What's up with trading psychology? | Forex Factory

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What's up with trading psychology?

  • #1
  • First Post: Apr 16, 2011 3:41am Apr 16, 2011 3:41am
If you can be so convinced that your trading method will generate profits, whats so hard about handling the psychology? It is the doubts that surface during live trading that screws up your mind. So isn't the key to handling psychology: convince yourself.

Convince doesn't mean applying mind techniques to make-believe, if a method doesn't work it will not work no matter how you make yourself to believe it will work.

Convinced means getting your self dirty, see what works and what doesn't, what suits you and what doesn't, only discovering and doing something inline with your personal beliefs and philosophies can you convince yourself and even bet your life on it. It is a process of aligning yourself with the market.

The shortcut? Convince yourself that someone else's method works, which is extremely hard. LOL.
  • #2
  • Apr 16, 2011 9:43am Apr 16, 2011 9:43am
Quoting Rand Yap
If you can be so convinced that your trading method will generate profits, whats so hard about handling the psychology? It is the doubts that surface during live trading that screws up your mind. So isn't the key to handling psychology: convince yourself.

Convince doesn't mean applying mind techniques to make-believe, if a method doesn't work it will not work no matter how you make yourself to believe it will work.

Convinced means getting your self dirty, see what works and what doesn't, what suits you and what doesn't, only discovering...
firstly, there are plenty of threads on this so there really is no reason to create a new thread and keep beating this dead horse.

but while we are kicking... the whole psychology deal is simple to break down :

1. some traders don't have the ability to profit from trading so they hope. they mistake holding onto hope as being disciplined or having the psychology to not deviate from their failing methods. the more they lose the more they fear and are determined that keeping faith is what will generate profit. they are lost, and are losing.

2. some traders progress to realizing they have no clue and are destined to fail, so they start keeping tabs on their psychology to help reform themselves and push towards a profitable outcome. ensuring they aren't facebooking or playing games and are dedicating time to research and practice falls under this category of using psychology to better their trading. they are keeping tabs on their emotions, thinking, and actions, and are ensuring they aren't being their own barrier to success.

3. some traders never had to discover the markets on their own and are relying on teachings of others and the rules given to them or the boundaries imposed on them by risk managers. these traders rely on ensuring their psychology is sound so as to not deviate from and sabotage the plan given to them. this is generally the situation that the books and online references to psychology are discussing. it is expected that the rules and boundaries the trader has been given are sound and ARE profitable, so the only element that could cause failure is the acts of the trader themselves and they must ensure they do not let themselves get in the way of profits.
Congratulations ScalaFX for coming out of the closet!
  • #3
  • Apr 16, 2011 9:59am Apr 16, 2011 9:59am
This whole discussion on psyhology in trading is overrated in my opinion. Yes there are some psychological barriers to overcome, but it isn't like climbing Mount Everest (unless you're just an emotional basketcase in which case you shouldn't be trading anyway). The bigger thing is management of ones risk and money. That's pretty much all there is to it.
  • #4
  • Apr 16, 2011 10:28am Apr 16, 2011 10:28am
Quoting Rand Yap
If you can be so convinced that your trading method will generate profits, whats so hard about handling the psychology? It is the doubts that surface during live trading that screws up your mind. So isn't the key to handling psychology: convince yourself.

Convince doesn't mean applying mind techniques to make-believe, if a method doesn't work it will not work no matter how you make yourself to believe it will work.

Convinced means getting your self dirty, see what works and what doesn't, what suits you and what doesn't, only discovering...
yes, extensive research will make any psychological development obsolete. Cause you "convinced" yourself through that research that your edge will very likely work in the future.

I think the problem is that many people don't really do real research. They got 100 trades logged in, and that maybe on the 5 minute chart and have a sample size lasting one week back in time. Now with such a small sample size, it is pretty hard for anybody to convince himself that he actually has an edge.
But if you tested it over decades of data & thousands of trades, then you will definitely be convinced and have no psychology problems whatsoever.
  • #5
  • Apr 16, 2011 10:55am Apr 16, 2011 10:55am
yes, I agree with you!

Quoting Rand Yap
If you can be so convinced that your trading method will generate profits, whats so hard about handling the psychology? It is the doubts that surface during live trading that screws up your mind. So isn't the key to handling psychology: convince yourself.

Convince doesn't mean applying mind techniques to make-believe, if a method doesn't work it will not work no matter how you make yourself to believe it will work.

Convinced means getting your self dirty, see what works and what doesn't, what suits you and what doesn't, only discovering...
  • #6
  • Apr 16, 2011 11:47am Apr 16, 2011 11:47am
To trade properly and profitably, one must view the market objectively. All is fine and dandy while you are trading inside your "comfort zone". Your normal risk parameters and appetite. But go outside your comfort level, increase your size or find yourself in a large drawdown and objectivity goes out the window, replaced by fear or greed.

We hear all the time about traders going "rouge" amounting huge losses, blowing accounts....... you hear things like:" I know the market will come back" etc. etc.

Bias marriage when all signs point the opposite, finally reverting to hope. And the opposite where traders get complacent or careless due to a win streak, or other life matters that divert attention, causing monumental mistakes.

Each of these are psychological problems, huge ones actually, however the small ones will nip at your pocketbook too. Your trading will be limited to your worst trading habits effect.

What looks back at you in the mirror is the biggest obstacle you will have to overcome to be consistently profitable in this business.
  • #7
  • Apr 17, 2011 11:37am Apr 17, 2011 11:37am
Quoting 2+2=4ex
This whole discussion on psyhology in trading is overrated in my opinion. Yes there are some psychological barriers to overcome, but it isn't like climbing Mount Everest (unless you're just an emotional basketcase in which case you shouldn't be trading anyway). The bigger thing is management of ones risk and money. That's pretty much all there is to it.
Thanks, u have pretty much summed up what I wanted to express, trading psychology is overrated.
  • #8
  • Last Post: Apr 17, 2011 12:05pm Apr 17, 2011 12:05pm
Trading is difficult, if it was easy everyone would be doing it!
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