TheStrategyLab.com Price Action Trading Support Forum

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 Post subject: Trading Psychology (mindset) Importance
PostPosted: Wed Oct 21, 2015 5:10 pm 
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Joined: Sat Jan 10, 2009 2:06 pm
Posts: 4335
Location: Canada
Its very common to go to any forum and see lots of trade journals or commentary by traders saying they backtested their trade strategy and that the results has a positive expectancy or that it produced profits on the simulator for many months. Yet, as soon as they traded with real money...it all fell apart and they became confused about what happen.

Its simple, backtesting and simulator do not contain that psychological element that shows up when your money (real money) is on the line. That's why I've consistently stated here at ET that successful trading involves more than just trade signals. Its one of a few things that can not be backtested and is one of the reasons why different traders using the same method on the same trading instrument will have different results.

Strangely, many traders can not admit that their failure or under performance was due to not having the right mindset or they dismiss the merits of how their brain (e.g. personality, beliefs, opinions, fears, greed, relationships, financial situation, peer pressure and many other things) interacts with the market. Instead, they tweak, change their trade method as if its going to change their behavior when trading with real money. This tweaking or changing process of the trade method is so much easier than dealing with the psych especially when under pressure to succeed.

Others that figure out the importance of the psychological element will then either try to automate their method to remove that pest call psych or they try to change their behavior while trading so that the psych becomes an advantage instead of a disadvantage.

Reality, most traders never complete the above and just end up becoming another losing trader...joining the group that most traders lose money regardless if you're position trader, swing trader, day trader, scalper and regardless to their trade method.

Regards,
M.A. Perry


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