Best Thread Trading Psychology

Triggerfish said:
Hi bbmac: Quote:
"No one can be certain they are right"
Am not sure if I would agree with this statement.....it can be known in sense of direction.

Then if what you say is true, then you must agree with me also that a trader is only paid for being "right".....then there are successful traders around, for them, they have to be right to be successful.....now, the only thing is the most successful ones are the ones who are "consistently right" and not only that they know they are right, they must pile on it based on their thinking/conviction.....that is why they make SO much!.....would you agree?.....you only get paid for being right...no?
Click to expand...

Being right in trading is ephemeral and every successful knows that. Tim Morge in one of his video done with IB described how their syndicate (including Hostetter and the Hunt brothers) cornered the Silver market but many of the members became bankrupt. That incident taught him two major lessons ; (i) money management; and (ii) windows of opportunity is fleeting. Trade psychology can never be a detached component as long as you are dealing with risk and fleeting opportunities no matter how right you think you are.
 
I absolutely disagree - I trade an edge - it is a set of variables that repeat and when they do I go into the market - I have no idea whether the market will move in the way the edge suggests on that or any other occassion I play it - therefore I cannot be rewarded for being right beacuse at the point of market entry I have no idea wether I am or am not - I am rewarded for playing the edge consistent with it's money management rules...and consistent with what I believe an edge to be, which is not about knowing wether I will be right or wrong on any given trade.

Your argument hinges on the premise that you have to know what is going to happen next to be successful - but you don't...- you can simply play an edge. You can be wrong more times than you are right and still make money Ie a strike rate of 30% will still make money if for eg on the 30% of times the edge wins - it wins more than on the 70% of times it doesn't.

I don't have a clue what the next tick in price will be let alone wether on the next occassion I play my edge it will be a winning or losing trade ie I don't know in advance what the market will do - I simply don't know - all I know - using my edge - is what the greater probability is based on a large sample historical precedent - and this is the essential basis of Tech Analaysis - that by analysing what happened in the past we can gain an advantage in what might happen in the future and build an edge around it...ie some patterns as a reflection of market behaviour - repeat and repeat -expressed using tech analysis to define that pattern on a chart.

G/L

Triggerfish said:
Hi bbmac: Quote:
"No one can be certain they are right"
Am not sure if I would agree with this statement.....it can be known in sense of direction.

Then if what you say is true, then you must agree with me also that a trader is only paid for being "right".....then there are successful traders around, for them, they have to be right to be successful.....now, the only thing is the most successful ones are the ones who are "consistently right" and not only that they know they are right, they must pile on it based on their thinking/conviction.....that is why they make SO much!.....would you agree?.....you only get paid for being right...no?
Click to expand...
 
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the hare said:
What do you mean by right, you keep using this term without defining it.
Click to expand...
Hi the hare:
Right here means the ability for the trader to know in what direction the market is heading.

If one cannot see this before the trade, one will not place the trade.....this is all based on conviction and not guess work!
 
The ability to know what price is going to do next is a skill none of us possess with any degree of certainty..How can we ? - we don't have access to the trading plans of all market participants - and, quoting another of Mark Douglas's principles - every moment in the market is unique - comprised of different buyers and sellers and diffierent volumes than the last time. If anyone thinks they know what is going to happen next to price they are deluding themselves - they don't for the reasons I have stated above - their analysis may though be able to tell them what the greater or very greater probability is - wether or not that probability plays out...That is a trading edge.

You can only be right or wrong if you decide you know what is going to happen next to price ahead of it happening - and using a trading edge - you don't know, - you accept you don't know - and it is not necessary to know anyway.

G/L

Triggerfish said:
Hi the hare:
Right here means the ability for the trader to know in what direction the market is heading.

If one cannot see this before the trade, one will not place the trade.....this is all based on conviction and not guess work!
Click to expand...
 
Brumby said:
Being right in trading is ephemeral and every successful knows that. Tim Morge in one of his video done with IB described how their syndicate (including Hostetter and the Hunt brothers) cornered the Silver market but many of the members became bankrupt. That incident taught him two major lessons ; (i) money management; and (ii) windows of opportunity is fleeting. Trade psychology can never be a detached component as long as you are dealing with risk and fleeting opportunities no matter how right you think you are.
Click to expand...

