Really. I know having an "edge" is necessary for being a profitable trader. It's true that we should all be constantly tying to refine and make our edge more effective...however that's all anyone ever talks about on this site. T/A, PA, fundamentals, support/resistance...all that is fine and good but it seems to me that your edge is a small factor in determining your trading success. The main and most important factor is your mental state, how you THINK, your head game. Yet edge and method threads outweigh mental threads probably 20 to 1. Is this the reason why so many traders fail?
You are correct jonbig04 ... and it is a traders edge that allows him to have all of those aforementioned psychological components in place.
If you have not bothered to work out an edge you can partake in all the feel good psychobabble you want, it's not going to help you.
mental has zero to do with anything. mental is a lie pushed by the broker to lure more dumb money. mental is excuse for losers, edge holders win, edge is all you need. think about it, do you need mental to pick up 100's from the floor? NO, but you need an edge on how to find the 100's. mental, ya ya ya ya, as your account dwindles, ya ya ya.
Its my opinion, and that of others...a few very successful others that trading is 80% mental and 20% edge... If that's true than it seems strange that edge and method thread outnumber threads about your trading mentality by so much that's all I'm saying
Correct. However, once you have or learned that edge, you must have your mental act together or you will have difficulty unless you are using a fully automated system which doesn't require you to think or employ any discretion. In other words, an edge without discipline is like no having no edge at all. Humans create many psychological conflicts when it comes to money all of which will undermine edge.
Jon, Support and resistance constitute the "head game" of those who are playing the same game as you. Trading equities, support and resistance levels within your trading time frame tell you where the majority of people playing the game wished they'd gotten in or out of a position. Support is that price level where people wish they'd gotten in before and they pile in now; resistance is that price level where those who piled in at the high end of the last uptrend and got burned desperately want to get out at least at break even. When a support level is broken, stops get triggered and prospective buyers will wait for the stock to hit the next lower support level to pile in. When a resistance level is broken, buy stops are triggered and the short squeeze ensues. The price may then pull back and resistance may be tested again. If resistance is tested strongly more than once it tends to weaken, because the many of the shorts covered. When that weakened resistance level is then broken, prospective buyers may fear the stock price will run away from them and they may pile in at that point. Will the breakout hold up? It will if there are now more buyers wanting in than there are people who bought at that level before and got burned. I've never traded e-minis, but I would guess the same S/R behavior applies to investors and longer term traders with regard to these market indices as a whole. The mental toughness you need as a trader is the patience to wait for strong setups based on S/R levels, improving your probability of success, rather than the desire to "make something happen" where action is unwarranted. The other mental toughness you need is the ability to cut losses based on an advance plan WITHOUT HESITATION. Donna