Trading is 1% psychology, 99% skill

[wrobinson]

one day...

one day, when you are trading your own money, perhaps you'll learn: trading is 10% method and 90% psychology. Crowd psychology, i.e. understanding why the market is doing what it is doing and what it is going to do next, and individual psychology, to do with with how you can trade using a method and not letting your emotions get in the way. I earn a living for myself trading from home. I trade just mornings, and I make a very comfortable living. I only managed how to do that once I had learnt about the psychologocal issues and how to overcome their pitfalls. I don;t know why I'm bothering writing this, but I just happened to see your post. In a word, it's nonsense. Learn some humility; if not, you'll lose your shirt.
W.

 

[Splitlink]

That 1% is for reading the other traders, not yourself.

If you cannot trade without emotions flying all the place quit. You should just log in, do your thing, and log out. Simple as.

As my mate chopper says, harden the **** up.

YouTube - Ronnie Johns - Chopper - Harden the **** Up


(just been reading about it on another thread and it got me thinking.)

You are wrong, as simple as that.

Get in, get out is good for a start. Getting back in when you have lost a few trades and doubt begins to set in about your ability.. Lose some more and fear sets in. I'd like to see how cool, calm and collected you are, then.

In any case, Good luck.

Split

 

[JTrader]

Trading is 1% psychology, 99% skill

Weakness on either part can sink the ship.

Maybe the strong psychology should follow, when the good trading plan AND the user skills required to execute that plan successfully, are in place & up to speed. That i can understand.

Right now, i shouldn't beat myself up too much, as my plan is new, and i'm seeing new stuff all the time. With my plan as it is - if i use the correct psychology to follow my skillful rules, i do very well.
However, my skill level is not yet optimum, as i am maybe 1 step behind the action, whereas i want to be 1 step in front of what is going on - like a good snooker player - always thinking one shot in front.

Because my skill level is a bit slow right now in real-time right now, I'm missing the odd thing. This then leads to a psychology barrier in that i may find it hard to pull the trigger. However, if i do follow the rules & pull the trigger, I will do very well.

Overall, the plan works, very well. Yet at present, i am not up to speed with it. Some valid trades, i hesitate, miss the boat and see the big winner pass me by. Yet when i do enter valid trades right now, i seem unlucky enough to regularly catch the rare loser - unbelievable.

Skill and psychology in place, market dynamics change. Right now, its volatile, so perhaps you need to determine through experience derived skill/judgement if eg. your stops are big enough for current conditions. Perhaps you need to assess/decide based on a memory bank of experience whether the current conditions are just too volatile and risky to be traded.........

So yes, overall, good skill - derived through experience and implementation, and the good judgement that is part of that good skill, should provide the strong trader psychology.
You cnanot have strong trader psychology without a strong trade paln & strong trader skills - that would be unwarranted/delusional.

 

[wasp]

ahhh bless you all.... I thought when I got home to the shores of Blighty, I wouldn't have any problems with sarcasm.

 

[Paul71]

Perhaps you need to assess/decide based on a memory bank of experience whether the current conditions are just too volatile and risky to be traded.........


The market has it's own 'memory bank', pal. This is what you need to pick up on. Sorry for the 'know all' type of post, but it's true. Timing, wit and a good eye for price action is what everyone is up to. Good trading, JT.

 

[JTrader]

Perhaps you need to assess/decide based on a memory bank of experience whether the current conditions are just too volatile and risky to be traded.........


The market has it's own 'memory bank', pal. This is what you need to pick up on. Sorry for the 'know all' type of post, but it's true. Timing, wit and a good eye for price action is what everyone is up to. Good trading, JT.

True. But parts of Monday/tuesday were a complete nightmare on the instrument/s i trade, and as an experienced trader, after a couple of losses, i knew to stand aside, and wait for a very good reason to enter - which was after a pending breakout on several timeframes. A novice could have thrown good money after bad, & i'm sure many did.

Yesterday however, was pretty textbook, yes volatile, but highly tradeable, as price was moving back & forth, in a more arderly fashion.

On of the 1st tasks of any trader should be to decide if the current condition is suitable for them to place a trade, regardless of the volatility level.

 

[littlemog]

that's a nagging thought you've pulled out wasp sir... i don't deny psychology plays a great part on the sport of trading, but there seems to be a totally undermining of 'skill' by many 'coaches'. that skew of '10% skill and 90% trading' seems to be a total mystery to me. i could see how someone could get a bit of edge after going through the psycho mill (as i have, after doing much reading on the topic and working on it trade after trade in a good old jotter book) but then to think that's enough... a bit too far fetched for me now.

there's so much more - getting good at forecasting, macro events, relationships between financial markets, technical and quantitative based analysis (the really scientific genre), probabilities and soo forth... i hate to think that people think it's going just comprise 1-10% of trading... but then again, there are people who do.

scary.

 

[JTrader]

Trading is 1% psychology, 99% skill

Actually i agree more now.

