Trading psychology

Quant said:

I have not read entire thread but have read a few posts here and there . And i have to tell you there is only one cure to trading induced emotional breakdowns . EDGE , thats it , now you dont need a therapist to find that . You more than likely need a mathematician . Now an edge is a positive expectancy ( that terrible thing many think is not real ) I can tell you the quickest way to a positive mindset is POSITIVE EXPECTANCY . Now obviously accurately defining it is difficult for many and basically impossible for a discretionary trader . It requires statistics of a repeatable sequence that produces a trade , this is where everyone fails . All i got to say is throw those goddam pyschology books in the bin and goddam learn to become systematic trader , I am a machine and i dont get emotional , its the answer i tell you ... The can is open haha


Many traders think its their psychology letting them down when in fact they are no freaking good at trading . Fix the root of the problem

Find a method that works and is defined by a rock solid set of rules ... RINSE & REPEAT ... its that easy


Last edit ... If you can measure it you can more than likely improve it . start bloody measuring

I LIED , if you have not got POSITIVE EXPECTANCY you could do all the work on psychology in the world and never fix your problems ..... that is a FACT , you cant turn **** into marble

Click to expand...

The only post you need to read on this topic

Roller_1 said:

You can have an entry edge ie greater than 50% win rate

Click to expand...

An entry where price moves in ones favour within a fixed period? Three wins and one disaster is a 75% win rate but a losing strategy.

Wysiwyg said:

The only "edge" in trading is the trade management.

Click to expand...

Good luck with those random entries , and just to be clear systems have risk management as part of the " system "

Wysiwyg said:

An entry where price moves in ones favour within a fixed period? Three wins and one disaster is a 75% win rate but a losing strategy.

Click to expand...

Obviously..

If you have an certain entry and exit after x days and you achieve a 60% win rate with a W:L ratio of 1. Then the entry has created an edge. I've found adding stop or profit targets to a short term system with a entry edge is mostly counter productive

Gringotts Bank said:

Because narcissism can be used as a proxy for low self-acceptance or low self-worth (the former being a reaction to the latter).

Click to expand...

The case of the introverted narcissist!


What should you do if you want to reveal your closest secrets to everyone?

Tell your darkest secrets to a narcissist first, then the narcissist will pass on your secret whenever he/she thinks it most appropriate(i.e. sooner rather than later).

What's a narcissist's idea of compromise?

Persuading others to go along with the narcissist's preferences.

Wysiwyg said:

The case of the introverted narcissist!


What should you do if you want to reveal your closest secrets to everyone?

Tell your darkest secrets to a narcissist first, then the narcissist will pass on your secret whenever he/she thinks it most appropriate(i.e. sooner rather than later).

What's a narcissist's idea of compromise?

Persuading others to go along with the narcissist's preferences.

Click to expand...

I'm well aware of my narcissistic tendencies thank you!

I stopped trading and investing about 10 days before Christmas.

A trading portfolio I'd started in August 2020 went from showing a 15% overall profit to 7.5% in just one week, in mid December.

I began over trading for a few days, then doing nothing for a few days. I guess it was the equivalent of a brainfart, a prolonged brainfart, over 6 trading days.

So I sold the whole portfolio locking in a 7.5 % profit for just on 4 months work.

I'm happy. I'll not trade until the New Year.

Work that out all you Psychs.

gg

@Garpal Gumnut that's a great reminder mate. We all need to take a step back to reassess what we are doing and how we are going about it.

I am still a beginner and always falling into little traps caused by my weaknesses, the list of weaknesses is long but slowly identifying and rectifying.

Cheers mate.

Trav. said:

@Garpal Gumnut that's a great reminder mate. We all need to take a step back to reassess what we are doing and how we are going about it.

I am still a beginner and always falling into little traps caused by my weaknesses, the list of weaknesses is long but slowly identifying and rectifying.

Cheers mate.

Click to expand...

Garpal Gumnut said:

I stopped trading and investing about 10 days before Christmas.

A trading portfolio I'd started in August 2020 went from showing a 15% overall profit to 7.5% in just one week, in mid December.

I began over trading for a few days, then doing nothing for a few days. I guess it was the equivalent of a brainfart, a prolonged brainfart, over 6 trading days.

So I sold the whole portfolio locking in a 7.5 % profit for just on 4 months work.

I'm happy. I'll not trade until the New Year.

Work that out all you Psychs.

gg

Click to expand...

I've been going through all the trades today and also looking at my money management.

In fact it was money management not "bad" buys nor "bad" sells nor overtrading wot did me in.

Until I entered brainfart territory. Then I over-traded and the gains and losses plateaued and I went sideways and became frustrated until I liquidated the protfolio.

It is what it was.

gg

Psychology, stock wise, as well as adding to the longer term big divvy payers generally on dips and/or SPP, one thing I've been doing in the last few years, with Commsec's $10 trades, is short term trading. Just the odd stock here and there but am absolutely ruthless in taking profits. I don't try to pick/predict a top and don't buy anymore than two to three parcels of any one stock.
The only mandates are that any profit >10% on a pull back gets the trigger to sell, if a stock falls it'll stay in the long term portfolio until such time it is 10% in the black or I take a loss to offset tax or it stays there for perceived longer term prospects.

Total purse available for short term is 10K and no more than 5K in the one stock. Might not sound like much to you heavy hitters but to me, it still feels like a million $ and that any stock pick is no better than a punt. Sure, I've had losers (THC) and I cop it on the chin as a learning lesson but the multi-bag winners (BTH) negate and compensate the loss.

As a mostly passive investor and a minnow, I find that these short term plays are useful in learning and dealing with the "emotions" of trading. It is easy to answer the question of why I want to buy any particular stock. Answer is simple, profit! That's where the ugly head called greed comes into view and hence my purse limitation. I'm not adverse to the risk/reward but losses imparts caution, lol.

I must add that my long term divvy payer portfolio is not just for my retirement, I intend to pass down this portfolio to my children either directly or through my trust.

With well over two decades of share holdings and seeing/feeling the markets fall and rise (rinse and repeat) and being bombarded with everything from flus, bubbles, 9/11, GFC, CV19 and the like, it has all helped my to HTFU, stay the course, fine tune and hone what it is I expect and want as a long term share holder and as a sporadic trader.