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Psychology

Bitcoin and Ethereum - can you exploit FOMO? This is well beyond technical analysis - into the domain of human psychology. In this video I theorise on exploiting FOMO - which is psychological phenomenon - instead of just being a victim of it. I look briefly at Ehterium as well. An important thing for all markets is that the point of greatest fear is also the point of greatest opportunity. Please note that I am not predicting anything. I totally expect price to crash as well. All I can do is control my loss. Supplemental: Microtends and risk aversion Disclaimers and Declarations: No pecuniary or other advantages are derived or to be derived by sharing opinion/information presented here, even if originating from other parties. The representations herein are indicative, not predictive and do not imply any past, present or future performance of the individual making the representation. Under no circumstances does any graphical or other representation imply, encourage or recommend the buying or selling of securities, or the making of any kind of investment or trade. No guarantee of accuracy is provided for reported facts. No insight into practical aspects of trading or investment is provided. There are no cloaked, or implied meanings or expectations to be received. Gambling in financial markets is strongly discouraged. Trading or investing in securities, crytpocurrencies or tokens of any kind carries serious and/or catastrophic financial risks. Those who lack the knowledge, skill and experience in those markets should avoid taking those risks. Interpretations by others about what may appear to be implied by the presence or absence of some content, are dismissed in advance and do not nullify all or any part of this disclaimer. You are responsible for your own due diligence. Should you take financial risk by acting on this representation or any interpretation of it, you do so entirely at your own risk.
BITSTAMP:BTCUSDEducation
by Captain_Walker
To boldly go beyond technical analysis towards self-analysisHaving been on Tradingview for the last few years, I've observed that perhaps 'the most important' aspect of trading is hardly ever discussed. I'm not sure why that its. Look, this is a loser's game. How? Read on. Some key estimates: 1. 90% of traders will lose money consistently. . 2. 80% of trading success depends on managing individual psychology. 3. It is possible to be consistently profitable even with a 30% win rate. I say that there is an invisible wall that affects many new and seasoned traders. How would I know? I've been there - and head-butted the wall! The difficult aspects of trading: 1. Managing risk 2. Self-deception 3. Finding reasonable entry and exit points. 4. Being disciplined - staying disciplined. 5. Changing patterns of cognition 6. Changing patterns of behaviour. 7. Managing external influences. 8. Managing emotions. Core trading skills to develop: 1. Finding trends early enough. 2. Calculating acceptable losses. 3. Exploiting trends. 4. Understanding when not to enter a trade. How do new traders get conned? 1. They have ideas or beliefs that there is some magic formula or system of trading that will work to beat the markets. 2. They are influenced to join training programs, most of which deliver little or no strategies for coping with the difficulties. 3. They move from program to program spending on 'hope'; losing as they go. 4. They spend on signalling services. The difficulty is that many traders have a difficult time seeing their own psychology. Note - I'm not talking about psychology in general or the stuff you find in textbooks. So a trader could focus on all manner of trading methodology and still have a very big problem. Dig deep fellow traders. The markets are their to punish you but also the markets are sound teachers.
BITSTAMP:BTCUSDEducation
by Captain_Walker
Three things Mark Douglas taught me (Pt3)Trading Strategy The trading strategy of any trader is one that should fit him or her. There really isn’t much to this section as a plethora of trading systems can be on the internet. What matters the most is that your system has a risk reward ratio of at least 1/4. If you desire a profitable trading strategy I highly suggest Michael Covel's and Rayner Teo's style of trading. They are great traders. Please check out my other article as well!
Education
by ElieTheForexTraitor
2
Trading Psychology 5 Edge ExecutionEdge Execution Trading is a numbers game, and markets are based on the mathematics of the traders equation. However, understanding this alone will not guarantee profits. The ability to apply and conform to the math of the current market context is what leads to consistent profits. Beginners often have a misconecption that they need to know what is going to happen over the period of the next X number of bars in order to make a profit. They believe they must enter at the exact right time and price in order to win on a trade. This could not be further from the truth, and anyone consistenly making money from the markets knows the reality. The reality is a trader does not need to know what is going to happen next in order to make a profit. In fact, a professional trader knows that any given trade is irrelevant to the bigger picture, and an income is generated over a series of trades; not any single trade. This menatlity is past the duality of winning and losing, which are simply accepted as part of the job. This can be called the "probability mindset." Profits are generated over a series of trades, not any single trade. Therefore, it is not necessary to make money on every trade, every day, or even every month to be a succesful trader. It takes time to build confidence, believe this is true and fully understand this concept. Perhaps this is why most traders fail, by giving up before coming to this realization. It has been said that professional traders have "Won the game before they started playing." (Jack Swagger). This confidence can only come from the probability mindset, when a trader accepts he may lose on this trade, the day, or even this year. But he accepts his risk, and trusts the math that over time he will generate a profit. Even if he takes a large loss, or several, it does not matter; he knows he will make it back up. The overall point of this is that losses are part of the trading process. If a trade is a loser, it does not matter; move on to the next trade. Dwelling on losses or a drawdown does not bring the money back, but continuing to trade does. In this sense it can be said that a successful trader "trades his way out of a drawdown." It is helpful to think of losses as the "cost of doing business" just like any other business would incur expenses while conducting its operations. There are very few (if any) businesses that do not require heavy start up costs, or capital to continue the business while generating profits. Ever heard the saying "It takes money to make money?" Trading is no different, although most traders fail to realize this, and focus solely on profits. In trading, our costs are commissions and losses, which are offset by gains, resulting in a net profit. Employing your Edge So what does this have to do with exeucting an edge? Well, it is necessary to understand not every trade is a guranteed success, and there is a random distribution between wins and losses, with any edge. Even the best setup or edge will result in a loss 30-40% of the time. It is virtually impossible to know in advance, which trade will win and which will lose. Therefore it is absolutely imperative to take every trade that meets a traders edge, regardless of how the trader feels, thinks, or any other variables unrelated to the edge. With this said, here are the basic steps to exeucting and employing an edge. 1). Identify edge. Pick a setup (second entry, wedge reversal, follow through bar, ect.) It is a good idea to start with one until familiar with reading prices. 