Psychology... the poll

[A Dashing Blade]

In case you did not get my argument, I was merely drawing attention to the fact if a 100% guarantee was possible no psychological issues arises. That was the hypothesis of the argument. Whether the hypothesis is possible is another matter entirely.?

Nothing I disagree with there.

 

[firewalker99]

In case you did not get my argument, I was merely drawing attention to the fact if a 100% guarantee was possible no psychological issues arises. That was the hypothesis of the argument. Whether the hypothesis is possible is another matter entirely.

What if 99% were possible? Or 90, or 80, ...? I mean... where would you draw the line? I'm sure there'd be less psychological issues when someone is trading a system that has 8 winners out of 10, instead of 3...

 

[temptrader]

What if 99% were possible? Or 90, or 80, ...? I mean... where would you draw the line? I'm sure there'd be less psychological issues when someone is trading a system that has 8 winners out of 10, instead of 3...

My statement was made in relation to systems, formalizable systems. Systems that don't require thinking or a brain to undertake, because that's why they are called systems. Anyone could do it if they had the system at hand and followed its rules.

Now you want to take the it further and touch on other matters. . . . we could talk about risk/reward, high strike rate but low gain, low strike rate but high gain . . . this invariably leads to discussions about probability theory and statistics enough to bore the hell out of most people (yourself included).

I have better things to do with my time. Very long story short, if you play probabilistically, expect probabilistic effects: losing runs, law of large numbers implying that you will eventually f*ck up your account.

I once knew a very profitable trader who said he traded systematically using his indicator and so on. When I looked at this indicator and back tested it I found it to wipe out the account in the long run, so I knew there was something afoot and asked him how he made it work. He told me that the indicator is one of several things (although a crucial thing) he uses to gauge his trades and that his knowledge of price actions and patterns accumulated over many years got him profitable, unfortunately he could not formalize the latter in a computer program to sell to people.

 

[mp6140]

My statement was made in relation to systems, formalizable systems. Systems that don't require thinking or a brain to undertake, because that's why they are called systems. Anyone could do it if they had the system at hand and followed its rules.

Now you want to take the it further and touch on other matters. . . . we could talk about risk/reward, high strike rate but low gain, low strike rate but high gain . . . this invariably leads to discussions about probability theory and statistics enough to bore the hell out of most people (yourself included).

cant argue there as I was the one who asked everyone WHAT "risk/reward" really meant, cause i didnt have a clue ! and if someone were to ask me what my "probabilities" were on a trade, Id just have to say "it will probably come in where i think it will come in ---- Im a trader, not a statistician !"

I have better things to do with my time. Very long story short, if you play probabilistically, expect probabilistic effects: losing runs, law of large numbers implying that you will eventually f*ck up your account.

I once knew a very profitable trader who said he traded systematically using his indicator and so on. When I looked at this indicator and back tested it I found it to wipe out the account in the long run, so I knew there was something afoot and asked him how he made it work. He told me that the indicator is one of several things (although a crucial thing) he uses to gauge his trades and that his knowledge of price actions and patterns accumulated over many years got him profitable, unfortunately he could not formalize the latter in a computer program to sell to people.

one of the reasons i dont go into much detail about HOW i trade, and just throw out jpegs is i cant really explain it ALL --- basics yeah, but how do you tell someone how you feel about that big empty area on the right side of a chart, hidden from view -- Its sorta looking at something and remembering that this sorta thing should happen, or analyzing the living daylights out of something, or watching the price action before a news release or maybe another hundred stupid things ?

STUPID in, STUPID out ?? it just wont program !

mp, enjoying and the trades aint bad today either

 

[new_trader]

Further 2¢

What if 99% were possible? Or 90, or 80, ...? I mean... where would you draw the line? I'm sure there'd be less psychological issues when someone is trading a system that has 8 winners out of 10, instead of 3...

I see the 100% as the confidence level in the system rather than the performance of the system itself. I would say that almost everyone is 100% confident that a coin flip will yield a 50/50 chance of a head or tail. Do you see? The coin flip 'system' only has a 50% probability but on each flip there is almost 100% chance it will either be a head or tail. I doubt anyone would bet on it landing and staying upright on its rim.

If you could win 2x as much for a head over tails you would eventually become a millionaire from flipping the coin. I wouldn't lose confidence after 10 losses in a row because I know in the long run it will drift back to the average. Especially if the coin went through a rigorous test under supervision to ensure it was fair. You could say then that a fixed odds system provides 100% confidence even though the chance of winning isn’t 100%.

