Trading Psychology

This is a discussion on Trading Psychology within the Psychology, Risk & Money Management forums, part of the Methods category; Although google is convenient, here are the links to the originals: http://www.themarketcoach.com/articl...35_article.pdf http://www.themarketcoach.com/articl...33_article.pdf http://www.themarketcoach.com/articl...25_article.pdf...

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Old Mar 23, 2009, 2:44pm   #17
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Although google is convenient, here are the links to the originals:

http://www.themarketcoach.com/articl...35_article.pdf
http://www.themarketcoach.com/articl...33_article.pdf
http://www.themarketcoach.com/articl...25_article.pdf
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Old Mar 23, 2009, 10:47pm   #18
 
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Thank you I was reading and then got dragged away, was just about to ask for source but you were one step ahead.
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Old Oct 16, 2009, 6:55am   #19
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Trading can be a skill. There is this FEAR that a trader should overcome so he could pursue. The trader has to take the risk of losing money to earn money. As espoused above, "making money is a by-product of successful trading".

Oh, I think I should be readin more about the trading psychology so I can set my mind in trading. Without the fears, I can move forward to trading, prepare to take the risks, focused and alert.
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Old Oct 17, 2009, 5:20pm   #20
 
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Top 10 list of what I have learnt

bbmac started this thread 1. Psychology is 90% of the battle. Once you have found/designed a trading edge that delivers a desired return over a sample of times it sets-up in all market conditions, the battle is then with yourself-to develop the robustness to execute it in such a way that it actually delivers.

2. Greed and Fear are the 2 constant negative emotions connected with trading, they can act together or alone , Hope and Revenge too are negative emotions insofar as trading is concerned and are interchangable and can side with Greed or Fear, they can also switch sides !

3. As Mark Douglas points out, a trading egde is no more than an indication of a higher probability of one thing happening over another. Accept that you have no idea where price will go next.

4. The only 2 constants of technical trading are support and resistance (demand and supply) and price action. Price action tells us everything we need to know about the market, it's sentiment and trend, and the basis of support/resistance. It is it's behaviour around support/resistance that can give us an indication as to whether price will break or bounce.

5. The money that moves a market generally does not do so via time frames lower than 1hr...this is not to say that hi-probability patterns/set-ups/triggers cannot be found on sub 1hr t/f's just that this is the t/f (+) that matters insofar as tech trading is concerned.

6. Confluence is where the highest probability trading opporrtunities are found. the confluence of technical factors can occur on the same t/f and on others, and it is the combination of these 2 that make for the highest probability trading opportunitiess.

7. Markets trend, but they also pullback, but trend so often will go further than you thought possible.

8. A positive expectancy is essential.

9. Preparation before and staying engaged with the market during a trading session is vital... There is no substitute for screentime.

10. You had better want to be a trader, not just want the rewards available for getting it right. If you do want to be a trader then your first task is to protect your capital. Once you are able to grow it, then you may as well aim to do so to handsomely reward/compensate yourself for the opportunity cost of being a trader.


NB: This list is subject to change !


G/L
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Old Oct 18, 2009, 11:19am   #21
 
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10 more things I have learnt

bbmac started this thread 11. Frustration and boredom are 2 other negative emotions that can cause mistakes/bad trading decisions.

12. Patience and discipline allied to decisiveness and experience can counter the negative emotions in trading.... the battle though is never fully won and ongoing, and you must call on the these 4 at all times.

13. Experience counts for nothing unless you carry on learning. You can have say 10years experience or 1yr's experience, ten times over...there is a difference.

14. The market is never wrong.

15. The market doesn't move beacuse you get a trigger/set-up/pretty pattern, it moves at areas of supply/demand, it follows therefore that these are the areas at which to look for a trigger/set-up.

16. A hi-probability outcome trading edge, although not essential is key toi building confidence in and longevity with a trading edge.

17. A trending market can be 'overbought' or 'oversold,' and can remain so far longer than seems possible.

18. Trade what you see, not what you think, the market doesn't care what you think.

19. Taking a fundamental viewpoint is not neccessary with a technical trading edge and indeed can be counter productive. A fundamental trading edge generally requires big stops and an expansive time frame. For eg; a bearish fundamental viewpoint can still see bullish sentiment/rallys.

20. Technical analysis does work. It is a useful tool and can be used to build a consistently profitable and even hi-probability trading edge.

G/L
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Old Oct 18, 2009, 6:06pm   #22
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Trading Psychology

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Originally Posted by bbmac View Post
11. Frustration and boredom are 2 other negative emotions that can cause mistakes/bad trading decisions.

12. Patience and discipline allied to decisiveness and experience can counter the negative emotions in trading.... the battle though is never fully won and ongoing, and you must call on the these 4 at all times.

13. Experience counts for nothing unless you carry on learning. You can have say 10years experience or 1yr's experience, ten times over...there is a difference.

14. The market is never wrong.

15. The market doesn't move beacuse you get a trigger/set-up/pretty pattern, it moves at areas of supply/demand, it follows therefore that these are the areas at which to look for a trigger/set-up.

16. A hi-probability outcome trading edge, although not essential is key toi building confidence in and longevity with a trading edge.

17. A trending market can be 'overbought' or 'oversold,' and can remain so far longer than seems possible.

18. Trade what you see, not what you think, the market doesn't care what you think.

19. Taking a fundamental viewpoint is not neccessary with a technical trading edge and indeed can be counter productive. A fundamental trading edge generally requires big stops and an expansive time frame. For eg; a bearish fundamental viewpoint can still see bullish sentiment/rallys.

20. Technical analysis does work. It is a useful tool and can be used to build a consistently profitable and even hi-probability trading edge.

G/L


Good Points..Check out the book trading in the zone by mark douglas, covers this area well.
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Old Oct 19, 2009, 7:59am   #23
 
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Originally Posted by amit.s View Post
Good Points..Check out the book trading in the zone by mark douglas, covers this area well.
I have read both The Disciplined Trader and Trading In The Zone by the author. Reading the concepts/ideas expressed in a book (s) is one thing but the list above is what I have learned from my own personal experience of trading, and some of these things bear out some of the ideas of Mark Douglas, others, as well as my own observations/experiences. It will be different for everyone but doubtless there will be common themes. Thanks for the response.
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Old Oct 20, 2009, 12:37am   #24
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Good stuff BBmac
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