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Psychology is nothing

  • #161
  • Nov 13, 2007 3:09pm Nov 13, 2007 3:09pm
Ubee;
Post # 156 in this thread.
That is an outstanding post. I look forward to more of your insights.
  • #162
  • Nov 13, 2007 3:20pm Nov 13, 2007 3:20pm
Surely if mindset was the only barrier, then every EA would be guaranteed to succeed. But is this the case?
  • #163
  • Nov 13, 2007 3:31pm Nov 13, 2007 3:31pm
Quoting SunTrader
What I expected. Dopey is right though. C-ya.
Of course he is. But it only applies to others, not you, right?

You know what really spells it out clearly to me is when I confide, open up, admit I'm wrong, show a weakness, etc., then someone uses it against me.

That has always told me all I needed to know about a person when they did that -- that being right was more important to them than the relationship, or the other person.

I won't turn my back on you anymore, ST.
  • #164
  • Nov 13, 2007 4:41pm Nov 13, 2007 4:41pm
Quoting blueruby
Of course he is. But it only applies to others, not you, right?

You know what really spells it out clearly to me is when I confide, open up, admit I'm wrong, show a weakness, etc., then someone uses it against me.

That has always told me all I needed to know about a person when they did that -- that being right was more important to them than the relationship, or the other person.

I won't turn my back on you anymore, ST.

Ok to clarify further, yes that includes me. Happy.

I wasn't using your old post, someone else found, against you. My reaction was you previously made sense, now not - IMO. Oh well.

Not turning my back on you either. I just have nothing further to add.
  • #165
  • Nov 14, 2007 12:40am Nov 14, 2007 12:40am
Quoting ubeee
Well, now, having said all that I repeat: I strongly believe that extreme DISCIPLINE and the right psychological attitude in trading are MANDATORY!
Pity is they are not enough at all to be profitable and for me they were by far the most easy part.

Just my opinion based on my experiences.
Well put. I fully agree. Psch aspect isn't the one and only key to success. But it IS a huge key to it.

Strict and defined money management is a must. When i trade to large, i can tell by my guts.....a simple clear risk percentage works for me now. This discipline must be learned. This displine doesn't come through psch books.

Success in any business mandates that we also know exactlly what we are going to do. It has to make sense in all areas of the business. In the business world it is called a business plan. It covers all parts of the business. For trading we need a very clear trading plan that works for us as individual traders and has has everything written out clearly that can be followed. It has to be tested and proven to have an edge. Most traders don't have their system defined and tested. I fully agree that no amount of psch books will make a difference in their success. They will lose. I know i did.

For me, i worked and studied the markets, studied with famous and not so famous mentors in the futures, indexes and forex markets. Finally developed a killer system that works for me and matches how i really like to trade. . After losing a lot of money due to poor money management, i worked on that. But still had issues of WHY i couldn'tsimply execute my own system properly. FOR ME , that was my biggest issue. That is where i learned a little bit about me as a trader on a psycolgocial level. No voodo....pure understanding of who i am. "Trading in the Zone" was a big help to me. Was it "THE" book? No. But a big help to me.

Success, for me was being able to put everything together. A great system that i know inside and out, knowledge of the markets i trade, clear management system, and getting my head in a zone to execute the above. I still have a long way to go, but without every thing working together, it is all for nothing.

Thanks for a great thread

Jimno
  • #166
  • Nov 14, 2007 7:05am Nov 14, 2007 7:05am
Ubee,

Do yourself a favour and try to think a bit more about how the pro's trade. Do you really think they win all the time? Do you really think that there is a system out there that wins all the time?

NO...

So when they lose, how do you think they lose? They cut those losses short. The law of probability tells them they cannot win all the time so the most intelligent thing to do is to cut those losses short when they recognise the loss straight away. No hoping or praying for it to turn around. That my friend is a good technique to lose. The pro's have learnt to lose this way because they know that as long as their winning trades are bigger than their losses, over time they have a winning edge. That my friend is not psychobable, that is Money Management which a lot of traders do not understand. Its that simple. Those that don't understand this are gambling. Maybe thats you. Go back to your sociology books on poverty and learn what the definition of poverty is all about and then tell me what the hell that has to do with trading!


Quoting ubeee
Porkpie, sorry, your post is full of all that nonsense that you read in trading psychology books. It seems to me that you learned it very well. Do you find it useful? Do you profit from it?

