I'm starting to think the market is not psychological. I think it's all about knowledge, edge and skills. There's also the capital and networks of traders you're with. You can just have a robo broker trade your account with a good system and leave it alone. There's no psychological aspect... or at least minimal... or at least till you send that system to the broker. You can ask a friend or discuss about the market and share a working strategy. Isn't trading becoming less and less psychological? More edge... more sucker / winner plays... more skills... more networking... Well, regardless of what I think... what do you all think...
You could have all the skills and the biggest edge in the world but if you lack a good handle on your own psychology it's all worthless.
This could be way off base, but don't you think the NYSE markets at least will remain psychological when the liquidity is in the hands of a human being, rather than an automated system. There has to be a conflict of interest when he is supposed to facilitate the market, and has personal interest in pulling money from the market. And when the market becomes anti-psychological, things like techinical analysis might become more effective by a self-fullfilled prophecy. Or, maybe I should stop taking bong hits and pondering the market...
Look at a 5min chart of the ES over the last few days. You dont think this schizophrenic behaviour is psychological??
If you look at the poll results in http://www.elitetrader.com/vb/poll.php?s=&action=showresults&pollid=913 You can see how "in balance" opinion about direction is at this juncture.
Even if you are a cold efficient machine-like trader, a veritable Doctor Spock, the other players in the market are not. If you don't have a handle on the screw-ups of human psychology, then you aren't going to be trading optimally. You can still make money, but... When you see a huge reversal bar at an old high, you can just *feel* all those suckers stuck long from the fake breakout high, now massively offside within a couple of hours and holding the bag while the market pukes down. Tell me it isn't an advantage to know that they're feeling like a rabbit in the headlights, they know it's going down but they can't pull the trigger...they are all waiting for the next bounce which doesn't come, then there's a wave of one or two huge down days and they spew, they can't take it any more. Can any system feel the rabbits' fear as they helplessly run out onto the tarmac to become your next roadkill? Learn the psychology of your average trading loser and you've got a meal ticket for life.
Trading instruments represent certain values and prices are fluctuating over and under these values due to human fear and greed. Is that not psychology? I have some charts going way back and I don't see any difference between the character of a wheat chart from the 1920's and a 2003 stock chart. Same patterns of alternating boredom and excitement or fear and greed. Every time I hear that some big house lost a couple of billion in currencies or copper I chuckle because I see it as a confirmation that the market is forever psychological: all their checks and balances and organization could not prevent the trader responsible for the huge losses from losing his head. I think trading will stay the ultimate head game.
WDGann: I'm starting to think the market is not psychological. Well, I think the market is greatly impacted by psychological reactions to events. The randomness of it rattles the cage of many market participants. WDGann: I think it's all about knowledge, edge and skills... Isn't trading becoming less and less psychological? I think when a trader gets it down, trading become unemotional and this usually means he's mastered his psychological foibles. So, then it does become less psychological, and more about simple execution (discipline). That's my take on it, from talking with traders and reading interviews, etc. The market still moves on knee jerk reactions that have psychological basis in heard mentality. André