Best Thread Trading Psychology

bbmac

Well-known member
Jan 15, 2003
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785
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#21
10 more things I have learnt

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
 
Last edited:
Oct 14, 2009
11
0
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#22
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.
 

bbmac

Well-known member
Jan 15, 2003
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785
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#23
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.
 
#32
Influence of fear-greed and intellect on our trading
Question:

How to beat emotions while trading?


-------------------------------------------------------------------------------------

When do we have appearance of fear?

-On position opening

-If we have loosing position
(we automatically become optimist-body is protecting itself from fear)

-If we have wining position
(we are afraid for profit-closing the position to early)


When do we have appearance of greed?


-On position opening (how much we will EARN-take risk)

-If price goes against us
(we think optimistically and move our stop loss until it's to late)
------------------------------------------------------------------------------------

Trading is a GAME not a job!

Psychology approach to the game isn't the same as in the work.

Psychology approach:"I will open 1 to 5 positions today" is not GOOD!

Because it's the same as:"To earn some money, I will do this and that".

To win the game you must know yourself and have skills!

Probably you have heard the phrase "Your worst enemy is yourself".

At the beginning we must know the fact : While emotions rule, intellect is shut
off and the other way round.

We have two emotions that control you while you are trading the market: FEAR and
GREED.


Did you know that our entire life is controlled exactly with those two emotions.

Fact: In the moment when one of these two emotions show, human changes his decision in split of a second.


They say: There is a set of rules you must follow to overcome the emotions.


Easier said than done!!!


You need to practice knowing yourself!

I think that an example would be the best way of explaining:

Example 1:

A new day has started and I had my breakfast. On the way to my computer I make a

decision:"I will find an opportunity to set up a position"!

I am watching the screen, searching for the opportunity, analyzing, waiting
patiently and in the end I enter into the position.

I understand that I have made a mistake, but I am an optimist. I continue to wait
for positive results.

I stick to the rules strictly, Stop loss is fixed. Time is passing. In the end,
price hits stop loss.

Beside having a loss, I recognize that I had made totally wrong interpretation
of the graph at the start. Everything has been showing the other direction of
price movement.


Example 2:


A new day has started and I had my breakfast. On the way to my computer I made a
decision:"I will watch price movement for a while, I don't have any intention to
open a position today at all"!

I am feeling comfortable. I am watching the price movement, analyzing, waiting,
but there is nothing. I take a break and watch TV.

After some time I come back to the market and watch for a while. In a moment I
notice the algorithm (regularity that is repeating).

I define a certain spot of entrance, stop loss and take profit.
I say to myself:" Let me see if I am right, would price come to the spot of
entering into the position?" After some time price is exactly at the spot of
entry.

I am getting into the position.

(if price doesn't come to the spot of entry, I pass that opportunity).

-------------------------------------------------------------------------------------

What do you think, which of those two examples is correct?

Let's analyze example 1 regarding example 2.


Example 1

----------------------------------------
"I will find an opportunity to set up a position"!


Decision like this automatically activates emotions of fear and greed even if you
didn't approach the market.

When you look at the market, you will watch the market through the filter of
emotions(fear-greed but intellect disclosed)

--------------------------------------------------------------------------------------------------
I am watching the screen, searching for opportunity, analyzing, waiting patiently
and in the end I enter into the position.

Decision is based on emotions!

--------------------------------------------------------------------------
I understand that I have made a mistake, but I am an optimist. I continue to wait
for positive result.


You understand that you had a mistake but you don't know why. If you don't know
why, the best thing is to stick to the rules strictly (stop loss and take
profit). In case you know why you made a mistake, you would flat the position
right away.

---------------------------------------------------------------------------------------------------------
Beside having a loss, I recognize that I had made totally wrong interpretation
of the graph at the start. Everything has been showing the other direction of
price movement.

Now when everything is over and emotions are gone, intellect is active again, you
see the picture logically as it was on the beginning.