Just starting from "..we are brought up in the modern world to succede... we have to learn how to lose...".
I won't get on all the rest, it would be too long, but do you really thing that we are not used to lose? Do you really thing that we have to learn how to lose?

Please, use your brain, for a moment just forget what those books told you, just use your own brain and answer this very simple question: "Do you really thing we live in a world where the vast majority of people is not used to lose because the world teaches them to succeed?"

We always say that 95% of new traders lose all of their capital in few time. We forget to mention that 98% of all the people of the world lives in poverty (even in civilized countries), have very low ambitions, are used to succumb to bosses at work, to partners at home, to derision in the streets.

98% OF ALL THE PEOPLE OF THE WORLD IS ALREADY VERY GOOD AT LOSING!
EXTREMELY GOOD AT IT!
This is the truth, not the contrary.

That's why when they go trading they lose all. They are used to lose, all their life has been a continuous uninterrupted loss and just that will remain in the future, as they go on perfecting on how to lose.

Remember, when one says:

War is Peace
Freedom is Slavery
Ignorance is Strength
Winning is Losing

Well, when I read these things I think it's way better for me if I start to doubt and to think with my own brain.
You can believe whatever you want, but I think that in order to WIN I have to learn HOW TO WIN, not HOW TO LOSE!

Please, go, do a favor to yourself, throw away those books, go reading this:

Think and Grow Rich by Napoleon Hill
This is not marketing, you can find with google free pdf of it.

This is an old book and it also contains inaccuracies, but surely it's way better than any trading psychology books.
  • #167
  • Nov 14, 2007 10:09am Nov 14, 2007 10:09am
Quoting Porkpie
... That my friend is a good technique to lose.
Porkpie, well, "a good technique to lose" is a way better sentence than "we have to learn how to lose".
You know, if someone tells me: "Come on, I will teach you how to lose"
I surely replay: "Oh, no, thanks! I prefer to learn how to win."
Now if the same told me: "I will teach you how to lose few and win big", well, heck, that would be a completely different story, that would be interesting!

Now, I have nothing at all against you, of course, and this is also why I suggested to you a book that I would never suggest to my enemies, but only to friends.
If I replayed to your post it's just because I saw in it a well lot of those bad constructed sentences (and concepts) that we usually find in some books supposedly written to help newbie traders that really don't help at all.

You cannot imagine (it's years I'm in this business) how many times I've heard and read sentences like:
"cut your losses short, let your profits run"
"trading is completely different from ...[put here what you prefer]..."
"money management is a must!"
"it is all mental!"
"95% of traders fail"
"this is a risky business"
"you have to LOVE your losses" (<-- this one is simply grandiose! )
...
and you can add other thousands of your own, but I have to add just another myself that is my absolute favorite:

"people don't cut their losses because they keep on HOPING!" (<-- my absolute all time favorite! )

Well, I think I've never found in my life a more idiotic sentence than the latter.
Do you think that when in my beginning I was used not to cut my losses it was because of HOPING?
HOPING? Do you really think I was HOPING?

You see, I don't believe in god, I don't believe in magic, I don't believe in lottery, and generally I don't believe in anything I cannot touch with my hands. Do you really think that I can HOPE something?

Please, a little of common-sense. Newbie traders don't cut their losses because of their ignorance of the markets that let them think (THINK, not HOPE) that the market is just about to reverse! They BELIEVE this, not HOPE, that's a completely different story!
Also beginners don't cut their losses because, thanks to their ignorance, they almost always enter the market at the wrong time so they have 99% of the time underwater trades as soon as they start them, and cutting them short so frequently, united to MM ignorance and consequent overtrading, would kill their account more speed than the speed of light. These are the real reasons, NOT hoping. Or, anyway, all this at least has been true for me because I've never HOPED in my life, I've always ACTED on the basis of my certainties.

This is why, Porkpie, I simply thing that those sentences help you to become a good trader not more than this one would teach you how to fly a plane:

"Don't bank too much at low indicated air speed"

And still, believe me, there is truth in it.
.Ubeee.
  • #168
  • Nov 15, 2007 3:28am Nov 15, 2007 3:28am
Ok point taken. I think this is a discussion about semantics than trading. But what you say is true of course, people have different experiences to the market. I personally have been on the wrong side of trades in the past where I hoped it would turn back in my favour because I believed I was right to enter where I did. So hoping and believing go hand in hand.

