National Institute of Mental Health, in order to explain from a biological perspective why investment and trading decisions are based on emotions, not rational thought.

In The Triune Brain in Evolution, MacLean proposes that the brain consists of three parts: the R-complex, the limbic system, and the neocortex.
The R-complex is the part of the brain that humans share with other animals and even reptiles. The reptilian brain includes the brain stem and cerebellum, which controls survival instincts such as muscles, balance, breathing, and heartbeat.
The limbic system is found only in mammals and controls emotions and instincts such as feeding, fighting, sexual behavior, and herding.
The neocortex is found in higher mammals and is significantly developed in humans. This portion of the brain controls reason and speech.

In summary, the human brain consists of three distinct parts: primal, emotional, and rational.

Scientific research has found that the limbic system, the emotional part of the brain, works faster than the neocortex. This describes why “feelings of certainty can be so overwhelming that they stand fast in the face of logic and contradiction. They can attach themselves to a political doctrine, a social plan, the verity of religion, the surety of winning on the next spin of the roulette wheel, the presumed path of a financial market or any other idea.” In other words, emotion trumps rational thought. Financial speculation induces herding behavior, which is controlled by the limbic system…….

Having an edge and the right psychology are two of the same things (almost). Lets think about the facts logically:

1. 95% of traders are failing
2. The Forex is a market place (supply/demand)
3. The market moves as a result of decisions much of which is Fear and Greed.

The losers are failing due to the 2 main issues which tells us alot about the market and therefore how we must trade it to be profitable:

If most of the participants of the market are losing they are not understanding the basic elements of market economics (Supply/Demand). They are buying and selling at the wrong places.

The fear and greed of the losers help perpetuate the supply and demand dynamics of the market, providing willing sellers to the buyers (selling when the market is oversold), and buyers to the sellers (buying when the market is overbought).

Having an understanding of basic economics and the psychology of the participants (Herd) is key to trading profitably. You cannot think of market economics without market psychology and vice versa.

I don't want to be so critical of a post but 90% of that post was nonsense. Good psychology won't transform a losing system into a winning system - it just means you'll lose money slower. Psychology cannot be your edge.

If you believe this then there is no reason to look at charts or news. and all types of analysis are pointless. Simply sit in mediation until some voice tells you to buy or sell.

Your reference to people losing money in equity markets just goes to show that most people don't have an edge. Most people buy into markets after sustained periods of outperformance and sell after the market has fallen. These people have no edge. They are 100% driven by fear & greed. Their primary problem is the failure to recognise that they have no edge.

No they are not the same thing at all. Having a bike and being able to ride a bike are not the same thing.

Someone earlier in the thread described it as system-MM-psychology as a ring. That is not the right way to think about it. Instead think of a pyramid.

- psychology <- this is the top (and it is optional)
--- MM
----- system/edge <- this is the base of the pyramid

Most losing traders have no sustainable edge but worse than that, they are convinced that they do have an edge. Even blowing out their account does not get them to see the truth of what happened.

Finding an edge is not any easy task and nor is consistently applying it. But it is what is required.

Excellent post if I could vouch for I would, My path so far is pretty much typical of most on this trading journey, spent the first year searching for the perfect system, had a couple of I have it sussed moments (calling my wife)

Only in the last six months Have i looked seriously at money management and the way it can be applied, and only then did I start to become profitable (even with negative pips)

Psychology seems to be the third major obsticale in trading and as far as I am aware it is the determination and discipline to stick to your system and mm rules which took me two account blowings to come to terms with.

As someone mentioned earlier treat your winners the same as your losers, no ups and downs and your well on your way to success

Good luck & Be in control always....with low leverage

There is no such thing as trading without money management, even if you only accept the default position size that your trading platform offers, then you are practising "money management".

If you have an edge, even a simple constant contract appraoch will result in profitability. Ironically, application of money management techniques is equally as likely to completely destroy a system with a positive expectancy.

I would strongly advise reading some Nicholas Talib. You are experiencing nothing other than random fluctuations in your account, achieving profitable returns due to the application of money management is a coincidence. Your post reveals everything I need to know to state this with absolute certainty.

Its a sad state of affairs when good advice provided by jzw, who clearly understands what hes' talking about, is contradicted by complete nonsense from someone who clearly hasnt a clue.

I think everybody would agree that a psychological dissociation from the money at stake is important, but this is simply part of the process of implementing your edge. All the successful long term traders I know, know what their edge is, regardless of the 'style' (from fully automated TA all the way to manual 'price action') in which they trade. If you cannot express what your edge is in a few sentences and test it's validity you are simply falling victim to (as Razzle said) randomness, you have flipped the coin 10 times and got 10 heads, tails are sure to follow as night follows day.

@ RAZZLE

I never suggested not having an edge, currently 70% but I always had this edge yet managed to lose more than i won , Why? money management that is the key and as for random fluctuations my account never fluctuates anymore than 3% yet increases 5% to 10% weekly, can you not accept that we all trade differently and not assume that someone has not got a clue.
Thanks