I believe that having the proper trading psychology is important. I have read several books on the subject and work daily to employ the concepts. There is little doubt that I will continue to do so. However, from time to time I take a step back and wonder if the whole thing is being overdone. There seem to be so many people who want to be, or at least sound like, trading psychology gurus/mystics. Is it because there is less accountability? Is it easier to sell trading psychology courses, books or seminars with a clear conscience than it is to sell a "winning" trading strategy? Or is it just an easier way to get away with outlandish claims or to impress your friends? Either way, sometimes I just can't help but feel zenned-out. In my own case, I find that I am most vulnerable during periods when I am not doing well because my method is not in sync with the markets for whatever reason. Then, I am most likely to reach for the warmth and comfort of a trading psychology book. That is why I sometimes wonder whether this is when the the gurus are either rising to help us or descending on us to prey upon our weaknesses. There is just so much of it, I can't be sure. Any thoughts?
Hey Thunderdog: It is the type of day where I should not be trading, so I wanted to keep myself away from the temptation to pull the trigger. Regarding your comment, I agree more or less, however I think the reason that authors offer commentary that seems mystical or in some sense removed from reality, is that they really don't understand the issues. From my point of view, the real problem is how to manage your mental state in three (3) areas. 1. While looking for a place to enter 2. While managing an active position 3. While looking for a place to exit In each case (I can say this from experience), the trader has to battle negative self dialogue that seems to originate from fear, insecurity or greed. On one level I understand the problem authors and so called gurus face. It is after all a difficult subject to talk about. In the several years that I have been looking, I have yet to come across a book written by a trader, that has really helped me to manage my emotional state (I guess books by Mark Douglas come closest to doing that). I appreciate any comment you might have. Best Regards, Steve46
Depends on what the guru is telling you. If it's the usual nonsense posted on ET about feeling better about yourself and don't give up and you can do it and perseverance and excelsior and so on, then it can be deleterious, to say the least. But if you're looking at something that helps you to trash whatever's extraneous and focus on what your central problem is, THEN take you on a step-by-step process to find potential solutions to the problem, then the book or article or whatever can be beneficial. What bugs me about all but a very few of the "advice" posts given on ET, as good-hearted as they may be, is that the poster never bothers to find out what the problem is. Granted, a lot of people supposedly looking for help are really just whining and looking for commiseration and the assurance that none of it is their fault, etc., etc., blah blah. But if someone is truly looking for help, being told that everything will turn out all right if he just sticks with it is hardly helpful.
Thunderdog, if these moments of "weakness" also makes you change strategies, following whatever psychology advice or strategy makes you feel better, you might try looking into revising your principles or beliefs/philosophy. There will always be a lot of opinions and advice, most of them wrong, with regards to the market. The real profiteers are busy playing with the markets. Anyone spewing out books, seminars, newsletter or the like is perhaps best read with some sound scepticism.
I happen to believe that it is ALL about psychology. I feel very well educated about the market. Sure there is more to learn and I continually get schooled. But I find the mental aspects rule my actions.
No, trading psychology is not overdone. I checked myself into a clinic in Feb. to find out why I have zero (0) emotions. Just a heaping mass of objectivity. They diagnosed me as having Post Traumatic Stress Disorder. I'm supposed to give up trading and do restful things for the next few years to regain some emotional balance. I wish one of the self-help books could tell you how to go through stressful situations without being setup for PTSD. I'm beginning to believe that mechanical trading is the only way to remain mentally healthy and be wealthy. The psychological damage from discretionary trading is just too great.
Successful trading is very simple. 1. KNOW Your Setup... that is, you need to have confidence that the play you're making has a high probability of success and a favorable risk-reward aspect. (I believe many traders are too whimsical about this. The setups you take should be the kind you could explain to someone clearly "why" and show them several examples to convince them your strategy is correct.) 2. Pay Attention.... if you're distracted and miss the play, your fault. 3. Courage To Take Risk... gotta pull the trigger 4. Discipline On Stops. Fail on any of these and the best you'll do is struggle to break even. KISS... The less complicated your method, the more likely you are to execute well. Simple? Yes. Easy? You aready know THAT answer. PS... I'm a long time veteran who's had several years struggling to bust a grape and feeling all worn out. I've also had several years making lots, and lots, and LOTS!! I know from where I speak.
One needn't be emotionless in order to be disciplined. Those who get emotional about their trades probably don't fully understand market dynamics, esp the role of probability. Turning to a mechanical system won't resolve that issue.
In retrospect, I see that I have always indentified too much with my successes and failures in the markets. In the past this has cost me greatly, in the toll it has taken on my self image and in the kind of self dialogue that I have engaged in when I have lost. Although I have obtained some success recently, I realize that I see that I am constantly lookin over my shoulder thinking that it may all disappear if I am not careful. There are several things that I have done, that have helped to manage these problems. First, I do not talk about trading to my close friends or family. Second, I take 2 months vacation every year, and during that period, I have no contact with markets, except the news that I might read in the paper. Finally, I try to be involved in some community volunteer work. I think these things have helped me to find some balance. Also the relationships that have developed along the way, have really made a difference in my life. I think when one talks about the importance of psychology, it has to involve the totality of our lives, not just trading. Best Regards, Steve46