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Self-help mentality

Quoting Custos
nice post, totally agree on all your points! Also a good analogy on sprinting against a world-class sprinter.
It actually helps prove the point of how psychology is important. A person that is out of shape and thinks they can beat the sprinter obviously isn't being realistic i.e. their psychology isn't in check.
Don't wish it were easier, wish you were better. ~ Jim Rohn
Quoting LasVahGoose
Any EDGE (method with positive expectancy) is completely useless if a Trader doesn't have the psychology to trade it.

Let's say you have a trader and a method with an EDGE, but only trades 1 lot a time....
Maybe an edge is not enough, but it is definitely the major requirement for succeeding.
Without positive expectancy systems you can't win in the long-term. Statistics will ultimately kick in and show you what kind of system you trade (be it positive or negative). Of course, the discipline to execute the edge is also important.

But that's why I said that this industry apparently attracts a lot of mentally weak people, cause most people require assistance in acquiring discipline.

But well, I am not here to convince anybody.
AAAARGH you start a thread like this and you don't tell me??!!! i'm not gonna talk to you anymore!!!

lol... enough said we already flamed enough on the topic! i'll just stay aside and look what people think about it!
Quoting Custos
Maybe an edge is not enough, but it is definitely the major requirement for succeeding.
It's just one layer, one ingredient, one facet, to a cornucopia of trading requirements to be successful.
Don't wish it were easier, wish you were better. ~ Jim Rohn
Quoting Custos
Maybe an edge is not enough, but it is definitely the major requirement for succeeding.
Without positive expectancy systems you can't win in the long-term. Statistics will ultimately kick in and show you what kind of system you trade (be it positive or negative). Of course, the discipline to execute the edge is also important.

But that's why I said that this industry apparently attracts a lot of mentally weak people, cause most people require assistance in acquiring discipline.

But well, I am not here to convince anybody.
i know... i said i would stay aside... but it's stronger than me...
may i ask, how do you know when you have a statistical edge? i mean do you place a SL and a TP? because when i trade i place a SL and than i trail my stop, i don't take TP just because my system said so, i take my profit when market says so... i can't make a statistical measure of it!
I swear (i hope) this will be my last post on the subject!
Quoting LasVahGoose
It's just one layer, one ingredient, one facet, to a cornucopia of trading requirements to be successful.
in my opinion it's the most important ingredient. Without it it's like making a chocolate cake without chocolate.
Quoting Beman
i know... i said i would stay aside... but it's stronger than me...
may i ask, how do you know when you have a statistical edge? i mean do you place a SL and a TP? because when i trade i place a SL and than i trail my stop, i don't take TP just because my system said so, i take my profit when market says so... i can't make a statistical measure of it!
I swear (i hope) this will be my last post on the subject!
well, you can either program your requirement into a stat program (if it's quantifiable), or you do it manually.
Let's say your requirement for an exit is that democrats or republicans win an election or whatever, then you just go back in time and look when this exactly happened and manually put your exit in an excel sheet.

Everything can be made into statistics. However, if something is not quantifiable, you need to do it manually.
Quoting Beman
may i ask, how do you know when you have a statistical edge? i mean do you place a SL and a TP? because when i trade i place a SL and than i trail my stop, i don't take TP just because my system said so, i take my profit when market says so... i can't make a statistical measure of it!
Easy, you know that you have a statistical edge when you're profiting with TP = SL + spread.
Quoting Sauron
Easy, you know that you have a statistical edge when you're profiting with TP = SL + spread.
mmh, yes, right.
I think we are using 2 completely different approaches.
Edge traders use a systematic trading strategy, so you have a set of rules to follow, and psychology for you is not so important, since it's just a tool you use to be disciplined.

Discretionary traders can't make a real statistic about their trades, i can make it from my past trades, but it would be useless to know something for the future, since every trade is different from the last one, one day i could close at BE just because market spiked out, the day after i could make huge profit just because market spiked in my favor, too many factors are involved.
Psychology is king since i need to be confident with market, i do have rules, but they are just a tool.

Both of us are doomed by luck:
Edge traders can't predict if their edge will remain intact for years, even if you have a 0.01% to lose all your money, that 0,01% could hit you...

Discretionary traders could make bad decision losing their confidence and their money too... luck is still involved since we can't predict what market will do next.

Those are my thought, i'm not going to write anymore on the subject since i don't want to monopolize the thread, me and Custos already had nice discussion, so i think it's enough.