Well, my comments to this would be they were wrong and they did not get out, basic stuff.....they kept holding on to their belief so it was inevitable.....equally strong too was their emotions at play because their ego self was in the way.

If they were right, they would have won.....but they did not know how to be "right".
 
Triggerfish said:
Well, my comments to this would be they were wrong and they did not get out, basic stuff.....they kept holding on to their belief so it was inevitable....
Click to expand...

You can't be more right in their case when they literally owned the market and cornered it. The whole scheme fell apart when the authorities intervened (a black swan event). If you are right why do you get out and which is the other point - windows of opportunity are never permanent no matter how right you are.

Your whole premise is being right without the substance to back that statement. Can you tell me a trade scenario where you can be more right than owning the market.

Triggerfish said:
equally strong too was their emotions at play because their ego self was in the way.

If they were right, they would have won.....but they did not know how to be "right".
Click to expand...

Precisely the present conversation about trade psychology and why they are inseparable in trading.
 
Hi Brumby:
What do you mean by "If you are right why do you get out?"

My comments were they were wrong and they did not get out.....because if they were right, they would have won.....agree?

Quote: "Precisely the present conversation about trade psychology and why they are inseparable in trading."
Well, am sure you would agree with me those who are successful can seperate emotions from trading.....because they can SEE clearly and act accordingly.....agree?.....this is why emotions are there if one cannot become free from it hence it is part of it.....but there are some who can break free from it.....agree also?

It is late so I will respond to your post tomorrow bbmac as they are interesting points.
 
Triggerfish said:
Hi the hare:
Right here means the ability for the trader to know in what direction the market is heading.

If one cannot see this before the trade, one will not place the trade.....this is all based on conviction and not guess work!
Click to expand...

All we do is assume price will move favourably. If it does we take advantage from it, if it doesn't we limit the disadvantage. It's not a matter of being right or wrong, it is a matter of managing outcomes.
 
Triggerfish said:
Hi Brumby:
What do you mean by "If you are right why do you get out?"

My comments were they were wrong and they did not get out.....because if they were right, they would have won.....agree?
Click to expand...

When you have a winner why do you fold your position? It is letting your profits run - the big bucks are made by staying the course. They had the market cornered. The authorities stepped in and changed the rules. Some of the syndicate members were affected because of money management.

Their first entry was in Sep 1977 at $17.65
By July 1979 (21 months later) the price was $22.00 and profits per contract was $21,750
By Jan 1980 (just before the authorities changed the rules) price was at $51.20 and profits per contract was $167,750.
If trading was only about being right and not about profitability, they could have exited but with less profits. The parabolic run was in the last 6 months. In your opinion and without hindsight, when should they have got out and fit your definition of being right?

You are equating being right as being profitable. In trading, being right is not synonymous as being profitable.

I am still waiting for you to spell out a trade scenario that fits into the sure thing category.
Triggerfish said:
Well, am sure you would agree with me those who are successful can seperate emotions from trading.....because they can SEE clearly and act accordingly.....agree?.....this is why emotions are there if one cannot become free from it hence it is part of it.....but there are some who can break free from it.....agree also?
Click to expand...

Is yours an academic opinion? What I do know is that every experienced and successful trader talks of trade psychology as predominant. The discussions are around management rather than detachment; dealing with uncertainties rather than having clarity.
 
Triggerfish said:
Hi the hare:
Right here means the ability for the trader to know in what direction the market is heading.

If one cannot see this before the trade, one will not place the trade.....this is all based on conviction and not guess work!
Click to expand...

You don't need to know the direction.
You can't know direction with 100% certainty, every moment is unique
You can get the direction wrong most of the time, and lose money on most of your trades and still make money

Very basic stuff, repeated here and elsewhere day in day out

The reason I ask about your terminology is that often the "right" thing to do is to take a loss. Trading isn't about 1 trade, its about the cumulative return from MANY trades.

You need conviction in your edge. If you don't know what your edge is, you don't have one.
 
Great advice in post above..

You need conviction in your edge. If you don't know what your edge is...., you don't have one

and I would add to that sentence '...and what it's performace metrics are...'

Unfortunately most don't even know what an edge and then some think it is still about being right or wrong and that that is or is not the basis of their edge and are simply unable to accept what an edge actually is- and is not.

Enough on edges already ! - it's like groundhog day again lol.

