I think your post has a lot of merit. And in all candor I will say that I had engaged in this back-and-forth for longer than I care to admit. However, if only to play the devil's advocate, let us not forget that, unless he is an automaton, the method must suit the trader. No matter how well made the shoes may be, they must fit the wearer. I also read several years ago that the way people tend to trade is a reflection on the way they live. For example, they may trade in a manner similar to the way they might buy a shirt (attention to detail, value, trends and so on). I don't know if the observation is entirely valid, but it is a notion worth cosidering, since people tend to stay in character for the most part. My point being that while there may be a lot of back-and-forth in the tweaking department, I surmise that some of it is not without merit. The method and the discipline to trade it must converge at some point. I think it concludes with a fair amount of give and take among a number of moving parts. And thus end my random observations on the haberdashery of trading.
Very well put. In a perfect world the Trader and his/her method merge into one indistinguishable seamless unit. It is not a perfect world for most people and so trainee Traders maintain a separation between themselves and their method, because they do not understand/ make the burning commitment to succeed. At least, this is what I garner from reading posts here. What has been written here is that when things are going well, then the Trader feels good about his/herself. This is completely backwards and I imagine it is the setup for failure further down the track. If you can place your mind in neutral then clarity will increase a thousand fold and your practice and training will kick in. It is a fundamental state of achievement.
I believe that survivorship bias is one of the most sabotaging mindsets for traders. A diligent student of the markets is analyzing hard data every day, both his/her trades and all the valid setups that "could've been" and then extracting statical probabilities from the hard data, and defining specific rules that produce the strongest overall results through varying market conditions. However, most students are learning randomly, using indicators without putting in the hard work, trading off emotion, and so on. These traders then remember certain outcomes that fulfill existing belief systems and unconsciously (or sometimes consciously) discard outcomes that do not fulfill existing belief systems. Here's a common existing belief: If the market shows you some profit, take it; no one ever went broke taking profits. The trader develops a bad habit of moving stops too quickly to lock in profits, fearful of taking a loss after there was profit showing. "What kind of idiot would I be to let a profit turn into a loss?" the trader thinks. In the process of doing this, some trades will continue favorable without retracing and the trader files this away in the "See, a real trade that's going to go your way goes your way and stays going your way, so there's no reason not to move the stop quickly to lock in some profit" mental file drawer. Some trades will stop out break even or for a very small profit and then run all the way to where the full stop loss would be hit, and the trader files this away in the "See, good thing I moved my stop right away and avoided that loss" mental file drawer. Many trades will stop out break even or for a small profit, and then before ever hitting the stop loss price, will turn and run in the favorable direction to full target or well beyond, and the trader feels quite frustrated. The feeling of frustration is a negative feeling. The feelings associated with the previous two scenarios are positive feelings. The trader in these final scenarios discards these trades; they don't create a positive feeling. Here we have survivorship bias in action. So the trader will continue to cut profits except on those rare trades that run fully in his/her favor from the start, and on trades that plain don't work, will be taking full losses. Traders definitely go broke taking profits if the profits are tiny, and the losses are full. Many traders in this phase of learning will move stops to break even or small profits instinctively, yet never consider immediately stopping out of a trade early that doesn't go in their favor right away. Heck no, they have to give the trade room! Yet when it comes to the very reason for trading - taking strong profits on a consistent basis - they strangle their opportunities over and over again because they remember what felt good (the trades that ran nicely out of the gate and preventing winners from becoming losers), but discard what felt bad (exiting a really good trade for little or nothing). It wasn't until I began analyzing hard data every day, all the valid setups that could've been, and then extracted statical probabilities from the hard data, and defined specific rules that produce the strongest overall results through varying market conditions, that I saw the light. Every day you meet a few losers on the road to consistent profitability. For every 2 or 3 small losers I take by letting a green trade reverse to red and stop me out, I have 5 or 6 big winners by letting green trades reverse to red and then move back in my favor to target or beyond. This ability came from hard cold facts, not from subjective experience and selective memory, where we tend to filter out that which does not fit our belief systems.
For me it comes down to the simple reality that money and worries are hard to separate from one another. I was always told that traders who worry about how much they can lose in the markets are the ones profiting while those who worry about how much they can make are the ones taking losses. Trading's a game and we're all just looking for the high score.
ND said it the best!! That has to be the best post on trading psychology I've ever seen! It makes so much sense.
If someone had the belief that Rande Howell could solve their trading problems, could this sabotage a trader?
Some nice threads here from Mark, NoDoji & Randi - to those posting negativity please keep away and don't spoil the best thread on ET.
Shagi, Donât drink the koolaid â a shill by any other name is still a shill Amazing is good at describing the problem (he should be heâs a psychologist)â¦. But falls way short on offering solutions (check his other thread) â unless youâre willing to pay him⦠Try asking for a solution â youâll be labeled âbanterâ We bitch when someone shows up to sell a system, or a service⦠Amazing is peddling his wares in the very same manor â so why cut him any more slack â than any other vendor Yes trader psychology is important (95 â 97% psychology⦠3 â 5% physical)â¦.. Iâve said it over and over Identifying our mental challenges â is easyâ¦. Coming up with solutions â should be left to the one who knows us bestâ¦, or at least â one who has walked in our shoes RN
In trading, psychologizing is pussification. Are you a man, or are you a pussy? If you are not happy with your trading, do you go whining for help to someone who doesn't even trade, or do you suck it up like a man and find the solution in your own manliness? The Amazing Rande will not step up and debate me on manliness and trading. I think I know why.
Used to be a commercial running on TV You are what you eat Good nutrition is always important in maintaining proper health Ummm for trading⦠Who am I to argue with good nutrition RN