Good trading everyone!!!
Hi All

My thinking is here at FF and the like, there are so many with herd mentality. In so many walks of life the followers never earn the big coinhttp://www.forexfactory.com/images/icons/pound.gif. Many are not prepared to serve an apprenticeship... do the hard yards...
It is clearly visible to many that the herd using "x system" will be filling their boots at "x" Fib level and the herd using "y system" are about to bail out at the close of the next 4hr candle etc etc.....All your movements known, you are behind the screen but as visible as being in a goldfish bowl !
The huge regiment marching over the hill can be seen for miles, the sniper is a little more tricky.
I am by no means super successful but I get by. I also know that I get by by my own intuition, research, making my own mistakes and learning from them.
I don't think there are an infinite amount of "EDGES" if so we would all be in clover. Get your own recipe and the more you experiment with it the better it will taste in time. Time being the most important ingredient !!
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
But lets say you trade by discretionary means. Do you take this strategy to market as soon as the idea pops into your head? I doubt it..

So lets say you demo trade for 3 months and decide that you're making money and feel good enough to go live with it...

Sorry to break it to you but you are 1) using an edge of sorts and 2) have statistical data to back it up. A small sample size of 3 moths yes but statistical data all the same.

Whatever way you cut it an edge is simply a trading method that wins more than it loses. WHATEVER that may be

IMO of course, your edge might be that you have no edge at all if that makes sense
Time hides Nothing
Quoting Custos
It is quite interesting that more and more trading psychology threads pop up. Almost like in the book market, where all the self-help books come up.

One can really see a lot of parallels with the advice given.
"You have to set realistic daily goals" - "you have to plan how you will achieve it" - "you have to follow your plan" - and all this other crap.
You find the parallel interesting, I find it trivial. Most market participants are losers, remember. So there is definitely a market for that kind of books to thrive. Heck, most of the authors aren't even psychologists. They'll write whatever is selling.

Quoting Custos
I don't know, don't people see that trading is a business like any other. And a very highly competitive one. It's not a job, it's a business.

And running a successful business has mostly to do with finding a niche, which the majority of already established businesses have overlooked. Or just doing things in a smarter and more appealing way to the customers than the already established ones. You can have the best business owner and manager mentality, but if you don't have a unique niche, business model or product, you will not make it in any business....
Psychology permeates every human activity whether one likes it or not. Trading is no exception. Actually, trading is one the most psychological demanding activities I can think of. Trading is a decision making process and you'd be amazed how poorly the average human being fares in decision making tasks, especially when losses are involved. Psychology alone will not make a trader successful, but it may help getting/staying there. I'd go as far as saying, psychology can be helpful in finding a business niche, doing things in a smarter and more appealing way to the customers than the already established ones, creating a business model, or even a product!

Quoting Custos
Now here in this forum people seem to think that you can just take any method and just need the right psychology to make it work. Are people really so delusional, especially in the trading industry? This industry really seems to attract a lot of mentally weak people, otherwise they wouldn't require so much assistance in developing psychology.
You need a niche, something most people are not looking at or has a high barrier of entry. Not all this psychology crap.

Feel free to criticize.
I am of the opinion that you need both the right strategy/method and the right psychological traits/mindset to be successful at trading. It is the synergy between these two components that generates and preserves profits. Believe it or not, very few people are lucky enough to be innately equipped or to have acquired through experience the right trading mindset. The vast majority of traders can surely benefit a thing or two from psychology.
"To hold, you must first open your hand. Let go." - Lao Tzu
The whole thing is like different body organs arguing which one is more important.
Lungs more important then Heart?
Quoting Beman
mmh, yes, right.
I think we are using 2 completely different approaches.
Edge traders use a systematic trading strategy, so you have a set of rules to follow, and psychology for you is not so important, since it's just a tool you use to be disciplined.

Discretionary traders can't make a real statistic about their trades, i can make it from my past trades, but it would be useless to know something for the future, since every trade is different from the last one, one day i could close at BE just because market spiked out, the day after i could make...
yeah, I think that is it. If you are very discretionary, you rely a lot on psychology. If you however have a systematic approach towards trading, the only psychological trait needed is discipline in execution.

I still believe psychology is secondary, but I understand that most here are probably trading discretionary, that's why they rely more on having a "healthy" trading psychology.

Anyways, I rather go for systematic approaches and cancel out psychological issues. I see it like what the military, police, firemen and so on try to accomplish when training their teams. They try to teach them how to systemtically solve extreme situations and make them rely less on fear and emotions, but on systematic approaches. Of course psychology is still involved, but much less than for an untrained person.
Hope you understand my metaphor.
Quoting Adal

hordes of people with no trading experience line up next to banks, hedge-funds and the like and try to take money from them in this zero-sum game.....believe that they can beat the professionals paid top dollar and spending 10 hours/day who have access to the best information and expertise.
'Beat the professionals'? We're not even playing the same game, let alone trying to beat them!