I would expect that anyone trading would know and understand that that the market is not a fixed odds system. What I have said from the beginning is that most (all?) system traders believe that eliminating emotions from the trading equation is the key to success. This is a valid belief but the major flaw in this belief is that the only way to achieve it is by automating their trading or following a set of rigid guidelines. The flaw is a symptom of inexperience and lack of understanding of the very markets they wish to trade. This is further compounded by the marketing tactics used by system vendors and the ignorant masses that perpetuate this nonsense.

The question is; can a discretionary trader be 100% successful with each trade? Of course not! But a discretionary trader is 100% confident that they are on the right and proper path. A discretionary trader is 100% confident they have a sound, bullet proof methodology...a REAL edge. A discretionary trader expects every trade to be a winner but knows that there is a chance of misjudging the market or a sudden unforeseen circumstance. But they are dynamic enough to reassess and alter their ‘old’ plan and go with the new. Imagine after a pep talk the coach of a football team says “Now go out there and win” and the captain says “Well we can’t expect to win. I’ve run a back test on the historical data for all the football matches ever played and no team has won more than 75% of their games. We have already won 75% of ours so we can expect to lose for the rest of this season”.

People take comfort in going with the masses, the inference being that the majority must be right. A major adjustment in thinking is required before anyone can start making real progress in their trading. The problem is that very few are willing or even capable of doing this. So does psychology matter in trading? Yes, it matters right from the start, well before placing the very 1st trade. I am now convinced that traders are born and not made.

 

[Paul71]

So does psychology matter in trading? Yes, it matters right from the start, well before placing the very 1st trade. I am now convinced that traders are born and not made.

This for me, sums this thread up. Psychology matters more to some than others. The answer as to why, lies in the above quote.

Well said, NT.

Now, what about Temptrader, with his maths and probability and coin tossinng?

Here is a question for TT.

Does the coin that is being tossed have to be aerodynamically the same on each side for the 50:50 rule to be correct? I think the heads side of a coin is more aerodynamic.

 

[firewalker99]

Yes, it matters right from the start, well before placing the very 1st trade. I am now convinced that traders are born and not made.

Although I'm inclined to agree with the rest of your post, the above sentence clearly goes against my beliefs! But I won't go into that again, because all the 'nature vs nurture'-debate and 'talent is born or developed' threads have pretty much exhausted me

People can change.
Change we can believe in.

 

[PKFFW]

You know, on the "have you've backed up your data" thread I said I might need to back up my house and contents - or something like that, I can't remember because I was having a laugh. I've now realised that it's you and FireWalker I need to back up because you're both so damn entertaining. Every time I think I might be getting big headed or have too long a winning streak I consider it a duty to have you two take the p*ss out of me to put me back to earth.

Glad to be of service.

I'm only sorry I can't be of service to you very often. It is patently obvious you rarely if ever have a "long winning streak."

Cheers,
PKFFW

 

[Paul71]

Glad to be of service.

I'm only sorry I can't be of service to you very often. It is patently obvious you rarely if ever have a "long winning streak."

Cheers,
PKFFW

It really is a terrible phrase, "long winning streak", don't you think, PKFFW?

It's a statement that makes trading seem like a luck thing rather than a skill that is to be attained. Maybe if the answer to trading doesn't lie within the pages of math book or physics book or the 'New Scientist' type magazines the academics don't like it.:cheesy:

 

[Lee Shepherd]

I agree

Watch the film, 'Trading places'.

Although fictional in principle, is factual in real life.

People can change. This is why some traders lose the hang of it after many years of being in the market and others simply take there place.

Although I'm inclined to agree with the rest of your post, the above sentence clearly goes against my beliefs! But I won't go into that again, because all the 'nature vs nurture'-debate and 'talent is born or developed' threads have pretty much exhausted me

People can change.
Change we can believe in.

 

[black bear]

win to lose and lose to win

Watch the film, 'Trading places'.

Although fictional in principle, is factual in real life.

People can change. This is why some traders lose the hang of it after many years of being in the market and others simply take there place.

Hi Lee

Congrats on your long ftse stance


I went from winner to loser in my early days backing horses, new nothing regards edges at the time I just used a very good method of selection and never varied it

every bit looking back was correct imo, I had just fallen by mistake almost on good work practice with no real understanding as to what I was in fact doing, I just new it worked.

