The Battle Between the Individual and the Group

Discussion in 'Psychology' started by GuerrillaTrading, Sep 19, 2019.

  1. Every trader behaves in accordance to their own emotional makeup. Fear, Greed, Hope and Regret drives trading behavior. We all know them! Trading the markets is a battle. The ups and downs are inevitable! Our mindset before, during, and after each battle needs to be correct. There are many discussions regarding on how to eliminate emotions with trading plans/trading systems and I have participated in my share. Some of the aspects include discipline, risk management, etc... but one behavioral perspective not talked about a lot is that people love to join groups and act like everyone else. Herd mentality... It's such behavior that can cloud your mind. It's human nature! How do you Traders eliminate that behavior or combat that in your trading?? All opinions welcome!
     
    Nobert likes this.
  2. Here's how I like to think about groups:

    1) Dumb Money
    2) Large Spec
    3) Institutions, Prime Brokerage, (IRA)
    4) Fund Managers

    In my opinion, the new dumb money is automated trend following algorithms. This could be hedge funds or independently managed capital, whatever. This group just follows the trend. These guys are good to work with until they follow a trend right into a trap!

    Large spec is the smart guys and the guys spreading. They are always making moves. Hard to keep track of them all. They will try to take advantage of the dumb money.

    Institutional are the guys gaming VWAP and manipulating the cash and after hours sessions. They never sleep. They have the best tech and know everything. These are the guys you want to trade with. But, they are very sneaky and very secretive. They always win.

    The fund managers are running long /short books and spreading sectors and international indexes, EM, bonds, credit instruments yada yada yada. They play with every kind of detail a portfolio can have. These guys are hard to figure out.

    It doesn't really matter how right this is. It's kind of an oversimplification that is convenient for me to think about.

    Good Luck!
     
    Last edited: Sep 19, 2019
    GuerrillaTrading likes this.
  3. expiated

    expiated

    By developing my own successful trading system. I have complete confidence in it, so following the herd is of no interest to me whatsoever. I have had several contributors to this forum try to talk me out of doing what I do, but to no avail. Not too long ago I skimmed through a set of books written by Al Brooks, and I think my outlook is sort of the same as his...
    ScreenHunter_6757 Sep. 19 01.17.jpg
    Personally, I enjoy hearing what others are doing. I'm just saying that I'm not going to change what I do just because someone tells me that I should...not until and unless they can show me, head-to-head, that their system is more profitable than mine.
     
    fan27 likes this.
  4. carrer

    carrer

    Wrong advice from the book. Always keep an open mind to new ideas.
    You will never know if there's a small part in the non-profitable system, when integrated with your current profitable system, could turn it to be a very profitable system.
    Different people will have different perspective and approach, some of them you have never thought of. You will learn something new.
     
    Nobert, ElectricSavant and CharlesS like this.
  5. I kind of envy the systems guys. I decided long ago to just trade completely discretionary. It was probably longer than I can even remember now.

    I don't really like the idea of a computer deciding trades for me, even if it had a really robust set of condition criteria and risk management. I would probably need to have like at least $1,000,000 before I would even consider trying to develop a system like that.
     
  6. TommyR

    TommyR

    anyway the key point about the group and the individual i think the definition of a complete market is a complete mess because of the non uniqueness. i think it's more you need to get to expiry with differentiability on the homeomorphisms between the groups so you can dynamically hedge combinations of the elements like sums with the confidence of an investment professional but you can't be unique unique
     
  7. Wow, that's like pseudo math speak. Why would you even use math jargon like that except to confuse people. What are you some kind of joke?

    This is complete bull$hit.
     
  8. tommcginnis

    tommcginnis

    End-of-Day data. :wtf::rolleyes::cool:
     
    GuerrillaTrading likes this.