Psychology... the poll

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Does psychology matter in trading?


  • Total voters
    130

shadowninja

Well-known member
Jul 22, 2007
5,524
641
173
www.helpforheroes.org.uk
#81
I counter that story with one of mine, Splitlink.

Now, I am scared of heights. Anything above a table makes me nervous. I get nervous standing on chairs. Anyway, I was negotiating an overhanging lead climb the other day. The first part was fairly easy so I was confident. Then it came to the overhanging bit. I had to climb up beyond where I'd clipped the protection in. I was so scared that every time I chalked my hands to dry them, they became wet with sweat again. I knew that the rope would hold my weight and that my belay partner would catch me should I fall off. After 5 minutes of talking to myself, telling myself to just climb and ignore the fear (fear of death or bad injury, rather than fear of losing a few quid), I managed to climb up to the next clipping point and clip in. I'm getting wet hands just thinking about it. A more confident climber would have not had the fear and climbed the route much more quickly. Fear could have resulted in failure.
 

dbphoenix

Well-known member
Aug 24, 2003
6,900
1,139
223
#82
I was walking down the street when a gaping hole opened up that led straight to hell and Satan popped up and beckoned me in but I was afraid so I turned around and walked the other way.

And that's why I was afraid to trade my plan today.

:?:​
 

Splitlink

Well-known member
Nov 18, 2001
10,850
1,230
223
#83
I was walking down the street when a gaping hole opened up that led straight to hell and Satan popped up and beckoned me in but I was afraid so I turned around and walked the other way.

And that's why I was afraid to trade my plan today.

:?:​

Yes, I know that these anecdotes have no relation to trading, but they do show that where there is danger about, then fear is an alarm bell to be heeded. What is there to be frightened about? I don't know, ask the guy who's lost his shirt!
 

dbphoenix

Well-known member
Aug 24, 2003
6,900
1,139
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#84
Yes, I know that these anecdotes have no relation to trading, but they do show that where there is danger about, then fear is an alarm bell to be heeded. What is there to be frightened about? I don't know, ask the guy who's lost his shirt!
First question I'd ask him is whether or not he had a consistently profitable strategy. Odds are he'd say "no". :)
 

nine

Well-known member
Sep 5, 2003
2,038
506
123
#85
I have zero disagreement with the need to study the markets in a way that lets you see important characteristics clearly; or develop a consistently profitable entry/exit/management strategy; or test it backwards and then forwards; and plan/document it and its implementation. And no disagreement that most people haven't passed the second step (or maybe the first).

The trouble is that you have to get all your ducks in a row and then wring their necks in the correct order. If you don't then you will generate bad habits, extra fears, and issues that need psych. Also if something earlier has damaged you for trading you need psych. Steenbarger agreed too; he said that if people were trained right then they wouldn't need psychological intervention ... but ...
 

Mathemagician

Well-known member
Jan 1, 2008
603
129
53
www.sema4group.com
#86
Many people think that trading systematically eliminates emotion from the equation. This is utterly false! All it does is shift the emotions to something that is easier for some people (like me) to deal with but harder for others. I think both types of people simply cannot fathom how the other can do what they do so two religions form and do the only thing two religions know how to do when faced with each other's presence -- try to destroy each other.

The reality is that you could have the greatest trading model ever written but if you don't have the ability to keep your grubby little hands off the button you'll underperform it at best and fail miserably at worst. Keeping one's hands off the button requires emotional fortitude of a different kind than is required to make discretionary trading decisions in the heat of the moment. However, the consequences of a lack of discipline are the same in each case.

jj
 
Likes: Splitlink

dbphoenix

Well-known member
Aug 24, 2003
6,900
1,139
223
#87
I think both types of people simply cannot fathom how the other can do what they do so two religions form and do the only thing two religions know how to do when faced with each other's presence -- fight.
That's idiotic. Nobody's fighting. It's just an ordinary debate.
 

dbphoenix

Well-known member
Aug 24, 2003
6,900
1,139
223
#89
Interesting. I've never seen the phrase 'that's idiotic' used in an ordinary debate before. :medieval:

jj
I was referring to the nature of the debate before you decided to characterize it as a fight (or what was "try to destroy each other" before you changed it).
 

new_trader

Well-known member
Jan 1, 2006
6,163
1,252
223
#90
Many people think that trading systematically eliminates emotion from the equation. This is utterly false! All it does is shift the emotions to something that is easier for some people (like me) to deal with but harder for others. I think both types of people simply cannot fathom how the other can do what they do so two religions form and do the only thing two religions know how to do when faced with each other's presence -- try to destroy each other.

