hi all, I have some issues that I believe related to mental/psychology, but I am not sure. Any comments are welcome. I found that I trade well when I really don't care about *why* the price moves. Just buy low and sell high. That generally will accumulate quite some money in 2-3 months. Then I want my activity in trading be more *meaningful*, which makes me to understand or at least try to seek the reason behind these moves. And I generally will get convinced and started trading on my beliefs. And I will blow away these gains in 1 or 2 bad ideas. Then I will get back to a mechanical solution, which doesn't care about the market moves. ....... the cycle begins again. is this so called "trade what you see"? but, how to make my trading activity more meaningful? I mean, all the hours spent, I seem to not be able to give up the curiosity to seek the answers behind these moves.
trade what you see, there are facts on the charts, the trick is to trade the facts and build a hypothesis or several,and wait for them to manifest for a trade,the error is to be anxious to trade and turn away from the facts and trade on beliefs,they are 50/50 at best, there is a process of conditioning the mind to block these out as over time they usually result in pain
Two things come to mind. One is the tendency of the human mind to seek order for control over a world that is not controllable by it's nature. The other is that sometimes what money or success or something else people get from trading runs into other self-programs that see failure as a bigger success yet. How you or your parents look at money could play a part. Perhaps if you think on what money means in your family or so you, it may come to you. (Power, success, safety, confinement, good, evil, etc.) Good luck.
You want to make money or you want to understand why the market moved this way or that way? Don't think, follow the trading rules of a fully backtested system, that's all there is to it.
I would expect a trading should be more meaningful than just trade what we see. there might be some more to offer? like better understanding of huamn being and be a better person by doing more trading??? also I don't think I can put a really big position without much deeper understanding of the price movement mechanism. I can trade like a rabbit, jump from here to there and with proper money management , profit does grow. But how to reach 20Million in 10 years to just trade liek this? there gonna be a break through, and will it come from phsycohology change???
Your first paragraph IMO describes guilt pretty well. Beware of self-sabotage until it is resolved. The breakthrough will come from courage and conviction once you have mastered your own emotions and thinking and in doing so, have become a better person. Ironically, at the far reaches, money becomes less important as a driver. Just my 2 cents worth.
Making profits regularly using a purely mechanical response to price movement the way you mentioned, is essentially a betting strategy (or âmoney" or "trade managementâ as some pundits prefer calling it!) and you are merely affecting the distribution of the trading outcomes. So your accumulation of profits in those times is the result of chance and is transitory. I would agree with your implied assumption that extraordinary returns (or even simply a real positive expectancy) cannot be achieved without a deeper understanding. But if you find you lose when trying to go that way then your deeper understanding is obviously flawed. It has nothing to do with psychology. What is the understanding you need? My take is that in the short term price movement is mostly technical while macroeconomic factors dominate at larger scale. For individual stocks of course there's also individual insider news to which you are not privy. The other answers you got or will get, are superficial nonsense. To my knowledge I have far superior understanding of the game than anyone else on here. Your post implies flaws in understanding. You are not "trading well" just because you are making a bit of money. You are confusing the concepts of having a belief about future price, the "why", "trading what you see"... To sum it up: you are operating under negative expectancy and your are going to fail. So, either employ a deeper understanding that works or hope to be able to retire before the odds catch up. -ras72. Feeling helpful today.
The true "why" is mostly unknown anyway even to those who think they trade fundamentals. Market reflects perception of participants, not objective reality.
I have to disagree, I believe that at least 50% of the time the markets are controlled dealing with Commodities futures. When one considers the number of Open Interest compared to number of shares traded with IBM or other heavy traded stocks. Especially in the Meats, it doesn't take much for a few ranchers to force the market to go in one direction for a few hours and THEY are the fundamentals as they can halt sending their livestock to slaughter. Much of the farms are now corporate controlled, the family farms are dropping like flies. The Indexes can be sent for a shorter amount of time by the bigger brokerages in one direction especially by looking at one hour charts, price will continue to trendlines and stop and reverse. What is normal is markets go up, volume reduces, the Pro's are feeding to the inexperienced and when dropping after an extended move, volume increases cause the Pro's are accumulating as the inexperienced generally are taking losses. I can watch this and over 50% of the time I am correct in my observations. The Futures markets were made for the small farmer in mind as a way to hedge, any time governments come into anything dealing with money, can only expect the rich to get richer and poor to get poorer. I believe with enough study of the "whys" something happens, the better trader you will become. Market trading by the smaller trader is too often based on emotions, I believe the bigger traders/brokerages are aware at what areas these emotions go extreme and are waiting for the inexperienced to bail and experienced will take the other side. I chat with my staff often on why markets move and what to expect. I often tell people I am waiting for the catching a big boulder(protective stops getting hit or targets) and I know it is going to stop most of the time. But I certainly couldn't say this when I first started in 1978. Trading is all about reoccurring patterns and much of was based on emotions, but we can test to see if these occurrences will show the stats we require to have a high positive expectation of adding to our trading methods. The more one has an open mind and being less rigid regarding to trading, better chances of letting opportunities becoming a reality. Being rigid is like the Hunt Brothers cornering the Silver market in the 80s and losing millions.
Knowing when a "high" price is too high is absolutely crucial, meaning that predicting regime switches is more important than predicting prices.