Psychology is important in trading, but I am not sure it is the psychology found in academic courses. I have taken quite a few psychology courses, but the kind of pychology useful in trading is the kind where you can read human nature. The human nature of yourself as well as the human nature of the market which tends to have a collective mind of its own. Western civilization has studied pyschology indirectly over the ages through literature. There is certainly a lot of psychology to be learned from reading the likes of Twain, Shakespeare, Dostoevsky, and the Old Testament. Much can be learned from some of the master pychologists of our popular culture who are coaches such as Pat Riley and Bill Parcells. In years past, it was always reputed that there was no better reader of people than the professional bartender. I think a lot of traders apply the psychology learned from varied life experiences as well. If there is such a thing as a trading light bulb, don't expect it to be turned on by taking a psychology course.
Study 'animal behaviour' as a subject. You will learn much more about people than if you study psychology.
True that! I bet you can learn more from 1 season of "When Aninals Attack" than you can from an undergrad Psychology course. But in all seriousness (ahem), there is alot of edge in being able to assess psycholgy. And it is a dual-edged sword, for you must accurately assess the mob psychology, while at the same time always gauging your own self-psycholgy. Digg It. Watch more Animal Planet
Ripley, That is a great answer, and the best one I've read. It's one of those that makes a person slap their forehead at it's simplicity, and truth. "Learn to trade by trading." I still make mistakes, and I am trying to learn from them. My biggest mistake is "blinking"...., if I would have held my ground, I would have been OK. What I am living by now is, "OK, I fell down, now get back up." Once I was so mad at myself and disgusted after a bad trade, I wanted to stop altogether. Then I got even more mad at myself. I thought, stop feeling sorry for yourself, get off your ass, and get back in there! My trades have been better ever since. Arnie
nathan, i have a degree in psych, and while i think that it has helped me a lot with my trading journey (mainly for purposes of self-reflection and complete awareness and "control" of my conscious thoughts), i wouldn't necessarily consider it to be an edge in and of itself. it definitely has the potential to shed some light on some otherwise unnoticed principles, but don't expect to get too much from one course. and, as others pointed out, it actually has a propensity to impede others because then they tend to over-analyze everything (this was how i was for a long time, and still struggle with it). so, there are goods and bads, but it is by no means a cure-all. have you read mark douglas? if not, i would highly recommend him as he is the most in-depth author of trading psychology that i have come across. if you have, then my suggestion would be to read it again and again until you fully understand all the concepts. don't just read it once and throw it back on the shelf; read it....STUDY it till you reach the point that you can completely understand what is being said at a FUNCTIONAL level, the point where you can begin to apply it to your day-to-day trading. it's not an easy nor a quick read, but it will get you much further than taking any single psych course ever will... best of luck jon
I'm a young psychologist and also a trader. I got my degree 2 years ago and am now practising with a known and respected professional in my area. I've being moderately successful in the last 3 years or so, averaging 30% per year trading equities in my own account, still learning. As it's been already stated lately in other threads, to be successful in trading you have FIRST and foremost to have a positive expectancy, tested system, be it discretionary or mechanical. All the rest is secondary. No psychology, no money mgmt, no superstition or any other erroneous belief will make you a successful trader if you don't have a successful system. If a trader has psychological issues he may ask for psychological help just as everyone else, of course, but this alone won't make him a successul trader. All that fuss about coaching that you hear lately is mostly directed to people who are ALREADY successful in their own business and would like to be even more so. If you really can't do without reading something psychological, just read M. Douglas (I liked The Disciplined Trader better than Trading in the Zone), then put it in a drawer, forget about it and, if you haven't got a winning system yet, work on that first. Consider the mental aspects of trading as a refinement, not the reason why you're not successful yet. uptik2000 is right: most people have an uncorrect idea of what is currently taught in psych classes because the clinical psychoanalitical psychology has been the prevalent paradigm for a long time. Also right that stat class is very useful for trading. mokwit is also right: I use to say that out of all the classes I took (26 different exams) the one the taught me the MOST about humans was ethology. GS
Ahhhhh! What goes on inside the head of a trader? The answers are a varied as the traders themselves. Lets take me for example. Why is it that I can swing trade and hold that trade for 3-4 weeks with no problems, then day trade and get ants in my pants after 3 minutes? Why? Why? Why? Couldn't learn it in a book. Maybe it was there in some book, but I didn't see it. The reason was/is that I couldn't find a time frame day trading that I was comfortable with, along with a set of indicators that made sense to me. 1 minute chart,....too much noise. 15 minute chart...the whole F'N move is gone buy the time the bar closes and I buy the high again. WTF? Do I use MA's, CCI, RSI, STOCH's and on and on. What parameters should I set those at? These are the things that are at the root of my psyho troubles and I ain't gonna find the answers in a psych book. How do I find them? Trial and F'N error, and that's expensive. Then I need to read the stuff that good for my head. What's that mean? It means it does me no good to read the P/L thread of some guy/gal making a grand a day, every f'n day, while I make shit 50-100 dollar days, at best. It does me no good to set goals I know I will never attain. I'm never going to have a 500K account to trade with, so I'm never going to make a grand a day, period. Frankly, I ain't that impressed with big dog accounts making a grand a day. Show me the guy that makes a couple hundred a day on a 10K account. Where the FCK is that guy? I wanna pick his head, cause that's the person I can relate to financially. Now I'm just rambling so I'll leave it with this. If I ever want to find a comfort level trading I need to trade my own game, not someone elses. We can pick some shit up from each other, but in the end it's just me and this damn computer.