psychology vs methodology

Discussion in 'Trading' started by quin8670, Mar 4, 2007.

  1. Hey,

    Don't you need a good method to be able to make money? I hear a lot from people who really sound like they know what they are talking about that its all about psychology. So my question is do methods to make money come relatively easily, and is it the greed and fear that mess up peoples methods? Or is finding a method very hard and then having a solid mental/psychological aspect even harder to come by?
  2. I think its both.

    Thus, some traders has the discipline, emotions in check et cetera but lack a good trading plan.

    However, there are other traders that have a good trading plan but lack the discipline, lack control of emotions et cetera.

    The traders that don't have much of a chance are the ones that lack a good trading plan and lack discipline...

    I think these traders have a priority to get their discipline under control so that they will have a better chance in developing a new trading plan.

    Also, I'm sure your not looking for answer about if its relatively easy or which is easier because that will always be different from one trader to the next trader.

  3. All people start somewhere.

    I call the first level the Assessor level.

    On this level, people use prior knowledge, skills and experience to get the picture.

    You have psychology and methods as ingredients for assessing.

    Making money comes from using principles. There are three. This is just my opinion and it is a minority viewpoint.

    Three psychological aspects that are best to surround yourself with are: comfort, support and confidence.

    The CW which permeates the financial industry and trading deals with what you are talking and asking about. Too bad.

    Methods of trading are usually not invented and you are following the normal routine of searching to find a method. A lot of time is spent by people doing the creation of methods and then trading them. Most people screw this up according to account record keeping. Look at the P and L thread to see what is there from traders who are posting. This level seems to be conventional.

    The psychology part that is commonly mentioned is the fear most of all. Fear is there as an emotion that results from looking at where the position held (entry value) is with respect to whether money is being made or not. This is a very poor way to monitor for making money but it is the most common. Almost all CW conversation (for example: "suddenly, the market went against me") centers on this relationship instead of what the market is doing. The greed comes up as a descriptor for a certain subset of failure, commonly. It is closely related to what is called lack of discipline.

    Fear is something to avoid if at all possible.

    The other two parts of psychology that are most often yielded from scientific measurement of traders are anxiety and anger.

    This stuff comes from what is sometimes called "emotion to trade Oscillator" of three parts: fear, frustration and feeling really lousy.
    Behaviorwise the pairings are: fear=inaction; frustration=taking action of 1/2 formed setup; and feeling realylousy=quiting for day , overtrading, and having very unprofitable results.

    As you assess, try to stay on the positive side of things and build on success instead of learning repeated failure.


    There are several forks in the road as a person assesses then begins to learn.

    Many people here will come to your aid and help you and protect you from others.
  4. You start out with a methodology. You'll then discover what your psychology is after you trade the methodology with real money, not the other way around.