I used to ride a bike in NYC, it's a coin toss no matter how good and defensive a rider you are. Most motorcyclists underestimate the risks and many of them tend to do poorly in the long run. Fatality rates in the US fluctuate around 20 thousand deaths per million miles of travel. To quote my friend who stopped riding after a few close calls, "there are cheaper ways to commit suicide". Like everything in life, it's complicated. Best way to think about is from the point of view of a poker player. A good poker player will have a system that determines the odds, but will have to make some discretionary decisions. These decisions are heavily influenced by his psychological state. Trading is very similar. Let's take a systematic strategy with Sharpe of 2, which is pretty good all things considered. On a day to day basis for most such strategies, it's PnL is indistinguishable from noise. So unless it's an arbitrage of some sort, a trader can never be sure if this just a normal fluctuation or the alpha has died. Making right decisions under these conditions is critical for the long term success (do you scale down? do you shut down completely? do you actually scale up if the strategy is mean-reverting? what should you scaling be to never hit your drawdown triggers? etc). All this is especially true if you're running OPM or employed somewhere, as there is non-zero chance that your investor or employers will not have the patience. So I do all that samurai shit ( https://www.youtube.com/watch?v=3thvXvT_HPQ ) to keep myself upright. Plus, I smoke lots and lots of weed. But yes, for most traders psychology is not an issue. Alpha first, psychology second.
One of the most important factors is managing fear and greed—two emotions that can really mess with decision-making. Personally, learning to stay disciplined and sticking to a plan has helped me avoid impulsive decisions. Also, accepting that losses are part of the game and focusing on the long-term picture has been crucial. Looking forward to hearing more insights and stories from others!
In the context of day trading, the best way not to lose money is to keep your greed in check. When you get greedy is when you have problems. Take your reasonable profit and get out of the trade. That is how you don't lose money.
I agree with you on most of what you are saying here, but my point is different and probably I failed to deliver it. When we´re talking about that poker player as well as your bike experience, table selection/setting is the key differentiator. Riding a bike in a suburban environment vs. riding in NYC. Playing a couple of drunk ragers online in a 5ct/10ct game on Friday night vs. playing a 500$/1000$ cash game at the Bellagio. One is a 0-80% learning curve and the other is a 98-98.9% learning curve where the difference between the winner and the second place is making the wrong decision in a marginal spot. That´s where it matters to keep your shit together. Most people with accounts below 20k have not a single reason to trade anything below a sharpe of 4. That might sound ridiculous, but think about how many strategies there are that have really low capacity but high expected values. And these are really easy to trade, too. Simple black and white decisions without any room for interpretations just like "only play facecards and never bluff" against maniacs. You can botch 10 trades in a row and still double your account within a year just because margins are massive and you have no competition. Yet they scoff at free money (bucket shops, prediction markets, low cap crypto, nano cap equities) and trade ES or other competitive markets and deal with psychology issues to go from 10% on the learning curve to 10.8% Of course the mental side becomes more of an issue when everything else is already dealt with and you are in a highly competitive setting (major markets, huge capacity needs and other peoples money) but don´t tell me you need ninja shit when you farm airdrops and hedge your bet on Polymarket to make a couple of thousand $^^
Yup, I got a totally different message from your original post. Everything you said is on-point. Mental game can be the main marginal contributor to traders performance once every low (and medium) hanging fruit is already picked. It's an optimization to an already-positive expectation strategy, not a source of alpha itself.
Discipline, emotional control, patience, and resilience are key. Overcoming fear and greed is crucial. Staying calm and learning from mistakes have helped me a lot.
Learn from your mistakes is pretty common advise. Can you give us an example of a mistake, what you learned from it and how you changed your behavior so that you didn't repeat that mistake?
here's a bad idea from me. $6.5 invested daily into total stock market index. eventually it reaches $1M. surely someone has done the math.