To me personally, those phrases "cut your losses.." etc make sense. I believe trading to be a game of probabilities given its random, non linear behaviour and the only way to deal with it is to have good MM and to me that means correct position sizing to the size of your account and the win/loss ratio of your system etc etc. Then its a case of taking those trades - emotionless.

Learning to trade without emotions and good MM I think are key. The system you use for entry is not so important.


Quoting ubeee
Porkpie, well, "a good technique to lose" is a way better sentence than "we have to learn how to lose".
You know, if someone tells me: "Come on, I will teach you how to lose"
I surely replay: "Oh, no, thanks! I prefer to learn how to win."
Now if the same told me: "I will teach you how to lose few and win big", well, heck, that would be a completely different story, that would be interesting!

Now, I have nothing at all against you, of course, and this is also why I suggested to you a book that I would never suggest to my enemies, but only to friends.
If I replayed to your post it's just because I saw in it a well lot of those bad constructed sentences (and concepts) that we usually find in some books supposedly written to help newbie traders that really don't help at all.

You cannot imagine (it's years I'm in this business) how many times I've heard and read sentences like:
"cut your losses short, let your profits run"
"trading is completely different from ...[put here what you prefer]..."
"money management is a must!"
"it is all mental!"
"95% of traders fail"
"this is a risky business"
"you have to LOVE your losses" (<-- this one is simply grandiose! )
...
and you can add other thousands of your own, but I have to add just another myself that is my absolute favorite:

"people don't cut their losses because they keep on HOPING!" (<-- my absolute all time favorite! )

Well, I think I've never found in my life a more idiotic sentence than the latter.
Do you think that when in my beginning I was used not to cut my losses it was because of HOPING?
HOPING? Do you really think I was HOPING?

You see, I don't believe in god, I don't believe in magic, I don't believe in lottery, and generally I don't believe in anything I cannot touch with my hands. Do you really think that I can HOPE something?

Please, a little of common-sense. Newbie traders don't cut their losses because of their ignorance of the markets that let them think (THINK, not HOPE) that the market is just about to reverse! They BELIEVE this, not HOPE, that's a completely different story!
Also beginners don't cut their losses because, thanks to their ignorance, they almost always enter the market at the wrong time so they have 99% of the time underwater trades as soon as they start them, and cutting them short so frequently, united to MM ignorance and consequent overtrading, would kill their account more speed than the speed of light. These are the real reasons, NOT hoping. Or, anyway, all this at least has been true for me because I've never HOPED in my life, I've always ACTED on the basis of my certainties.

This is why, Porkpie, I simply thing that those sentences help you to become a good trader not more than this one would teach you how to fly a plane:

"Don't bank too much at low indicated air speed"

And still, believe me, there is truth in it.
  • #169
  • Nov 16, 2007 3:20am Nov 16, 2007 3:20am
Quoting Porkpie
I believe trading to be a game of probabilities given its random, non linear behaviour and the only way to deal with it is to have good MM and to me that means correct position sizing to the size of your account and the win/loss ratio of your system etc etc. Then its a case of taking those trades - emotionless.
I agree with you.
At the end there is only one way to make money on the markets and that is the one you describe. Difficulties, efforts and strains that different people have to get there sometimes are specific and that's why there is not one single path to success that fits everyone.
.Ubeee.
  • #170
  • Jul 16, 2008 3:22pm Jul 16, 2008 3:22pm
Quoting blueruby
Psychology is nothing

Knowing is the entire game.
A 2nd greatest post for me for these few months here @ FF.

That's so true.

Fear and Greed.

Fear is mostly from dealing with unknown (market);
Greed is so blind that it often ignore (in fact, DO NOT know) the potential dangers.

Great summary, Blue!
  • #171
  • Jul 16, 2008 7:02pm Jul 16, 2008 7:02pm
Thanks for your vote of confidence.

Seems the longer I'm in this, the less I know.
  • #172
  • May 26, 2010 5:50am May 26, 2010 5:50am
Quoting blueruby
Psychology is nothing

Knowing is the entire game.
[Psychology is the scientific study of the way the human mind works and how it influences behaviour, or the influence of a particular person's character on their behaviour] (Cambridge Dictionary)

Knowing, believing, hoping, etc, all happens in the mind. It is all psychology. So I disagree with your statement "Psychology is nothing".

