Trading Psychology

[Steve Arthur]

I'm not new to this forum, but until recently I have never had a good look around it.

I have to say there are some very experienced and knowledgeable people on this forum and there is a wealth of information to be had.

However as usual, most of the talk and interest is focused on the strategy or system, not on the psychology of trading.
Why there is no forum for psychology as there is for strategies and systems?

If you search the word psychology in the posts titles on this forum, you get 13 results.

If you search the word system you get 43 results.

If you search the word strategies you 62 results.

The results, as they say speak for themselves.

In his book super trader Van Tharp talks about a workshop he did 1990, with Market wizards Ed Seykota and Tom Basso.

"All 3 of them agreed that psychology contributes to 60% to success, position sizing 30% and system development 10%. And that most traders ignore the first 2 and don’t really have a system anyway, that’s why 90% fail".

19 years later, he argues that psychology now counts for 100% of trading success and I for one agree with him.

So why aren’t there more threads on psychology?

The same reason why there aren’t more successful traders I guess.

I have placed this thread in the strategy section as there is nowhere else to put it.

 

[Trembling Hand]

Whats the best way to look after your trading Psychology????

Have a system that you know is profitable and when its profitable or not (strategy). And how to apply it to milk the most out of it while staying relatively save (Money Man).

Whats the best way to sell a book, system, course or con a skilless newbie? Talk about Psychology being the most important. Thats just my most humble opinion.


Carry on.

 

[tech/a]

“Education is a progressive discovery of our own ignorance” – Will Durant

And the more I see these lead threads the more Educated I become.

Whats the best way to sell a book, system, course or con a skilless newbie? Talk about Psychology being the most important.

and the more educated I become.

 

[Boggo]

19 years later, he argues that psychology now counts for 100% of trading success and I for one agree with him.

So why aren’t there more threads on psychology?

Worthwhile reading 'Trading to Win' by Ari Kiev, he discusses the psychology of operating outside of your everyday comfort zone.
http://www.booko.com.au/books

Education = behaviour modified by experience.

 

[professor_frink]

Would love to hear some more about this Steve.

What would you say the main psychological issues are that will make me a better trader?

 

[Steve Arthur]

Yes, thanks guys, keep em coming.

 

[professor_frink]

my question was a genuine one

You've implied a correlation between trading success and the amount of time devoted to talking about trading psychology on a forum.

Out of curiousity, I'd like to hear what specific topics you think haven't been already addressed on the forum, and which psychological issues there are that I should address to become a better trader?

 

[tech/a]

While I think your being sincere Prof.
I also think you should treat ALL spam the same.
There IS hidden agenda here.

11 posts!!!

 

[professor_frink]

While I think your being sincere Prof.
I also think you should treat ALL spam the same.
There IS hidden agenda here.

11 posts!!!

ooh I didn't get that far into the site, to be honest I didn't get past the cliched posts on the front page before going elsewhere! I did learn that I am unique though, so it wasn't a complete waste of time.

We can't really ban Steve based on the fact that he is a trading coach and selling his wares via his site, but I am now much more interested in an answer to my questions now that I know the person answering charges $6K a year for his mentoring services!

 

[Dowdy]

I would suggest you find books on Behavioural Finance.

You can download ebooks on the net

 

[tech/a]

mate

I'm not suggesting he should be banned.
But recognised for what his agenda is.

I too would be interested but I doubt he will expose himself to serious discussion
by members of this forum.
Quoting regurgitated material from known educators is pretty average in my view.
I doubt there would be anything original---if there was he would have lead with it.

Happy to take part but my personal view is that the psychological argument is an excuse based premise pulled out of the hat when hind site is applied.
Psychology is fine until you look back at the what if's---woulda's coulda's shoulda's.

 

[Steve Arthur]

I have been a member of this forum for almost 2 years, during this time I have read and followed others of a similar occupation to me.

I have always had a high level of respect for the main contributors to this forum. It was never my intention to deceive.

The hidden agenda was only to aspire to the same level respect of some of the others that have made this forum the quality it is today. Of course this would have been positive for my coaching business.

I feel I have been unfairly vilified after a couple of posts. I merely made an observation that people focus too much on strategy/system and ignore or are unaware of their psychological behaviour, to their detriment.

I will remove my blog link immediately, if that is an issue and will continue to contribute to the forum if I am given the same respect.

 

[nielsend]

I've been trading for nearly 6 years, part time to start with and now full-time for 3 + years. Read all the so called 'must read' psychology books on trading; Trading in the Zone, Trade your way to financial freedom, blah blah blah. Even did a Van Tharp course in Sydney a couple of years ago?
The only psychology that has helped me is: a) study the markets until the cows come home and get to know a particular trading product's behavior inside and out, and b) start winning. The last one being the most important of all. Forget about trying to wipe away all your emotions, you'll end up being a zombie. And there is no spiritual zone that you can tap into, just good old discipline and buckets of hard work.
As TH mentioned once, if you intend to become a successful trader based on psychology alone, you'll last to about 10 o'clock.

 

[professor_frink]

I have been a member of this forum for almost 2 years, during this time I have read and followed others of a similar occupation to me.

I have always had a high level of respect for the main contributors to this forum. It was never my intention to deceive.

The hidden agenda was only to aspire to the same level respect of some of the others that have made this forum the quality it is today. Of course this would have been positive for my coaching business.