When did it stop :?: = hindsight observation

Very slowly not a sudden thing, life moved on = other interests and friends. I wandered from original method without even noticing. Never had or wanted to go back there and stopped the second it was obvious I had lost something

was not interested at the time in finding out what it was

It was just drift from good work practice and discipline, thought perhaps opportunities could be manufactured like on a production line at more frequent intervals

 

[Lee Shepherd]

Record keeping has got to be at the forefront of any successful trader

Records will identify any anomolies in ones trading as an early indication that things are going...not so good as they were, and can be an excellent way to recognise ones own trading perfomance and correct it BEFORE it becomes a problem, let alone too late.

Keeping records has got to be one of the very most important things in trading. Without records one cannot determine how the person is losing and more importantly at what rate.

I'm only as good as my last trade and when future trades start to slip below targets and points become less, so do earnings and this needs to be addressed immediately.

Although still successfully trading to date this of course could all fade away and be a thing of the past in the traders world as just another has been.

This weekend I am currently undergoing a heavy workload to look closely into some slippage on one of my target markets, this is due to a very obvious slip in points percentage against target. If I didn't keep a strict record on this then when would I know that I'm failing or even be able to identify when I'm starting to fail?? When I've lost a bit of money?? When I'm losing money on a regular basis?? Maybe when I'm close to blowing my account??? Who knows.. Maybe it will be when the bailiffs are knocking at my door?

Many people overlook the value of recording trades and ALL the workings out that accompanies it.

Record keeping has got to be at the forefront of any successful trader.

 

[mp6140]

MP -- what you call psychology, I call stupidity !

. . . . . . . . . . . . . . . . . The question is; can a discretionary trader be 100% successful with each trade? Of course not! But a discretionary trader is 100% confident that they are on the right and proper path. A discretionary trader is 100% confident they have a sound, bullet proof methodology...a REAL edge. A discretionary trader expects every trade to be a winner but knows that there is a chance of misjudging the market or a sudden unforeseen circumstance. But they are dynamic enough to reassess and alter their ‘old’ plan and go with the new. Imagine after a pep talk the coach of a football team says “Now go out there and win” and the captain says “Well we can’t expect to win. I’ve run a back test on the historical data for all the football matches ever played and no team has won more than 75% of their games. We have already won 75% of ours so we can expect to lose for the rest of this season”.

People take comfort in going with the masses, the inference being that the majority must be right. A major adjustment in thinking is required before anyone can start making real progress in their trading. The problem is that very few are willing or even capable of doing this. So does psychology matter in trading? Yes, it matters right from the start, well before placing the very 1st trade. I am now convinced that traders are born and not made

==================================================================

sorry for editing your post, but its only in the interests of brevity that i do that.

I see a lot of pontificating going on here ------ "do we control emotions", "are we born with the "right" stuff or made", "can you trade unless you take medications" and etc, BUT NO ONE HAS approached the truth of the matter which is simply that trading is like any other job ----- it has its own CULTURE, RULES and METHODS OF WORKING, and these can all be LEARNED, which I prove pretty much daily.

Now, if one becomes smart enough to realize they require schooling, how do they do it while in school studying to be a Doctor (or whatever) and even with study, there is ALWAYS those who graduate in the top 10 and those in the bottom 10, and a whole lot of mixed ABILITIES in the middle ~!

Of course, there are people who WILL NOT succeed at this because of a NUMBER of internal reasons as there are people who will not succeed at being accountants, doctors, lawyers and indian chiefs --- either because they simply DO NOT LIKE trading (or being an indian chief, for that matter !)or are more INTERESTED in something else (my last life I was a photographer of the most beautiful women in the world --- I did a lot of investing, but i would rather be with the women than stare at a computer all day)

BUT WHAT REALLY GRINDS MY COOKIES is youre looking too far UP the information chain for your answer ---- TONS of newbs arrive at forex (and stocks and everything else), their heads in the clouds and their feet firmly planted on a water bed, EXPECTING what they just read about how they can buy a robot, or take a few lessons, and start to make a fortune trading Forex. They are like the "starlets" of old, arriving at the Hollywood train station and rushing down to Schwabs at Hollywood and Vine, simply WAITING to be discovered and to start their own personal road to fame and riches !

These are the "fools" in life --- as in forex, and their real problem is that they came to Forex to "get rich quick", or have a life of ease and glory without having to "work", AND THIS IS WHY THEY FAIL, NOT BECAUSE THEIR PSYCHOLOGY WAS WRONG, BUT BECAUSE THE WHOLE CONCEPT WAS WRONG FROM THE BEGINNING !

Have your fun dissecting "their" problems, my veteren posters, but face the fact squarely that TRADING IS NOT FOR EVERYBODY, and for those it works for, LEARNING is what has to take place ~!