KNOWING "is" part of PSYCHOLOGY, when you refer to the correct definition of the word.

Knowing is when the required beliefs are part of you. When you no longer have to TRY to be disciplined.

I'm a former international athlete and I used psychology to conquer certain limitations in my performance. The work on my psychology helped instill in my mind, the beliefs I needed to beat my toughest opponent and to be successful at the highest level.

In 1997 I interviewed a guy who was an unknown on the international water ski circuit. He won the world championship that year and I asked him if he believed he would win. The mild mannered humble Aussie replied "I didn't believe I would win, I knew I would win. Because knowing is one step further than believing." He went on to become the world wakebording champion and won another world water ski racing title last year.

But getting to "believing" and "knowing" requires work on one's psychology.

However until a trader has a method that gives him an edge, and he knows that edge can make him money, over a large enough sample size, psychology is not enough. But many traders have an edge and yet they are not consistently profitable (as their psychology is not where it needs to be yet). Even knowing you have an edge is insufficient until you can capitalise on that edge. It's important that a trader has the right beliefs to allow him to be consistently profitable with his edge.

Forums such as Forex Factory are full of people boasting their 200 pip wins, because they "KNEW" where price was going or they KNOW they have a winning 'system'. But few of those traders have a steadily rising equity curve over 12 months and trade for a living. Most have to keep a day job going because they are not successful traders yet.

It's a big topic and Mark Douglas covers much of it. As he is someone who has probably worked with more of the world's top traders than anyone in this forum on that matter, I tend to side with his theories.

I'm yet to meet a financially successful trader who does not appreciate the importance of psychology. But I've come across many people who are not financially successful traders who think they know better.

"KNOWING is part of PSYCHOLOGY"

Rob
  • #173
  • May 26, 2010 6:28am May 26, 2010 6:28am
The cold hard fact of this business - the psychology that separates everyone from everyone else is - you must be prepared to sacrifice everything to achieve the required consistency. A few will understand this but most will not.
Those that say do not know. Those that know do not say.
  • #174
  • May 26, 2010 6:38am May 26, 2010 6:38am
Quoting priceaction
I'm yet to meet a financially successful trader who does not appreciate the importance of psychology. But I've come across many people who are not financially successful traders who think they know better.

Rob
I'm yet to meet any successful person (in any field of endeavour) who does not appreciate the importance of psychology.

Even if such successful person have no working knowledge/background of the human psychology 101, you can clearly trace part of their success from their positive psychology (or way of thinking).

Even successful movie stars and singers who fell unto drug abuse... when you trace their psychology, the possess a "can do" attitude.

Any form of success in any field of endeavour are linked to a certain psychological state. It's a simple "cause and effect"... have a F*cked up psychological state and let's see where that would lead you.
  • #175
  • May 26, 2010 6:46am May 26, 2010 6:46am
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...
I agree with a lot of what you said, but there is a psychological aspect. In fact your post is quite poignant in pointing it out. Your psychological and physiological bent determines how well you will perform based on what you know. Whether you follow it, go against it, or throw up your hands and remain indecisive. Greed isn't based solely on knowledge.

And what about what you cannot know? When you're in the wilderness of what you cannot know, and we're all there a great deal of time while we're trading, doesn't it all come back to psychology? Anyone who says they trade and at least once a day (probably much more) not say WTF? Is lying. I think the biggest mistake to make trading is to set your projections in stone in your mind and be unyielding to them.

I know to trade pin bars, I know to trade inside bars, candle stick patterns, resistance, support, MA crosses, all of this. When my assumptions based on these things work I pat myself on the back and take my profits. When they don't work, and they don't always, sometimes a couple times a day: I have to psychologically balance my fear and my greed along with what I know, and make a decision.

Plus everyone's experience and knowledge of the market varies, people see different things, and things differently. This is what causes it to move. These are the mechanics behind valuations. If there was a perfect common knowledge that could be applied to the market it wouldn't move.

So you have knowledge, but do you always have the right knowledge? No.
Otherwise you would always make the right decisions. Knowledge + Psychology = Behavior. Which is what makes the market.