G/L
 
bbmac said:
Enough on edges already ! - it's like groundhog day again lol.
Click to expand...

emmm, not sure if you want me to continue posting bbmac?.....please let me know as I do appreciate this is your thread......if not, I could just leave it as it stands.
Thanks in advance......awaiting your instructions.
 
bbmac said:
But here's the thing...when in a trade it is common to experience discomfort and the body communicates that to our brains, resulting in the all too common response to ending that discomfort...by exiting the trade early. (Our bodys react to perceived dangers by preparing to 'Fight or Flee.' )

In trading a lower strike rate system/methodology there are naturally more losing trades and crucially more consecutive losing trades. Our brains remember past losses and irrationally place more emhasis on them than the winners, resulting in it fearing more losses to come. It's mechanism to protect us from this discomfort is to secrete adrenaline and noradrenaline (which comes from the adrenal glands above the kidneys.) The release of these hormones results in the body increasing the flow of fatty sugars through the liver which causes the feelings of discomfort resulting in a much decreased ability to make objective judegements. To put it another way;

'..Your Neo-Cortex (the thinking part of your brain) shuts down and the survival mechanism in the middle and lower more primitive parts of the brain take over. As a result you can react to things and stop thinking things through rationally. Basic emotions like fear and anger take over from more complicated sophisticated higher function emotions.'

So our ability to adhere to strict risk:reward ratios necessary to ensure overall net profitability with a lower strike rate system is severely impaired with the greater number of losses and consecutive losses with this type of trading system. The greater the consecutive run of losses the greater the impairment, and again, crucially, the less experience/understanding one has of this, the greater the discomfort one might experience resulting in non-adherence with the critical risk:reward ratio.

Further to this, such a consecutive run of losing trades can also interfere with the ability to actually place the next trade when the trading edge presents itself, fearfull of further losses, thus interfering with the natural flow of probability upon which all trading edges rely.

Physical discomfort and Fear are powerful debilitating factors on the ability to profit from a trading edge.

The only effective solution in helping to overcome these potential neurological and physiological barriers, available to inexperienced trader is to seek a trading edge that has a high strike rate over any sample of set-ups. This trading system/methodology achieves that.
Click to expand...

The above is the important message , high probability trading will reduce overtrading and mistakes .When the rational brain shuts down as per orignal poster , trader's make mistakes The difference between the winning traders and losers is the mistakes they make .So read about trader's mistakes and trading mistakes

Just search google for "trader's mistakes and trading mistakes".The articles in this forum cover some of them

http://www.trade2win.com/boards/edu...s-traders-make-how-avoid-them.html#post227298

http://www.trade2win.com/articles/1184-seven-deadly-trading-mistakes

https://www.google.co.uk/webhp?sour...takes+the+difference+between+winning+traders+


Take only 1 trade in the morning and 1 in the afternoon , the reason is our emotional brain is faster than the rational brain , the emotional brain influences trading decisions and hijacks rational trading .The limit of 1 trade , is a ploy against the emotional brain taking over .After a loss , block the emotional brain , by not trading any further for another 4 hours , by which time emotions will cease



Amygdala_hijack: emotional responses from people which are immediate and overwhelming, and out of measure with the actual stimulus because it has triggered a much more significant emotional threat

https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=amygdala+hijack
 
Patience is not simply the ability to wait - it's how we behave while we're waiting.we have to get a certain amount of pleasure and stimulation or rewards from our daily activities and what we put into our bodies. If we don't, then we create a pleasure deficit or what is known as "reward deficiency," and are subject to depression, anxiety and poor performance. Each day we have to stimulate our reward pathways adequately if we are to function well emotionally, mentally and physically.

There is a conflict between patience required to wait for the high probability entry , and our phsyche , we can not be sitting idle doing nothing.High probability trading requires sitting patiently

seach on google and youtube videos for Trading is a patience game


 
Traders are like monkeys , they suffer from the MONKEY BIAS, THEY DO MONKEY BUSINESS ON LIVE ACCOUNTS


Like this?

Humans are very clever and we get clever , when it is not in our interests .When given a highly profitable system , we second guess systems , because we are smart and smarter than the creator of the system.We are like monkeys and do monkey business on live accounts .It is called self sabotage.


We are curious and try new things , inventions and do the same in trading.
We get too clever for our own good in trading ,like these monkeys.


 
Ha ha

Monkeys were here first. Going news for you they're still here & they're in charge.
 
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