Thread: Trading Psychology: Mistakes in a Trading Environment

I believe it is worth to find out....

Trading plogy may be learn... let your system function as robot, without hindrance of your believe and desire, hope etc.. . emtion...

Hi,

Well ordered article - really informative.

In my experience (that can be really a mere 21 years) I'd add this to attain the plogical equilibrium for trading, one has to get to know thyself and deliver any sort of trading method employed in tune.

For the simple reason that for many, the worst part in trading are the losing trades. Not only because they shed (as you've properly set it) but because it leaves the trader wonder him/herself and uncertainty in his/her skill - unfortunately only indirectly because the very first thing to be blamed is the system.

If a person gets familiar with the thought (and its not only a notion, its own given unchangable fact) that trading involves losses no matter what, than this is a step forward. Not all ways of trading are the exact same and different methods allow for different sorts of expectancies (expectanciy = positive or negative outcome in terms of money balance in a large enough sample collection of trades based on MM, pos. Size and model used).

If you know your model has a positive expectancy, it is going to be less difficult to accept losses as a part in trading and you won't associate them as a failing part for your benefit.

Like I said, there are methods with positive expectancy that still differ in win/loss ratios, i.e. some are based on a relative small amount of winners that are comparatively large and compensate for the larger amount of losing trades; other methods are based on a larger number of smaller winning trades that still involve losers which need to be much more controlled in order to not divert the better part of accumulated profits. Others are somewhat more balanced.

Now, if your character is that of a perfectionist, you can very easy get yourself in trouble because any losing commerce will almost certainly cause you to wonder any method you empoy and try to mess with it to eradie losing trades into an extend that could force you to stop trading completely since you identify possible flaws pretty much everywhere.

You'll have to accept in the first place the market prices themselves are a mathematically imperfect construction in terms of how fluid they're.

Knowing (by understanding I mean understanding yourself and studying the expectancy of the model you're investing ) that despite losing you can finally win in the long term is what should improve confidence and trust.

Hope this helps.

regards

Originally Posted by ;

.. .If one gets familiar with the thought (and its not only an idea, its given unchangable fact) that trading involves losses no matter what...

The afternoon that I finally got that through my thick head was the turning point in my trading career.

Nice post too BTW joldas.

Thumbs up to both of you.

1) System functions and profitable
So you've got a winning system, you get confidence and start utilizing more lots/risk so that you are able to make use of a winning system. Boom! The reduction that is inevitable comes one good day and you eliminate a big chunk of your profits due to higher risk/lots used. Now you would either a)continue trading, b)alter system or c)try to get even with the market using more competitive lots

a)Your profits appear to be small and you eliminate patience to ch up with the prior reduction, so you either do (b) or (c)

b) When the new system is profitable, you'd do (1) or (a). If It's a failure you'd still do (1)

c) You would do (b) and (c), possibly, way very likely you'd blow your account

Originally Posted by ;

1) System works and profitable
So you have got a winning strategy, you get confidence and start utilizing more lots/risk so that you are able to make use of a winning strategy. Boom! The reduction that is inevitable comes one fine day and you lose a large chunk of your profits due to greater risk/lots used. Today you would either a)continue trading, b)alter system or c)try to get even with the market by using more aggressive lots

a)Your profits appear to be small and you lose patience to ch up with the earlier reduction, so you do (b) or (c)

b) If the new system...

Hi,

How do what you describe above be a system if you haven't figured out the typical winning AND losing commerce as well as the frequency of the losing vs the winning transactions?

If you would have done that to a level that's essential to the development of a technique, the reduction and its stretch would not come as a surprise. Furthermore, your position size anytime would be such that even if the (to be expected) reduction would exceed its value by 10%, it would still not damage the general positive expectancy of your system.

In short, if you do not know what your method's average loss is going to be, your method is not complete; for those who do not know the typical ratio between your winners and losers, your method is not complete. Your method is not complete if you do not know your typical potential winner.

I state you without being personal here - just to aid the comprehension of the thread.

Hope it helps.

regards

Originally Posted by ;

Hi,

How do what you describe above be a platform when you haven't figured out the typical winning AND losing commerce as well as the frequency of the shedding vs the winning trades?

If you would have done that to a degree which is indispensable to the development of a method, the reduction and its extend would not come as a surprise....

Agreed, however, the mistakes were crucial to train me to believe this way. My systems are profitable

Originally Posted by ;

I think it's worth to find out....

Trading plogy can be learn... allow your system work as robot, without interference of your think and desire, trust etc.. . emtion....

It is really worth studying.

Originally Posted by ;

[Abandoned ] Trading Plogy: Mistakes in a Trading Environment

When it comes to trading....

Thank you, http://www.earnforex.com/articles/tr...nvironment.php, for taking the time to post at FF.

Originally Posted by ;

Don't get us wrong, it is very important....

I figured it was either a copy-and-paste or somebody with a multiple personality disorder. If you are going to quote someone else, then give reference.

Thank you.