So far retail trading has introduced me to a variety of concepts from statistical, technological and economic fields. However, as an aspiring trader who is yet to even invest in a trading platform it seems that the preliminary obstacle to success is psychological, this is especially prevalent in the fact that it "said that some 90+% of all people who attempt to trade financial markets never succeed", and one thing that the 90+% certainly have in common is the human psyche. Rather than regurgitate the various mantras from successful traders that I have come across I believe it would be more beneficial to actually discuss why so many independent traders fail to be profitable and the role of their mental approach in that failure. Any comments, suggestions or questions are encouraged in the replies to this thread
Perhaps not an emotion, but I'd vote for ignorance/ego and maybe arrogance / audacity ("I'm special"-mode). Getting into trading, most plunge without knowing what they're diving into. This is the most dangerous periodwhen starting, because it may scar you pscyhologically to have catastrophic losses, or it may create false ideas of confirmation if you start by having a run of lucky winners. The naive approach is seeing a chart, spotting ideal positions where one would want to enter and try that live. Takes a long time to even realize it's about probabilities, not price repeating in exact patterns and betting the farm every time. Otherwise, trading on emotions alone will probably bring ruin sooner or later, wether they be light or dark emotions.
I'm curious why you started this thread in the "trade journal" thread section instead of in the "psychology" thread section...you plan on posting trades ? There's hundreds of discussions at this forum about why so many fail and just as equal discussions about the impact of "trader psychology" in the failure. I've learn that every trader is different and that there's so many reasons for the failure that it can not all be pinned to the psychology of the trader all by itself when in reality its just a combination of many things. Yet, the psychology seems to be the most misunderstood or underrated. For example, there's emotions involving trading itself and then there's personal issues "outside" of trading that greatly impacts the trading that seem to be the most difficult to manage or resolve. Also, I believe most traders would rather tweak their trade methods than tweak themselves especially if they "suspect" the answer is when they look in the mirror. There seems to be this belief that if I keep tweaking the method until its perfect or has a positive expectancy or profitable on simulator... The psychological issues will manage or resolve itself when traversing into real money trading. Ironically, some of the most disbelievers in the psychological aspects of trading or the most quantitative traders will say to traders "lets see how you perform with real money" after they see a trader post profitable backtest results or profitable simulator results. Its as if the disbelievers of psychology or the most quantitative traders are projecting their own hidden thoughts about the importance of psychology. My point is that the psychology of trading...there's a battle within us and it can be very confusing if/when we think about it even if some don't believe in it (hiding it).
A lot of people have hard time understanding that they are their own worst enemy. You control everything ,period. Don't blame on the markets because it goes against you (hope you have a strategy to cut your losses). It's important to understand that you can't beat the market because the market moves by billions of dollars everyday. So, develop a strategy to game the market ,not to beat it.
Why do Casino owners take every trade (bet placed on the table)? Because they have full confidence in their strategy. They know it's just a game of numbers and they have the edge whether they win or lose today or even this week/month. Ever heard of seminars/books/blogs to help casino owners with the psychology? No. Granted, a Casino strategy can be mathematically proven whereas a market strategy/edge can't (at least going forward). The point is that unless you have full confidence in your strategy/edge the psychological work is a waste of time because if you have the best psychological makeup with a money losing method that won't help one bit. The paradox is that if you have full confidence in your strategy/method then you won't need any psychology help like the Casino owner doesn't need any. The work therefore ALWAYS has to be done on your strategy/edge and one of the best ways forward is to always make sure you put yourself in trades that have the chance of making many times more than your average loss. And the easiest way to do that is trade short term, 1m charts and the like. If you haven't worked out yet there's a reason so many in the game say things like - don't trade less than a 5m chart because the noise/random movements will get you. The reason is because they either don't know what they're talking about or they don't want you there...
But trading is more complex than a fixed game like the casino. Discretionary trading requires strong psychology for every decision. Systematic trading require supervision because markets are changing and systems tend to deteriorate. Is not that simple.
I believe it is as simple as that (for discretionary traders). But to get to simple in this game is normally always very hard. Good traders don't worry about their losses because they know their strategy will make money overtime. Good/great sports teams don't worry about being down at half time because they know they have the ability and skill to win the game come the final whistle. Casino's don't worry about a big winner because they know they'll get 99% of the gamblers' cash, craps especially. In fact the big winners are normally the best kind of clients because 99% of them are mad gamblers and they're never able to keep their winnings as the odds always get them. It all boils down to your skills and strategy, get that right and there's no need for any psychological training/work. Having said that, pressure to perform can take even good traders with very solid strategies down. But that will usually be to do with where they work. The clue therefore is to change workplace. Pressure or hassle from other areas like kids/wives/mistresses and so on can also be very detrimental so you also have to work at eliminating those kinds of problems.
Am I my own worst enemy? One should never be remiss in asking WHY Then of course resolving the why =================== Believe it or not..., these are all born/ emanate from the same Cure one..., cure em all - and some others RN
Hope definitely affects beginners who hold losing trades. Fear is the big one as the subconscious mind is always on the lookout for danger and will constantly try and stop you trading a long term profitable system that is not working in the short term. Greed is big when you make it for the first time (or the first few times) you are likely to lose it all back. You get greedy and bet big during a nasty losing streak. You think you are invincible and forget how unforgiving the markets can be. Regret, you constantly regret giving up your well paying career to become a struggling day trader.