I feel I have been unfairly vilified after a couple of posts. I merely made an observation that people focus too much on strategy/system and ignore or are unaware of their psychological behaviour, to their detriment.

I will remove my blog link immediately, if that is an issue and will continue to contribute to the forum if I am given the same respect.

Steve,

you can leave the link in your signature, it's really not a problem

Feel free to answer my questions if you want to.

 

[Trembling Hand]

I feel I have been unfairly vilified after a couple of posts. I merely made an observation that people focus too much on strategy/system and ignore or are unaware of their psychological behaviour, to their detriment.

And I and others have just pointed out that we disagree. That strategy/system etc is it. Psycho blah blah is just that, blah blah, IMO. You haven't made an argument yet. We would love to here it.

 

[Julia]

Steve, if I were to ask if you'd be kind enough to offer a short summary in explanation of the term "Trading Psychology", what would you offer?

I'm not being dismissive or critical, but am simply unclear as to what exactly you are referring to with this term.

With thanks.

And if you could address Professor Frink's questions, that would also be helpful.

 

[Steve Arthur]

I've been trading for nearly 6 years, part time to start with and now full-time for 3 + years. Read all the so called 'must read' psychology books on trading; Trading in the Zone, Trade your way to financial freedom, blah blah blah. Even did a Van Tharp course in Sydney a couple of years ago?
The only psychology that has helped me is: a) study the markets until the cows come home and get to know a particular trading product's behavior inside and out, and b) start winning. The last one being the most important of all. Forget about trying to wipe away all your emotions, you'll end up being a zombie. And there is no spiritual zone that you can tap into, just good old discipline and buckets of hard work.
As TH mentioned once, if you intend to become a successful trader based on psychology alone, you'll last to about 10 o'clock.

Nielsend, I whole heartedly agree, study, study, study . I spent years following charts, hours everyday. Recording and reviewing looking for patterns and monitoring behaviour of the price.

That it itself this requires a mindset of determination and of drive. But it will not make you a profitable trader in itself, if you are unable to apply what you have observed consistently.

We cannot wipe our emotions, only be aware of them. (Crikey it's hard not to sound like a cliché!, but it's true, at least it was for me)

I spent 12 years self sabotaging for the thrill of winning and to avoid the pain of losing.

Clichéd or not your psychology influenences your behaviour over every aspect of your trading.

Yes you need a system.

Yes you need hard work and experience.

But without understanding the fact that you are ultimately to blame for your own actions, not your system, not the news, not the software or the broker, not your rules, not the guys on the forum, you.

The psychology of trading that I refer to is your psychology, knowing yourself and how you are programmed to respond to certain situations.
These responses are primitive and can dominate rational thoughts in the decision making parts of the brain. I believe control is obtained through self awareness, and repeated behaviour.

The only way I was able to do this was with a trading plan. (Trading plan does not describe what it was to me, it was everything I knew and had done, all my failings as a trader laid bare on paper, for me to read and re read again and again. It was all my mistakes, my behaviour, my goals, things I had read, written down as rules and every time I ignored them, they became tighter and tighter and eventually I was forced to accept the truth, it was all about me.

Overtime it became more important to follow the rules, than to experience the thrills of winning random rewards and it also became painful not to follow my rules.

So there you have it people, or at least a small description of why I believe that psychology is ultimately to key to success, not the system. What good is a system or money management, if you cannot control you responses to positive effect?

 

[tech/a]

The only way I was able to do this was with a trading plan. (Trading plan does not describe what it was to me, it was everything I knew and had done, all my failings as a trader laid bare on paper, for me to read and re read again and again. It was all my mistakes, my behaviour, my goals, things I had read, written down as rules and every time I ignored them, they became tighter and tighter and eventually I was forced to accept the truth, it was all about me.

If you seriously believe this is how a trading "plan" should be constructed or has any place in a trading plan---its just Blah blah blah (Apologies to T/H)

Overtime it became more important to follow the rules, than to experience the thrills of winning random rewards and it also became painful not to follow my rules.

All your describing is a transition from POOR discretionary trading to poor "Plan Trading"

So there you have it people, or at least a small description of why I believe that psychology is ultimately to key to success, not the system. What good is a system or money management, if you cannot control you responses to positive effect?

You need self control in ALL aspects of life.
HINT
Don't use a credit card and keep away from pokies.

What good is a positive attitude a non defeatist stance or un emotive decision making if coupled with "your laid bare trading plan??"
How am I the trader more likely to profit on a regular basis?

 

[Wysiwyg]

But without understanding the fact that you are ultimately to blame for your own actions, not your system, not the news, not the software or the broker, not your rules, not the guys on the forum, you.

There are from a few up to millions of other people influencing the outcome of any trade. I accept the outcome because the outcome (although I would like the result/outcome to favour me is out of my control.

 

[Steve Arthur]

If you seriously believe this is how a trading "plan" should be constructed or has any place in a trading plan---its just Blah blah blah (Apologies to T/H)



All your describing is a transition from POOR discretionary trading to poor "Plan Trading"



You need self control in ALL aspects of life.
HINT
Don't use a credit card and keep away from pokies.

What good is a positive attitude a non defeatist stance or un emotive decision making if coupled with "your laid bare trading plan??"
How am I the trader more likely to profit on a regular basis?

What gives you the right to be so rude and judgemental?

I have judged myself, I know my flaws and my strengths and do pretend otherwise.

Tell me tech/a, you have posted 9,000 posts over many years on this forum, what have you learnt about trading and about yourself as a result?