The reality is that you could have the greatest trading model ever written but if you don't have the ability to keep your grubby little hands off the button you'll underperform it at best and fail miserably at worst. Keeping one's hands off the button requires emotional fortitude of a different kind than is required to make discretionary trading decisions in the heat of the moment. However, the consequences of a lack of discipline are the same in each case.

jj
1) The problem with the statement I've highlighted in red is that people actually interpret it to mean "If you eliminate emotions from trading you will be successful".

2) People who trade and promote system trading don't seem to have a valid comparison with discretionary trading. Most if not all have attempted discretionary trading but give up and turn to system trading.

I think both types of people simply cannot fathom how the other can do what they do
No, this is absolutely false. I know exactly how to do both, but I know which is far better and I have a valid comparison . I know how to develop a system, back test it and then automate it. I bet you have absolutely no idea about my discretionary trading methodology.
 

the blades

Well-known member
Aug 21, 2004
1,336
275
93
Sheffield
#91
1)
No, this is absolutely false. I know exactly how to do both, but I know which is far better and I have a valid comparison . I know how to develop a system, back test it and then automate it. I bet you have absolutely no idea about my discretionary trading methodology.
sorry if I've come in late on this and missed previously covered material (I haven't the time at the moment!) but;

surely all you KNOW is that YOUR discretionary approach is better than YOUR systematic approach. How can you draw sweeping conclusions about vast topics, based only on your own experience?

UTB
 

Splitlink

Well-known member
Nov 18, 2001
10,850
1,230
223
#92
I've been trying, because of this debate, to analise the reason that I did my trades, this morning. It was done mainly because of SR lines and averages. How does one know what SR line to use? IMO, you don't know. There are so many of them that, really, they consist of a zone that can be many points apart. Trend lines and averages, too. We may, or may not, believe in all these lines but of one thing I am sure. There are thousands of traders who do and who put their stops and orders near them. Which one? God knows, but a gut instinct tells me when it is time to make a move and I do it. So, I suppose that labels me as an emotional trader.

I'm not changing my methods, I like them.

So, putting a stop too far away is going to make me nervous when there are so many of these, averages and TL's hanging around, which is all the time.

This morning I, practically, nursed the FT down through a whole stack of them so I'm going to wash my sweaty hands and have something more substantial than nine's chocolate bar. :D

Split
 

new_trader

Well-known member
Jan 1, 2006
6,163
1,252
223
#93
sorry if I've come in late on this and missed previously covered material (I haven't the time at the moment!) but;

surely all you KNOW is that YOUR discretionary approach is better than YOUR systematic approach. How can you draw sweeping conclusions about vast topics, based only on your own experience?

UTB

Simple logic and reasoning.
 
Feb 2, 2007
2,056
412
93
#95
Many people think that trading systematically eliminates emotion from the equation. This is utterly false! All it does is shift the emotions to something that is easier for some people (like me) to deal with but harder for others. I think both types of people simply cannot fathom how the other can do what they do so two religions form and do the only thing two religions know how to do when faced with each other's presence -- try to destroy each other.

The reality is that you could have the greatest trading model ever written but if you don't have the ability to keep your grubby little hands off the button you'll underperform it at best and fail miserably at worst. Keeping one's hands off the button requires emotional fortitude of a different kind than is required to make discretionary trading decisions in the heat of the moment. However, the consequences of a lack of discipline are the same in each case.

jj

What is a system? A system is a need for rules, it gives a seemingly chaotic condition, ie PA, an order. System users are probably more likely to think that psychology matters, because it actually does matter a lot to them. This, as B. Steenbarger emphisises, is due to not properly understanding PA.

It must be quite strange, to be able to successfully trade, but not actually understand what you are really looking for in terms of PA. The wierd world of the system trader?
 

Mathemagician

Well-known member
Jan 1, 2008
603
129
53
www.sema4group.com
#96
Very interesting, Paul. I'm sure that there are system traders who don't understand what the system is doing and why. Others, of course, simply find it to be more consistent, convenient, and time-efficient when the identification of specific price action is automated rather than manually executed. For many system traders, the question is not whether they could manually execute, but why?

jj