Once you have the plan that works, is proven, and you know that it will always work as it makes complete sense, there should be no reason for letting psychology get in the way. Your skill level will be so much that psychology isnt an issue as its a simple case of doing X & Y and reaping the benefits more often than not, and your belief in the process of doing X & Y will be so much that trading psychology becomes ancient history.
Even in volatility, where perhaps you might hit a sticky patch, it is your skill level/experience that determines whether you trade or stand aside until things settle.

 

[jeffsmith]

Once you have the plan that works, is proven, and you know that it will always work as it makes complete sense, there should be no reason for letting psychology get in the way.
Even in volatility, where perhaps you might hit a sticky patch, it is your skill level/experience that determines whether you trade or stand aside until things settle.

Agreed.In fact this idea this is applicable in most other aspects of life as well.

 

[bnaimy]

I respectfully dissagre with u guys, trading is 80% emotions and rest is skills.

Reason most people fail is not because of not being skilled, cause skills can be learned but controlling your emotions is a different storie.

Bad habits are hard to kill, and emotions are even harder

I can bet that , many those traders who are not going well, if the only could
stay calm and stick to their rules and dont get all emotional and do mistakes cause their hear is raising , i think they would all do alot better and acutaly make some profits.


But thats my personl take on it :whistling

With kind regards
Bashir Naimy

 

[bnaimy]

Actually i agree more now.

Once you have the plan that works, is proven, and you know that it will always work as it makes complete sense, there should be no reason for letting psychology get in the way. Your skill level will be so much that psychology isnt an issue as its a simple case of doing X & Y and reaping the benefits more often than not, and your belief in the process of doing X & Y will be so much that trading psychology becomes ancient history.
Even in volatility, where perhaps you might hit a sticky patch, it is your skill level/experience that determines whether you trade or stand aside until things settle.

Well, i agree that having a plan and something that is proven to work, but we humas are not that simple. I can tell you that here is a system, use it and 80% will be winner, even thought that trader knows it, he will still get emotional . Just saying that there is no reason to be emotionl wont help, cause we are humans and are not rational at all.

There is always emotions in play,and even a 80% winner method will not make those emotions go away, dont matter how much we tell our self that we should not.

I think that the skill part is something that comes fast, but the emotions parts is the thing that takes years.

With kind regards
Bashir Naimy

 

[jeffsmith]

I respectfully dissagre with u guys, trading is 80% emotions and rest is skills.

Reason most people fail is not because of not being skilled, cause skills can be learned but controlling your emotions is a different storie.

Bad habits are hard to kill, and emotions are even harder

I can bet that , many those traders who are not going well, if the only could
stay calm and stick to their rules and dont get all emotional and do mistakes cause their hear is raising , i think they would all do alot better and acutaly make some profits.

Thats a perception One doesnt get to hear very often. I believe if thats what works for you then that great in itself.

 

[Charlton]

I respectfully dissagre with u guys, trading is 80% emotions and rest is skills.

Reason most people fail is not because of not being skilled, cause skills can be learned but controlling your emotions is a different storie.

Bad habits are hard to kill, and emotions are even harder

I can bet that , many those traders who are not going well, if the only could
stay calm and stick to their rules and dont get all emotional and do mistakes cause their hear is raising , i think they would all do alot better and acutaly make some profits.


But thats my personl take on it :whistling

With kind regards
Bashir Naimy

It is 80% emotions when it is not done properly. It should be a much lower figure, nearing 0% ideally when it is done properly.

Trying to remove the main 2 emotions of greed and fear should improve trading results, because it improves consistency by sticking more closely to a trading plan that can be quantitatively evalusated and improved.

It avoids taking profits too early, lowering stops and generally increasing risk without the consummate increase in rewards.

Experience and the improvement in skills over time will generally lower the influence of emotions as traders realise the effect, but build in safeguards within their strategies to stop the effects e.g. scaling out of positions and protecting profits.

The basic skills of charting, order entry etc are indeed relatively quick to acquire. The skill that takes the longest time is the skill of looking at your own actions, emotions and thoughts from outside. It just takes time and is no different to any other enterprise such as sports, business or language learning

There comes a time in all such learning (if continued) when the destructive emotions are laregly removed and a feeling of contentness, natural confidence and being at one with the world takes over.

It's really a question of surviving financially and emotionally until that happens.

Charlton

 

[forker]

it is amuzing how so many of you think it is as simple as having this golden chariot of a system and that executing trades one after the other is just 1% mental. it is highly doubtful that the control required to take trade after trade (losers and winners) without feeling emotions is mearly 1%. you guys come here and claim it is a load of bull when you are actually so good at it you dont realise that the methods you use actually the smallest percentage and the mental control you have is the largest percentage. so wasp maybe you should think about it, perhaps your system is just 1% and mental 99%

 

[njptrix]

90% psychology for me, 10% skill!

Yikes!