In this world its relatively easy to see who will "succeed" at what they choose to do --- they are ALWAYS learning, NEVER looking for the easy way (robots to trade for them, while they sit back and enjoy) always prepared for "whatever" --- They are the ones you look at and think "SMART kid !"

HONESTLY, WHAT GIVES A KID THE IDEA HE/SHE CAN JUST STEP ONTO THE PLAYING FIELD, SCORE NON-STOP TOUCHDOWNS, AND NEVER LEARN THE GAME OR PRACTICE !

That is NOT Psychology, THAT is STUPIDITY !

your dutch uncle

mp

 

[0007]

Records will identify any anomolies in ones trading as an early indication that things are going...not so good as they were, and can be an excellent way to recognise ones own trading perfomance and correct it BEFORE it becomes a problem, let alone too late.

Keeping records has got to be one of the very most important things in trading. Without records one cannot determine how the person is losing and more importantly at what rate.

I'm only as good as my last trade and when future trades start to slip below targets and points become less, so do earnings and this needs to be addressed immediately.

Although still successfully trading to date this of course could all fade away and be a thing of the past in the traders world as just another has been.

This weekend I am currently undergoing a heavy workload to look closely into some slippage on one of my target markets, this is due to a very obvious slip in points percentage against target. If I didn't keep a strict record on this then when would I know that I'm failing or even be able to identify when I'm starting to fail?? When I've lost a bit of money?? When I'm losing money on a regular basis?? Maybe when I'm close to blowing my account??? Who knows.. Maybe it will be when the bailiffs are knocking at my door?

Many people overlook the value of recording trades and ALL the workings out that accompanies it.

Record keeping has got to be at the forefront of any successful trader.

Exactly. Most traders wouldn't enter a trade without loads (sometimes too much?) analysis of data. Why should the debrief be any different?

 

[temptrader]

I see the 100% as the confidence level in the system rather than the performance of the system itself. I would say that almost everyone is 100% confident that a coin flip will yield a 50/50 chance of a head or tail. Do you see? The coin flip 'system' only has a 50% probability but on each flip there is almost 100% chance it will either be a head or tail. I doubt anyone would bet on it landing and staying upright on its rim.

If you could win 2x as much for a head over tails you would eventually become a millionaire from flipping the coin. I wouldn't lose confidence after 10 losses in a row because I know in the long run it will drift back to the average. Especially if the coin went through a rigorous test under supervision to ensure it was fair. You could say then that a fixed odds system provides 100% confidence even though the chance of winning isn’t 100%.

Confidence levels are just that: probabilistic (apart from a few strange cases). In statistical sampling there is no such thing as a 100% confidence level, unless you've measured the sample space, and if you've done that your result is practically useless anyway. You are just stating the probability of the whole sample space (the sum of all possible events), and hence not a confidence interval. Sampling statistics is quite messy to discuss so I will not do it here.

And your coin experiment is actually false (if you start with £x and are extremely unfortunate enough to get x tails in a row you are bust), but we are left with a rather absurd situation, you are talking about an asymmetric random walk on the integers. All you can say is that in the long run you have a strong change of hitting the target (£x million say) than you have of going bust, but the probability of going bust is NOT zero if you play the game long enough (but we don't have infinite time do we?), since it can be shown that if we do coin tosses indefinitely and if you are given a finite sequence (say x tails), then with probability one (certainty) that sequence will eventually appear (don't you just love playing with infinite sequences?)! Hence you don't eventually become a millionaire, but you do have a very HIGH chance of being one.

Does the coin that is being tossed have to be aerodynamically the same on each side for the 50:50 rule to be correct? I think the heads side of a coin is more aerodynamic

We are talking about a hypothetical coin - aerodynamical considerations are of no concern. Having said that I will note your point for practical considerations because casinos regularly change roulette wheels because they become "bias" and certain gamblers would frequent certain tables because of this effect.

 

[Mathemagician]

Confidence levels are just that: probabilistic (apart from a few strange cases). In statistical sampling there is no such thing as a 100% confidence level, unless you've measured the sample space, and if you've done that your result is practically useless anyway. You are just stating the probability of the whole sample space (the sum of all possible events), and hence not a confidence interval. Sampling statistics is quite messy to discuss so I will not do it here.

Probably a good idea as you've already illustrated the depth of your knowledge on this subject. :|

jj

 

[Paul71]

Just Like Any Other Job!



This is fantastic!





Within the world of plumbing....are plumbers doomed without the correct psychology.....or is plumbing psychology over-hyped?

