Psychological Weakness

[cronian]

Do all psychological weaknesses cause traders to lose money. Is there any psychological weakness that does not affect trading?

Is the whole trading game simply a game where the most people trade based on some psychological weakness, which could be fear, greed, euphoria, addiction, superstition, etc. Meanwhile, the psychologically strong traders are examining the situation objectively, and watching the psychologically wounded trader give away money.

If you are psychologically strong, are trading strategies just a matter techniques---by which I mean something that can be learned by systematic study without much thought. Or does trading require pro-longed and 'creative' thought for even the most psychologically strong?

 

[grantx]

Cronian,

Perhaps one could ask whether a specific pyschological trait is a strength or weakness in trading which may not be so in other occupations (I think we can ignore cliches like "the killer instinct").

Further, are there any psychological traits (good or bad) which are unique to trading? I can't think of any.

It's a start.

Grant.

 

[Crap Buddist]

I think that some market participants do operate with the view to exploit the typical human condition.

Also, anyone see the royal institute chrimbo lectures? They suggested that the humans approach to risk is genetically controlled between 30/50% meaning (as I understood it) that upto 50% of a persons approach/reaction to risk is in the individuals genes. (So 50% of traders are born, maybe the other 50% is a work in progress?)

So we could argue on that basis that anyone with a predisposed anti risk gene may well likely be pissing into the wind? More work required to act against ones ingrained,inherited natural tendancies..... in short a bigger challenge maybe...?

Also interesting from the show, it hinted at early age training (physically, so why not mentally?) that the genes can be stretched or they will grow to meet the required task required, they highlighted archers and their shoulder blades.

Now maintaining a rant on that show, but skewing off topic FAT PEOPLE or the fat gene.... OK. upto 75% of a persons fat is controlled by gentic genes....... OK, how interesting it is then that Americans in the last 20/25 years are 60 % Obese???

Putting 2 and 2 together and making 22 I thought, hmm wait a minute the Yanks have been scoffing GM (genetically mutated) food in their cakesholes for about the same time...... and reflecting on a post I made in another thread re GM (it'll all end in tears etc thread) I highlighted a few sharp scientists are actually noticing the effects of Rats DNA being altered by scoffing GM foods. The long term effects of which in humans is still NOT KNOWN... Except that Americans are getting podgier. huh huh...?

I rest my case..... and I also need a rest.....


so genetic Risk Gene ????? Something to ponder on as we head on into 2008 maybe.. :idea:

 

[Priceman]

1 Is there any psychological weakness that does not affect trading?
2 Is the whole trading game simply a game where the most people trade based on some psychological weakness.
3 Meanwhile, the psychologically strong traders are examining the situation objectively, and watching the psychologically wounded trader give away money.
4 If you are psychologically strong, are trading strategies just a matter techniques---by which I mean something that can be learned by systematic study without much thought.
5 Or does trading require pro-longed and 'creative' thought for even the most psychologically strong?

I am very surprised that this fantastic subject hasn't got more responses! I'd like to add my thoughts. I've slightly edited the text of everyone else to just hit the points that I find interesting.
1, Way too difficult a subject for my little brain to work out that question.
2, Trading is all about perceived value of something; a stock or currency etc. It is a game and inevitably psycholgy comes into that. It's certainly survival of the fittest! I don't believe it's played with psychological weaknesses in mind though. It's all about who wants what for what price and the big boys mop up all those who are not prepared.
3, The 'psychologically strong' do watch objectively and herd as many people together for maximum gain.
4, Some say that you get that light bulb moment where it becomes boring and mundane, and it becomes like flying on auto-pilot. Not that many understand enough about the markets to ever get there. There are so many techniques out there, and there are some that work much better than others. It's generally who's driving the technique that's the problem.
5, Trading does need constant out of the box thinking as it's a living breathing entity that changes all the time. If you are not up to date on the changing markets then the things that did work, stop working.

I think that some market participants do operate with the view to exploit the typical human condition.
Also, anyone see the royal institute chrimbo lectures? They suggested that the humans approach to risk is genetically controlled between 30/50% meaning (as I understood it) that upto 50% of a persons approach/reaction to risk is in the individuals genes. (So 50% of traders are born, maybe the other 50% is a work in progress?)
So we could argue on that basis that anyone with a predisposed anti risk gene may well likely be pissing into the wind? More work required to act against ones ingrained,inherited natural tendancies..... in short a bigger challenge maybe...?
Also interesting from the show, it hinted at early age training (physically, so why not mentally?) that the genes can be stretched or they will grow to meet the required task required, they highlighted archers and their shoulder blades.

CB, I'd love a link to those lectures if you have one?
Here's a couple of links about John Nash and game theory. Trading is like a huge game of poker IMO, with most being suckered into the false moves as they do not see the big picture. It also shows there's a fine line between genius and total nutcase! Has anyone seen the film? I'm halfway through the book which is obviously much better.
Game theory - Wikipedia, the free encyclopedia
A Beautiful Mind (film - Wikipedia, the free encyclopedia)

I'll end with a note to say keep your brain fit aswell as your body!

All of what I have written is nicked from someone who understands very well this subject and has given me some snippets into the psychology of the markets and it's participants. You can never learn enough about this!

All the best