---------------------------------------------------------------------------------------------------------------------------

Example 2

--------------------------------------------
"I will watch price movement for a while, I don't have any intention to open a
position today at all"!


This kind of decision makes you absolutely comfortable - today you will just
watch the graph without any obligations.

There are no emotions and your intellect is active.

---------------------------------------------------------------------------------------------------------
I am feeling comfortable. I am watching the price movement, analyzing, waiting,
but there is nothing. I take a break and watch TV.
After some time I come back to the market and watch for a while.


Still there is comfortable feeling which proves that there are no emotions and
our intellect awareness is active.

---------------------------------------------------------------------------------------------------------------
In a moment I notice the algorithm (regularity that is repeating).
I define a certain spot of entrance, stop loss and take profit.
I say to myself:" Let me see if I am right, would price come to spot of entering
into the position?" After some time price is exactly at the spot of entry.

Knowledge based on intellect.

------------------------------------------------------------------------------------------------------------------
I am getting into the position.(if price doesn't come to the spot of entry I pass
that opportunity).


Decision made on intellect basis. After entering into the position there is a
good feeling!

-----------------------------------------------------------------------------------------------------------------------------


Who would say that the enemy is hiding at the beginning, right between breakfast
and my way to the computer!!!


( Text is taken from here:http://trade-forex-questions-answers.blogspot.com/2010/05/influence-of-fear-greed-and-intellect.html )
 
Oct 29, 2009
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#33
I know this my not be popular but I don't think that psychology accounts ofr 90% of your success in trading.
Being disciplined is not going to increase your account if you don't have an accurate money management technique or if your strategy hasn't been accurately backtested before trying it in real time.
A runner works hard on the psychological side and on motivation but without a constant and qualitative training there are no results.
Obviously, that's only my opinion
 

HowardCohodas

Well-known member
Sep 29, 2010
1,868
97
58
#34
I know this my not be popular but I don't think that psychology accounts ofr 90% of your success in trading.
Being disciplined is not going to increase your account if you don't have an accurate money management technique or if your strategy hasn't been accurately backtested before trying it in real time.
A runner works hard on the psychological side and on motivation but without a constant and qualitative training there are no results.
Obviously, that's only my opinion
Spot on!
 
Oct 14, 2009
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#35
I totally agree - just yesterday stock indices refused to move of positive news - after going long twice I moved the hand away from the mouse and took a step back. It meant ending the day down but it would have been a disaster if I continued to trade and lost discipline.
 
Nov 30, 2010
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#36
As for me discipline is a very important part in anything including trading, so in some cases it's really helpful!
 

bbmac

Well-known member
Jan 15, 2003
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785
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#37
Possibly the greatest and most underestimated advantage we have as traders, over those of our broker (s) is that we don't have to take the price. We don't have to be in the market when the broker quotes a price. We can remain flat - flat is a position too. Lol.

G/L
 

BlackBison

Active member
Jul 30, 2007
162
12
28
thenextleveltrader.blogspot.com
#38
Possibly the greatest and most underestimated advantage we have as traders, over those of our broker (s) is that we don't have to take the price. We don't have to be in the market when the broker quotes a price. We can remain flat - flat is a position too. Lol.

G/L
(y)

This is a HUGE weapon and one of the few we have over many instituitional traders.

One of the most important things I teach
 

bbmac

Well-known member
Jan 15, 2003
3,584
785
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#39
If as Victor Niederhoffer (Eductation Of A Speculator etc..) says '..The only job of a trader is to but lo and sell hi...' (*) then I would extend the maxim by saying that the only decision to make when your trading edge sets-up is What risk you are going to take to see if it works out.


(*) Some might argue that to buy high-sell higher -and- sell low- buy lower is okay too.

G/L
 

bbmac

Well-known member
Jan 15, 2003
3,584
785
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#40
'...Never wait, nor hesitate, - get in quick before it's too late - You may never get another chance.
Youth's a mask but it don't last-live it long and live it fast.....'


Rod Stewart - The Killing of George (Part I)