Quoting Adal

But I can understand them, at first I also thought that this would be so easy...
It is easy, it's complicating the process unnecessarily which makes it appear difficult.....
Quoting Custos
It is quite interesting that more and more trading psychology threads pop up. Almost like in the book market, where all the self-help books come up.

.
Custos - a nice thread and I commend you for going against the pack on this one. I agree with your sentiments regarding trading psychology, though would also point out that developing a "niche" might be one of many possible ways to develop a profitable method. For what it's worth, here's a cut of some of my thoughts from a previous post, which I think displays a similar sentiment to yours.

"Reality #9 -The concept of Trading Psychology, as it is most commonly understood, is completely over-rated, and in some cases might actually do more harm than good. "Trading Psychology" sells books, seminars and training courses - to the profit of "experts" who are usually not very good traders themselves - but in reality the psychology of trading should be quite simple. Sadly, it usually exists as the "grand answer to all problems" for people who have failed to understand the basic and practical implications of reality #2 (see above), and/or for people whose capabilities are ill-matched to the realities of the business of trading (though perhaps the latter can be overcome?). If you run a successful business, is that likely to be achieved through buying a course in the internet and hoping someone else has done all the hard work for you, and that it can be copied to achieve almost immediate success - or is a successful, robust and sustainable business achieved through months and years of hard work, staying focussed and disciplined, learning from your mistakes, being realistic and being adaptable? Is there something mysterious and magical about the psychology of this situation, or is it just about understanding reality? If your business is not producing the profit you expect that it should, and you feel emotional strain, anxiety and a lack of confidence in what you are doing, do you try to manage your 'business psychology' symptoms as the principle means to improve the output of your business, or do you try to get down to the root cause(s), and carefully examine the way your business is operating, in a methodical, systematic and detailed manner? Trading is a serious business and should be treated as such..."


All the best.
I believe that we are all greedy enough to sort out our psychology/ work through our demons once we have a trading philosophy which we fervently believe will work. It's only natural that over time we iron out the creases in our behaviours, we learn what's good for us and move on to the next challenge... that's why we're alive now.

Don't mistake having no confidence in a trading philosophy (which you know deep down in utter toss) with you sabotaging your own chance of success.
Living the adventure in my head.
Quoting Hedginghog

....developing a "niche" might be one of many possible ways to develop a profitable method.....
I'm interested to know why a couple of you think a niche would be helpful, retail trading isn't competitive so trying to find something unique which no-one else has thought of isn't really going to help is it, in fact quite probably the opposite!

As far as psychology in business, particularly in the retail industry, retailers spend a small fortune on trying to understand/exploit the psychology of their customers. Maybe it would be more productive to try and get an understanding of other market participants psychology rather than trying to suppress/adapt our own natural instincts, discipline should overcome any psychological 'issues' we may have in our trading.
Quoting Hedginghog
Custos - a nice thread and I commend you for going against the pack on this one. I agree with your sentiments regarding trading psychology, though would also point out that developing a "niche" might be one of many possible ways to develop a profitable method. For what it's worth, here's a cut of some of my thoughts from a previous post, which I think displays a similar sentiment to yours.[indent]"Reality #9 -The concept of Trading Psychology, as it is most commonly understood, is completely over-rated, and in some cases...
that is a really nice post. Goes with my sentiment that trading psychology is totally overrated.
  • Post #40
  • Quote
  • Edited 1:30am Feb 8, 2011 1:17am | Edited 1:30am
Quoting pipmutt
I'm interested to know why a couple of you think a niche would be helpful, retail trading isn't competitive so trying to find something unique which no-one else has thought of isn't really going to help is it, in fact quite probably the opposite!

As far as psychology in business, particularly in the retail industry, retailers spend a small fortune on trying to understand/exploit the psychology of their customers. Maybe it would be more productive to try and get an understanding of other market participants psychology rather than trying to suppress/adapt...
I thought the foreign exchange market is a zero-sum game? Now if that is not competitive then I don't know what is. Well, and with regards to doing everything the same as everybody else, then why are still not more people profitable in the fx market. A net-profitable system is needed, regardless of trading psychology.

But I totally agree that it is much more important to try to understand other market participants (behavioral finance, mass behavior,...), than wasting effort on developing a "trading" psychology.
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