Some people say that the profitable trading is 90% mindset. If method was unimportant, then trading robots would, on average, outperform human traders. In any case, it's impossible to quantify the relationship that exists between Elder's three Ms: method (the strategic rationale behind entries and exits), money management (position sizing), and mindset (the emotional qualities needed to consistently execute the method). If one is to trade profitably, then all three are essential prerequisites: method = 100%, MM = 100%, mindset = 100%. Any weakness in mindset negates the efficacy of method, but mindset in itself can not compensate for deficiencies in method. Overleveraging can cause irretrievable drawdown despite having a profitable method (more info here). Hence all three are 100% important. Let’s look at our Public Practice Session traders. Here is a typical day of one of our top public traders. All the necessary stuff that contributes to successful trading is there: precise stops and reasonable exits. Coupled with high discipline, those skills get him as high as being the third top public trader. Now let’s look at the same trading day by another trader, the one showing poorer performance. Would you say that the the single reason that makes this trader unprofitable is the wrong mindset? I definitely wouldn’t. All three trades were not successful due to poor trade management: it is obvious that the stop loss level has been dragged to breakeven too soon. The trades simply had no room to breathe. Now part of the reason why could be the mindset, but a rather simpler explanation is a lack of good risk/reward ratio as a basis of their trading system. To conclude, the "90% mindset" myth is possibly perpetuated by traders who attribute their failure to an obvious inability to remain disciplined, but while the ill-discipline was in fact masking an impotent method.
some degree of non reactivity is def required, but way too much weight is ascribed to this discipline online. trading is not woo woo mysticism 'if I just will it hard enough, the $ will come' like, no
When i first started almost 10 years ago, i I always thought that trading psychology was 95% of the battle but as I started learning and getting better i figured out if you have no edge you have nothing, psychology makes up less than 5% of trading
Advantage, Bankroll, Execution. 000 -> Fail 001 -> Fail 010 -> Fail 011 -> Fail 100 -> Fail 101 -> Fail 110 -> Fail 111 -> Success 1/8 chance to get all three Now to get it consistently is 1/8^n More or less ... Good luck ! For me it’s not 1/3, 1/3, 1/3. It’s all of them, consistently, or nothing.
Thanks for the opinions. I would say that for me discipline is at least 50%. Too many good trades have become loosers due to inability of making a right entry also a right exit.
Discipline (Execution) is 100%. Have you ever met a profitable AND undisciplined trader ? Money Management (Bankroll) is 100%. Have you ever met a profitable AND over betting trader ? Advantage (Method) is 100%. Have you ever met a profitable AND gambling trader ? All the profitable traders share these characteristics. When you say Discipline is 50% For me it means that 1 out of 2 profitable traders are undisciplined. It’s not 100/300 or 1/3 neither, Because if one piece is missing then ... You won’t be consistently profitable. Sometimes the whole is bigger than the parts. And I truly believe that it’s either 0 or 1. As you can’t safely drive a car without... Skills, Car, Fuel. None of them is 50%. It’s all or nothing.
However I believe that a “Growth mindset”, is needed to turn experiences and feedbacks, into fruitful progress & amelioration of one’s craft. Aka. Thirst to learn and ability to challenge oneself. But it’s not trading specific related.
I, for one, believe success comes to those who has the will to succeed. Most traders want to make money for all the wrong reasons. Hence, they're doomed to fail. If you want to succeed as a trader, look within yourself.