Trading is an exercise in cognitive dissonance, over and over again. In fact that WTF feeling becomes rote at some point, and once you can detach from it, you can trade from it. As an aside, once I started trading, macroeconomics, politics, and the disbelief associated with the transpiring of these events versus our expectations and what we are told to expect, became just laughable. Just like the GBPUSD today trading short off a 4H pin, which I've grabbed 100+ pips on many other occasions was followed by an unexpected (by me) breakout so I had to exit with only about 65 pips. I didn't know it would be a breakout at the time, but I did have to psychologically make a decision based on price action. It was an "I don't know" moment.

The Dow drops, sucks, but while everyone on CNN is freaking out because people and their 401ks are slanted long, I know whoever is moving the market and whoever was flexible has been loading up shorts. I'm seeing the profit in the loss.
Thank you Lux!
  • #176
  • May 26, 2010 8:17am May 26, 2010 8:17am
I just would like to say that psychology is a big factor in human confidence at anything. Before anyone of us traders decide that we are about to take a trade, we also think 'whether or not we are gonna profit'. And sometimes that very thought sometime let you not make a trade. But, from experience, a good understanding of the real probabilities involved in having a strategy should alone be motivating enough for any good trader to keep trading. It is hard to separate psychology from the entire mix of things a trader goes through. Sometimes, actually, its seems, from my experience, to be the only thing that determines a win or a loss in this business. The trader who executes at the right time, and hold to his strategy, no matter what, is in essence trading like a machine with no emotion and in that context his successes will far outreach that of a trader who gets entangled too much with emotions. But his psychology makes him the master of his game because he knows how to dictate to his emotions and ultimately control himself. And this is the primary reason why trading is simple, and a simple strategy always works best. A simpler strategy makes for simpler and fewer decisions by a trader.
  • #177
  • Jun 12, 2010 1:18am Jun 12, 2010 1:18am
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.

[font=Times New Roman][size=3]Well, the first time she went...
HAHAHAH.....Half of what you say has to do with the psychological!! So i don't know what the point of what your saying is I believe what you are saying about knowing what your doing is true, and most books or whatever will tell you the same thing.

To just dismiss the psychological effects that come with trading is just surprising to me , but I am sure you do well so who am i to argue lol.
Even If It Is A Minority Of One, The Truth Is Still The Truth!!!
  • #178
  • Jun 12, 2010 4:00pm Jun 12, 2010 4:00pm
I'd rather eat out a bull's ass than read this thread again, but...Psychology is everything.

Everything that you've ever done and/or experienced stems from your psychological reasoning. If anyone holds a different thought than this, guess what, it's an after-effect of your conditioning just as my thoughts are effects of my own conditioning.

To say that psychology is nothing is to say that you're dead, so to speak. Without it, there wouldn't be a mind there. Your psychology is a product of everything that you've ever experienced, and considering that humans are always in a state of change, I'd say it's safe to make the claim that our psychology is always changing. With that, a person's "knowledge" changes as well. It's all about perspective in my opinion, and it's just that, my opinion.

I get what the OP was trying to say however, and I think that he just holds a different definition for certain words than the definitions that other people would hold to them. In terms of the market however, there is no such thing as knowing which is why there will be emotions in tact every single time we place a trade. I've placed thousands of trades thus far and have seen "identical" setups end with different outcomes time and again. No setup is identical however and therefore, you will never KNOW where price will be in the future. You don't need to either.

P.S. "Knowledge" is nothing if it isn't coupled with wisdom. I can "KNOW" what I should be doing at a certain point, but it's something totally different to hold the wisdom in order to actually DO it.
I dream, therefore I become.
  • #179
  • Jun 12, 2010 4:13pm Jun 12, 2010 4:13pm
Quoting ohenry
The cold hard fact of this business - the psychology that separates everyone from everyone else is - you must be prepared to sacrifice everything to achieve the required consistency. A few will understand this but most will not.
Agreed entirely. I'd actually make the claim that success in any business/movement/activity/whatever comes down to the I-will-not-give-up-until-I-die-and-even-after-I'll-be-kickin-ass attitude. That's what separates the front-runners from the "also-rans".

"Get to the island and then burn the boat."
I dream, therefore I become.
  • #180
  • Jun 12, 2010 5:03pm Jun 12, 2010 5:03pm
It's cool to resurrect a thread from from 2007, but at least make sure it is a good one and not one that is bullshit. Looks like the OP is still around, I wonder if after a few years there has been a change of heart?
Don't wish it were easier, wish you were better. ~ Jim Rohn
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