Three Pervasive Myths of Trading Psychology

[R0n1n]

Hi I read this guy's blog and he writes some great stuff.. recently I was looking up some of his old posts and found this above gem, here is the link.

http://traderfeed.blogspot.com/2006/12/three-pervasive-myths-of-trading.html

His best lines are (IMHO):

the great performers spend more time practicing their performances than actually performing

and this line

Discipline is necessary for trading success, but there is much more to success than discipline. It takes concerted practice and the cultivation of skills at reading and acting upon market patterns.

Hope you guys like it. I did.

 

[hongwong]

Hi I read this guy's blog and he writes some great stuff.. recently I was looking up some of his old posts and found this above gem, here is the link.

http://traderfeed.blogspot.com/2006/12/three-pervasive-myths-of-trading.html

His best lines are (IMHO):

the great performers spend more time practicing their performances than actually performing

and this line

Discipline is necessary for trading success, but there is much more to success than discipline. It takes concerted practice and the cultivation of skills at reading and acting upon market patterns.

Hope you guys like it. I did.

dont get it .... isnt charting meant to be a pattern so why do you need to keep practicing patterns ?

pattern "a" has happen ... so this will happen .... isnt that what charting about ?

 

[theasxgorilla]

dont get it .... isnt charting meant to be a pattern so why do you need to keep practicing patterns ?

pattern "a" has happen ... so this will happen .... isnt that what charting about ?

Because somewhere between the keyboard and the chair exists around 60% to 90% of every trading situation.

 

[ben007]

If you do not get what these words mean then without being rude you will not be a great trader.

The elite get there because they are not lazy. 99% of what I do as a successful trader is prepare to trade when the opportunity arrises. this means research, backtesting and fine tuning my skills.

Charting is so much more than just patterns, if you care to study charts a whole world of analysis will reveal itself.

Sadly most would be traders lose becasue they do not put in the effort then they blame everyone else for thier failure.

 

[IFocus]

Testing testing testing

And then more testing testing testing

Then trade the idea

Focus

 

[Magdoran]

Hi I read this guy's blog and he writes some great stuff.. recently I was looking up some of his old posts and found this above gem, here is the link.

http://traderfeed.blogspot.com/2006/12/three-pervasive-myths-of-trading.html

His best lines are (IMHO):

the great performers spend more time practicing their performances than actually performing

and this line

Discipline is necessary for trading success, but there is much more to success than discipline. It takes concerted practice and the cultivation of skills at reading and acting upon market patterns.

Hope you guys like it. I did.

Hello R0n1n,



Thank-you so much for posting this blog up.

I found it really interesting to read, and referred it to wavepicker who was equally impressed.

I have been meaning to post up a reply for a while now, and hope to comment more in the future on this subject.


Warm Regards



Magdoran

 

[tech/a]

Excellent

Here are some of what I thought are highlights

Reasons

When traders fail to manage risk properly, trading size that is too large for their accounts, they invite outsized emotional responses to their swings in P/L. Similarly, when traders trade untested patterns that possess no objective edge in the marketplace, they are going to lose money over time and experience an understandable degree of emotional frustration.

Its not ALL about psychology.

No amount of emotional self-control can turn a person into a successful musician, football player, or trader. Once individuals possess the requisite talents and skills for success, however, then psychological factors become important. Psychology dictates how consistent you are with the skills and talents you have; it cannot replace those skills and talents.

Its NOT about the Analysis.

Anyone, with dedicated effort, can get to the point of trading for a living. That is nonsense.

Across the many traders I’ve met in various settings, from home-based, independent traders to professional ones in firms, the best predictors of trading success have been the size of the trader’s account and the resources available to the trader.

The I want to turn $5k into $500k NOW syndrome.

If, however, a trader begins with $60,000 of capital, he or she may not be content with $18,000 of profit. This leads the trader to accept huge leverage and court a risk of ruin when an inevitable string of losing trades occurs. Indeed, such excess leverage is a main cause of emotional distress in trading.

Talent, skill, and opportunity are the ingredients of success,

Why most plans fail

The main cause of trading failure is a lack of an objective edge in the marketplace, trading random patterns that have never been tested out for success. Amazingly, many traders will risk far more money trading patterns that they never research or test-drive.

Discipline is necessary for trading success, but there is much more to success than discipline. It takes concerted practice and the cultivation of skills at reading and acting upon market patterns.

Qualities many have here at ASF.

To sustain such effort requires a love of the markets themselves, something not all traders have. Some traders love the action, some love the dream of making money, some love the opportunity to work for themselves””but many don’t love the work itself: the effort of mastering patterns in demand and supply.

 

[R0n1n]

Magdoran you are welcome, I am glad you liked it. This guy has heaps of posts and they are all GOLD. Yeah do post more comments....

 

[wayneL]

Qualities many have here at ASF.

To sustain such effort requires a love of the markets themselves, something not all traders have. Some traders love the action, some love the dream of making money, some love the opportunity to work for themselves””but many don’t love the work itself: the effort of mastering patterns in demand and supply.

Why sneak in this little disparagement of ASF members Tech?

Granted, it is common, but Steenbargers comments are designed for people to read and hopefully self-analyze and improve.

When such comments are particularly directed at individuals or a group, it takes on the tone of derogation.

I just think there are more diplomatic or generic ways of putting it across.... like Steenbarger.

 

[Magdoran]

Why sneak in this little disparagement of ASF members Tech?

Granted, it is common, but Steenbargers comments are designed for people to read and hopefully self-analyze and improve.

When such comments are particularly directed at individuals or a group, it takes on the tone of derogation.

I just think there are more diplomatic or generic ways of putting it across.... like Steenbarger.

Fully agree Wayne. Perhaps if that trademark judgemental rose coloured “microscope” was turned in on itself, then there may be some hope of improvement. Till that day we will just have to accept that it is his nature.

 

[tech/a]

Why because its true.

Its seen in many posts in many sections of ASF.
As its true in many other forums.
Hotcopper would have to be the leader by miles.

Is verbalisation of observation not allowed here?

 

[wayneL]

Why because its true.

Its seen in many posts in many sections of ASF.
As its true in many other forums.
Hotcopper would have to be the leader by miles.

Is verbalisation of observation not allowed here?

No

But but there are useful ways to put a message across, and there are non useful ways.

You are not likely to be listened to if you insult people, just pointing that out. It also makes it appear as though you are trying to boost your ego by denigrating others. I don't know if that's true or not, but thats the way it appears to people.

Psychology... it doesn't just apply to trading.

 

[CanOz]

Till that day we will just have to accept that it is his nature.

I think you hit the nail on the head here Mag...

I think the intentions are well meant....its just the presentation that leaves a sour taste sometimes....

Interesting thread.

Cheers,

 

[Nick Radge]

Steenberger is speaking at the ATAA annual conference in October. I think its his first visit to Australia.