 

[wasp]

This is fantastic!

Within the world of plumbing....are plumbers doomed without the correct psychology.....or is plumbing psychology over-hyped?

Have you ever tried it!? :whistling

 

[temptrader]

. . . . . . . . . . . . . . . . . The question is; can a discretionary trader be 100% successful with each trade? Of course not! But a discretionary trader is 100% confident that they are on the right and proper path. A discretionary trader is 100% confident they have a sound, bullet proof methodology...a REAL edge. A discretionary trader expects every trade to be a winner but knows that there is a chance of misjudging the market or a sudden unforeseen circumstance. But they are dynamic enough to reassess and alter their ‘old’ plan and go with the new. Imagine after a pep talk the coach of a football team says “Now go out there and win” and the captain says “Well we can’t expect to win. I’ve run a back test on the historical data for all the football matches ever played and no team has won more than 75% of their games. We have already won 75% of ours so we can expect to lose for the rest of this season”.

People take comfort in going with the masses, the inference being that the majority must be right. A major adjustment in thinking is required before anyone can start making real progress in their trading. The problem is that very few are willing or even capable of doing this. So does psychology matter in trading? Yes, it matters right from the start, well before placing the very 1st trade. I am now convinced that traders are born and not made

==================================================================

sorry for editing your post, but its only in the interests of brevity that i do that.

I see a lot of pontificating going on here ------ "do we control emotions", "are we born with the "right" stuff or made", "can you trade unless you take medications" and etc, BUT NO ONE HAS approached the truth of the matter which is simply that trading is like any other job ----- it has its own CULTURE, RULES and METHODS OF WORKING, and these can all be LEARNED, which I prove pretty much daily.

Now, if one becomes smart enough to realize they require schooling, how do they do it while in school studying to be a Doctor (or whatever) and even with study, there is ALWAYS those who graduate in the top 10 and those in the bottom 10, and a whole lot of mixed ABILITIES in the middle ~!

Of course, there are people who WILL NOT succeed at this because of a NUMBER of internal reasons as there are people who will not succeed at being accountants, doctors, lawyers and indian chiefs --- either because they simply DO NOT LIKE trading (or being an indian chief, for that matter !)or are more INTERESTED in something else (my last life I was a photographer of the most beautiful women in the world --- I did a lot of investing, but i would rather be with the women than stare at a computer all day)

BUT WHAT REALLY GRINDS MY COOKIES is youre looking too far UP the information chain for your answer ---- TONS of newbs arrive at forex (and stocks and everything else), their heads in the clouds and their feet firmly planted on a water bed, EXPECTING what they just read about how they can buy a robot, or take a few lessons, and start to make a fortune trading Forex. They are like the "starlets" of old, arriving at the Hollywood train station and rushing down to Schwabs at Hollywood and Vine, simply WAITING to be discovered and to start their own personal road to fame and riches !

These are the "fools" in life --- as in forex, and their real problem is that they came to Forex to "get rich quick", or have a life of ease and glory without having to "work", AND THIS IS WHY THEY FAIL, NOT BECAUSE THEIR PSYCHOLOGY WAS WRONG, BUT BECAUSE THE WHOLE CONCEPT WAS WRONG FROM THE BEGINNING !

Have your fun dissecting "their" problems, my veteren posters, but face the fact squarely that TRADING IS NOT FOR EVERYBODY, and for those it works for, LEARNING is what has to take place ~!


In this world its relatively easy to see who will "succeed" at what they choose to do --- they are ALWAYS learning, NEVER looking for the easy way (robots to trade for them, while they sit back and enjoy) always prepared for "whatever" --- They are the ones you look at and think "SMART kid !"

HONESTLY, WHAT GIVES A KID THE IDEA HE/SHE CAN JUST STEP ONTO THE PLAYING FIELD, SCORE NON-STOP TOUCHDOWNS, AND NEVER LEARN THE GAME OR PRACTICE !

That is NOT Psychology, THAT is STUPIDITY !

your dutch uncle

mp

Absolutely. The way I see it is that if anyone can do it, why doesn't everyone do it? but more to the point: when you are trading you are actually trading AGAINST other people/individuals/institutions etc . . . as this is a war (a war for profits), you must have something special about you (your edge) if you are going to survive - let alone make money. As one famous poster would say: civilians cannot be admitted. And most newbies coming into it act like civilians.

 

[Paul71]

Have you ever tried it!? :whistling

It would probably make me more money than most of the stuff bandied about on this site bud.