I say... "Trading psychology is misleading. It's only viable to the discretionary traders who, actually, has the skills to utilize it. Most of the guys in ET should be concentrating on acquiring the knowledge and skills to make money." Now... people bring stories about Tiger and MJ but they've trained hard to acquire and maintain their underlying skill. I don't deny the aspect of psychology to "peak" their "acquired" skill during the game... But most of the guys don't have the skill required to maintain a living as a trader. So... before you start all the bashing... 1. At what point can you acclaim that you have the necessary skills to consider psychology as an option? 2. I can imagine people saying, "When you have an edge." as an extension to Q1..... Markets always change regardless of systematic or discretionary trading. So how is perceptiveness and psychology related? Isn't perception more important... more-so isn't all this conclusion about psychology, actually about perception (alertness towards perception is one thing... psychology "control" is another...)? 3. Trade management may... be... the key. But in reality "Risk management" is a protective delay for you to realize that your so-called "edge" sucks. You need to be "in-sync" with the market to make money. So let's keep that out of the picture... Though... RISK is very important in this business... more than anything... so... What is risk? How is that applicable to psychology? Are you as a trader, a risk of it own? There are great discretionary traders and I personally do fairly well trading discretionary... so this won't be the case (for me... at least).... 4. Do you run a red light? Unless you're drunk / high and perceptively impaired, most people don't. So what's the difference between a red light and an undisciplined trader? Don't get me wrong, again, I don't mean to push systematic trading as some grail. I see patterns and trade them from a discretionary point of view (My trading models/systems are dealt with separated from my discretionary trade execution. I don't do signal pickings or grey box unless it's intended as a grey box model.) --------------------------------------------- Anyways... I have all these anti-"Psychology" thesis and I'm waiting to prove that "psychology believers" are BS. Please answer my question for the discussion sake. And don't take snippets of quotes and questions. Answer them all for the whole content... Thank you in advance.
I think that the discussion of trading psychology necessarily assumes that you already have a viable trading plan that would make money over time if implemented as intended. It is the "if" part that can get in the way, and that is when the matter of psychology arises. Consider the article in the following thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=159473
Thank you for your reply TD. Great link of a link to the article.(I do not agree fully to the article but everyone is entitled for their opinion...) Theoretician vs Practitioner... How about Engineers? And they do apply their studies and science outside of the box... I'm not going to bother bringing examples up because there's plenty of them...
1. At what point can you acclaim that you have the necessary skills to consider psychology as an option? ------------------------------- Imo, this is the "which came first, the chicken or the egg" theory. The psy first when you begin (I can do this) , then a small dose of knowledge than a retest of the psych aspect. Steps. Fast forward, to the necessary skills. Suppose you have acquired the necessary skills. Perhaps there was some all knowing jury of your peers who confirm you have all the necessary knowledge. This bring us to "If you know so much how come you ain't rich?" You could be at this point any place in time ( even without a jury of your peers to confirm in the former example) but it is the psych that is at work.
I've mentioned that I don't want people taking snippets of quotes and question but you're the first person to do it. And you are diverting the question as a whole. Questioning the whole intention of the thread is fine... Does that mean you deny skills as a whole? Does that mean "motivation / driving intention" is the sole aspect of what makes a wealthy trader? I personally think that everyone (regardless of becoming a trader) wants to be successful for any reason. No one starts off trading "intending" to be broke. Doesn't this sound like a religious preacher telling that a person lack faith for a miracle? Sounds like the movie "Leap of Faith"
I think the piece answers your 4 points reasonably well. Further, since the article connected fairly well with me and my own experience with trading over the years, I'd be interested to know where your disagreement lies.
Currently... I consider myself as an engineer. I try to learn as much as I can with what the theoreticians talk about and personally "test" them as practitioner. "PART OF ME" is a big user of people who theorize stuff. I challenge white papers by actually testing them and running them live, after all the confirmation I've done. Disagreement??? Well... "the complaint" I have is how much the dude writing the article has done. With so little time and experience it's a bit naive to conclude a point what trading is. Did he consider all the options for becoming a better trader? I can relate to an extent to the article's writer but... it's very close to all the BS you read about how "Discretionary trading sucks" or "Systematic trading sucks". I see that article in the same thoughtfulness... Well written but very naive...
What I find interesting is that majority of people freely use word "psychology" without really understanding what psychology actually is! Over the years it always amazed me how little people know about this science yet everybody considers them selves an expert in psychology. I have yet read a post on this forum that professionally discusses any particular issue from the proper psychological analysis point of view. I don't even talk about "Mathematical Psychology" that uses formal game theory models to explain certain aspect of human behavior.
I think that the general disagreement here, MAESTRO included, may be attributed to the fact that we are each referring to different things when we use the same term.
MAESTRO... With all due respect... I don't want another type of "Prisoners Dilemma" type stuff... and what the hell is "Mathematical Psychology"? Good GOD... you're making me Google stuff!!!