Trader makes money, not the system (p.1)
Let's start today with an excerpt from an interview in which we cover the important topic "It is the trader who is profitable, not the system". You'll see with examples how results depend on what's going on in a trader's head, so you'll look at your own results from a distance and see that they may in your case depend on deeper things than you've so far thought, on more factors than just the system itself.
I once spoke with an excellent trader about balance in life and the role of mental and physical fitness in trading. He said that it is the trader who is profitable, not the system. What I mean is that many times it turned out that two traders having the exact same system achieve completely different results. So different that one can be very profitable and the other have losses.
Let's start with the fact that in order to compare two traders with the same system we have to keep in mind the situation when they learn the system more or less the same time. Once we assume that they started from the same point and learned more or less the same way, we can begin to answer the question of why their results differ to the extent that one has good profits and the other has losses. So let's get to the substance.
Note that any entry into the market requires a series of observations, analysis and decisions. Observation is simply watching the market. At this point, your brain begins to analyze the situation. As a result of the analysis, you can decide to take a position. You determine the size of the position for entry, wait and enter the market. This is another sequence of thought and decision-making. Then you manage the order. In a nutshell, we can say that it's a series of zero-one decisions on whether to stay in or exit the market. And eventually the closing of the position follows.
Now the most important thing - note what happens during this process. Your mind sees, analyzes and makes decisions. This is a complicated process. This process is different in each trader. And it is the reason why one trader makes money and another does not - even if they have the system mastered to a very similar degree. This, in turn, can be checked on a simulator or by asking to identify signals on a demo. Meanwhile, in the real world, psychology comes to a head. Stress, glass ceiling, beliefs, various factors that make them, for example, make different decisions when managing a position. Even if they see the same thing. Their brains analyze the situation differently, taking into account extrinsic, non-market factors.
Take two traders seeing the same signal and trading the same system.
Example 1 The first trader just had a series of losses. This made him nervous and conservative. Seeing a small correction, he starts to worry about profit, he would like to close this order on the upside even a small one, so he leaves the market. The second trader has not had such experiences and nothing oppresses him, so he is able to calmly wait until the TP.
Example 2 The first trader thought about his goals for a long time, counted how much he should "earn" per month in the market to be able to live comfortably from trading, created a plan based on this, divided into monthly goals.
Currently he chooses the best orders according to the system, he looks at the market as a place where he can earn to achieve his goals - from this perspective he has distance from every single order. Hence, it's easy for him to get to TP, because he doesn't have the pressure to run away with anything from the market right now, right away.
He knows that if not today, he will achieve his goal tomorrow, or in a week - so if that's the case, why not now? He sets SL and TP and calmly waits.
The other trader doesn't have specific long-range goals, he has some trading plan, but he doesn't quite take it seriously. That is, he has no inner conviction that its implementation is something very important. As a result, his psyche is dominated by a shorter perspective - to earn as much as possible today and this week.
Hence his level of "nervousness" is higher - because he has the conviction that every pip ("every dollar") counts. If you look at him from the side - he makes a lot of "quick" trades, while the first trader chooses them more carefully. His market entries also last shorter.
In the long run - it turns out, however, that trader 1 has better results and greater mental comfort.
To sum up - both traders have different perspectives, one treats trading as an opportunity to achieve his goals and tries to follow the plan, the other just wants to "make money". As a result, their mental processes are different, each of them makes different decisions at the same moments, as their thought (decision) processes differ.
The different life goals of traders make their psyche work differently during the course of a gamble and because it pursues different goals.
When you have set long-term goals - they stabilize the psyche and help you keep your distance from the trade, yourself, the market.
That is, trading the same system, both will see the market differently? No, they will both see the same thing, but their brains will analyze it differently, because a particular decision-making process serves DIFFERENT PURPOSES. As a result, there are two different decision-making processes going on in their heads. And this is the main reason for the situation that one earns and the other loses. To the first, goals gave a long-term perspective, to the second, the lack of goals anchored in the psyche gave a focus on the present moment and "what he will earn today." In addition, the first knew that he needed to rest and maintain his mental form, so he couldn't sit in front of the platform all day. Hence, more comfort, better decision-making and, as a result, better results.
Example 3 The third example is obvious: one trader has a low risk tolerance and quickly runs away with small profits. The other tries to get to the TP.
The same system, but again two people execute it differently, because they make decisions using different criteria. That's why it's the trader who is profitable and not the system, because two people will trade the same system in different ways due to the fact that they have different things in their minds, pursue different goals, from different perspectives. I don't know a single two traders who trade the same way with the same system.
