For me it breaks into two parts: acquiring knowledge, and then applying that knowledge mechanically. In theory, as long as the underlying strategy is sound, mechanical application of that strategy to consistently valid setups should, over time, offset any drawdown. The wheels have not come off, yet. If they do, then I agree that alcohol might well enter the equation…
My only issue with use of the term psychology is that different people take it to mean different things, it becomes a bit of a dumping ground for all the bits of trading that don’t fit neatly under other headings. For me, it just means dealing with anything that might stop one executing one’s strategy mechanically, time and again, in the same way.
Yup, it really all boils down to discipline, and committing the kinds of errors you’ve just mentioned, is when it breaks down, but hey, that I guess is the best way to learn, because no one wants to make the same errors again, especially when they are really suicidal ones. I too am still in the process of honing my system, and I have got to the stage in my trading career when I have accepted there is no rush, it will take as long as it takes, and as long as I keep improving, I’m happy. I really don’t bother about the psychology of it, because I know that every decision that I make will ultimately depend on the confidence I gain from trading well, and I can only do that once I have a clearly identifiable edge, which I have. The mistakes will always be there, how can they not be, but keeping them to a minimum, and pressing home your advantage on every winning trade is the key for me.
I couldn’t agree more. One of the biggest challenges to me is the idea of ‘operating in an unlimited environment’, as Mark Douglas puts it. One of trading’s biggest attractions to me is also one of its biggest challenges, it is a pure meritocracy. That means you can’t blame anybody [U]but yourself[/U] when you’re wrong, and the speed of your success is entirely up to how well you focus and work on eliminating your inner demons.
Initially I remember I said to myself that I should be able to get this under my belt in 6-8 months. I guess that’s just like teen rock bands that expect they’ll be touring the world and filling stadiums in a year or two max, and who start maxing out their credit cards because they believe they need the latest guitar and amps to be successful.
At this point I’m fine if it takes me another five years, seven years, even ten years. As long as I focus and work hard, and don’t do stupid things, I’m sure I will become consistently profitable and be able to live off my trading profits alone sooner than later. And even if I had to stop trading for whatever reason, the personal development I gained from this will be of benefit to any other business endeavor that I will be involved in.
That’s definitely the way to look at it, I agree. I see learning to trade as just like making a trade. If you rush it, if you force it rather than let the trade come to you, you are going to lose. It’s just having the patience and the belief that no matter how long it takes, you are going to get there, and the wonderful thing about trading is that you don’t have to worry about being made redundant in some job, because the markets, with all reasonable calculation, are always going to be there, and once we’ve cracked it, that’s as safe a financial security as one is going to get in this life. And yes you are right, trading, because it exposes so ruthlessly our strengths and weaknesses, is a great vehicle for improvement in whatever we do in life.