Don't assume that by learning someone else's system you will have the same good results as the author of that system. Assume that you will have better! :)
Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers!
Follow: https://www.tradingview.com/u/drSwierk/
I once spoke with an excellent trader about balance in life and the role of mental and physical fitness in trading. He said that it is the trader who is profitable, not the system. What I mean is that many times it turned out that two traders having the exact same system achieve completely different results. So different that one can be very profitable and the other have losses.
Let's start with the fact that in order to compare two traders with the same system we have to keep in mind the situation when they learn the system more or less the same time. Once we assume that they started from the same point and learned more or less the same way, we can begin to answer the question of why their results differ to the extent that one has good profits and the other has losses. So let's get to the substance.
Note that any entry into the market requires a series of observations, analysis and decisions. Observation is simply watching the market. At this point, your brain begins to analyze the situation. As a result of the analysis, you can decide to take a position. You determine the size of the position for entry, wait and enter the market. This is another sequence of thought and decision-making. Then you manage the order. In a nutshell, we can say that it's a series of zero-one decisions on whether to stay in or exit the market. And eventually the closing of the position follows.
Now the most important thing - note what happens during this process. Your mind sees, analyzes and makes decisions. This is a complicated process. This process is different in each trader. And it is the reason why one trader makes money and another does not - even if they have the system mastered to a very similar degree. This, in turn, can be checked on a simulator or by asking to identify signals on a demo. Meanwhile, in the real world, psychology comes to a head. Stress, glass ceiling, beliefs, various factors that make them, for example, make different decisions when managing a position. Even if they see the same thing. Their brains analyze the situation differently, taking into account extrinsic, non-market factors.
Take two traders seeing the same signal and trading the same system.
Example 1 The first trader just had a series of losses. This made him nervous and conservative. Seeing a small correction, he starts to worry about profit, he would like to close this order on the upside even a small one, so he leaves the market. The second trader has not had such experiences and nothing oppresses him, so he is able to calmly wait until the TP.
Example 2 The first trader thought about his goals for a long time, counted how much he should "earn" per month in the market to be able to live comfortably from trading, created a plan based on this, divided into monthly goals.
Currently he chooses the best orders according to the system, he looks at the market as a place where he can earn to achieve his goals - from this perspective he has distance from every single order. Hence, it's easy for him to get to TP, because he doesn't have the pressure to run away with anything from the market right now, right away.
He knows that if not today, he will achieve his goal tomorrow, or in a week - so if that's the case, why not now? He sets SL and TP and calmly waits.
The other trader doesn't have specific long-range goals, he has some trading plan, but he doesn't quite take it seriously. That is, he has no inner conviction that its implementation is something very important. As a result, his psyche is dominated by a shorter perspective - to earn as much as possible today and this week.
Hence his level of "nervousness" is higher - because he has the conviction that every pip ("every dollar") counts. If you look at him from the side - he makes a lot of "quick" trades, while the first trader chooses them more carefully. His market entries also last shorter.
In the long run - it turns out, however, that trader 1 has better results and greater mental comfort.
To sum up - both traders have different perspectives, one treats trading as an opportunity to achieve his goals and tries to follow the plan, the other just wants to "make money". As a result, their mental processes are different, each of them makes different decisions at the same moments, as their thought (decision) processes differ.
The different life goals of traders make their psyche work differently during the course of a gamble and because it pursues different goals.
When you have set long-term goals - they stabilize the psyche and help you keep your distance from the trade, yourself, the market.
That is, trading the same system, both will see the market differently? No, they will both see the same thing, but their brains will analyze it differently, because a particular decision-making process serves DIFFERENT PURPOSES. As a result, there are two different decision-making processes going on in their heads. And this is the main reason for the situation that one earns and the other loses. To the first, goals gave a long-term perspective, to the second, the lack of goals anchored in the psyche gave a focus on the present moment and "what he will earn today." In addition, the first knew that he needed to rest and maintain his mental form, so he couldn't sit in front of the platform all day. Hence, more comfort, better decision-making and, as a result, better results.
Example 3 The third example is obvious: one trader has a low risk tolerance and quickly runs away with small profits. The other tries to get to the TP.
The same system, but again two people execute it differently, because they make decisions using different criteria. That's why it's the trader who is profitable and not the system, because two people will trade the same system in different ways due to the fact that they have different things in their minds, pursue different goals, from different perspectives. I don't know a single two traders who trade the same way with the same system.
Don't assume that by learning someone else's system you will have the same good results as the author of that system. Assume that you will have better! :)
Give it a boost 🚀 and drop a comment so we know to publish more for you. Cheers!
Follow: https://www.tradingview.com/u/drSwierk/
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