2). Ask yourself at the close of every bar "Is my edge present?" If no, wait. If yes, enter the trade. 3). Execute the edge with a series of 10 or 20 trades, document every trade. At the end of the series analyze results and tweak. Wishing you the best of luck on your trading journey -Josh Ridenour
Education
by tradersmentality
1
Trading Psychology 4 "Now Moment"Trading the "Now moment" Most of the time, prices do what they have been doing or normally do based on the current context. But what about when they dont, or instead do the opposite? For instance a strong bear breakout of a bull channel. Five minutes ago prices were rallying higher and higher, with no end in sight. Now prices are falling dramatically, what is a trader to do? Is he going to continue trading as a bull channel or trading range? Or does he exit his longs with a loss and sell at the market? Unless he accepts the reality that in a market truly anything can happen and anything is possible, he will more likely be unable to let go of the past and not willing to recognize the opportunity being presented right now. In this scenario he would probably fail to take the later action, and instead continue to fight the strong bear breakout because his mind is convinced prices are still in some form of bull trend or bull flag trading range. Until a trader truly accepts this fundamental point of market reality, it is easy to get caught up in what should happen and the true opportunity continues to elude him. The reality of the market is; every moment in the market is unique, and every opportunity has a different set of risk, reward, and probability. What worked today, may or may not work tomorrow. Most beginners fail to appreciate or even realize this is the case, as they attempt to apply rigid rules to a constantly changing environment. This prevents a clear, objective view of what prices are likely and not likely to do. As a result, this does not allow the trader to correctly identify the opportunity being presented "right now." Awareness A major obstacle to trading the "now moment" is where a traders awareness lies at any given time. Is he thinking about what happened an hour ago, or what may happen by the end of the day, or is he intently focused on what is transpiring in this very moment? Identifying and becoming aware of what is occuring internally while trading is helpful in this situtation. The idea is not to fight or prevent emotions from occuring, but rather acknowledge they are present and inturn may lead to a poor trading decision. Most trading errors are due to an emotional outburst or the traders awareness being somewhere else other than the market. Beathing exercises such as focusing on the breath and taking slow, deep breaths, can help ease the internal tension and return focus back to the market. This is a form of awareness training (mindfulness), which can help a trader with concentration and placing his awareness on the trading task at hand. It is also beneficial to practice some form of mindfulness outside of trading to become more intune with yourself, and ultimately the market. Trading along side stress / emotions What makes the difference between an amateur and professional trader is not the lack of thoughts, emotions, or stress. Professional traders too have these characterstics as we are all human, although they may be less obvious to the observer. However, a professional does not act on these feelings, and instead does what is necessary based on the market structure, not how he feels or what he thinks. He may find himself distracted with thoughts or an emotion, but then brings his awareness back to the trading task at hand. Amateurs do the opposite by allowing these feelings and emotions to lead to actions in the market, which more often than not are trading errors. Amateurs get stuck so to speak in the stress or emotion rather than the correct trade action. Moving past this is not easy, but returning awareness to the market rather than internally is the first step. An easy way of accomplishing this is to periodically throughout the day ask yourself "Where is my awareness?" or "Where is my mind?" The next question is, "What is the opportunity being presented right now?” or “What is the market telling me to do right now?” Continued...
Education
by tradersmentality
Trading Psychology 3 Fear Keys to building a strong Traders Mentality (Probability Mindset) There are many hindrences to developing the probability mindset, and it would be easy to write an entire book dedicated to them all. However most of these issues fall into four broader categories; fear, false beliefs, trading the "now moment", and edge execution. In the following paragraphs we will touch on these key issues and simple ways to address them. Fear As humans we all experience fear throughout our lifetime and so much so the "fight or flight" response has been genetically enbeded into our DNA. Many traders believe they will natuarlly be able to “trade as a computer” after X amount of practice or experience. They assume these components of human nature will eventually give way and soon they will be able to trade without fear or emotions. There is a problem with this theory. We are not computers, and never will be. We are human, which means we are susceptible to emotions and fear responses that are built into us. We are also far from perfect, and full of mistakes, furthering us apart from computers. With this said, it is extremely unlikely a trader will be able to over-ride his natural insticts without slowly and gradually changing his way of thinking first. The best way to overcome fear is through exposure in small doses. For example someone who is afraid of heights, is not taken to a fifty foot cliff and forced to jump off. And he surely does not overcome this fear spontaneously, or naturally after any period of time. Instead he is slowly exposed to heights and as he gets comfortable, taken to increasingly higher points. He may jump off a ten foot cliff, then twenty, and so on until he reaches the fifty foot cliff and jumps off. It is important to realize his fear was never removed completely, but rather he was able to cope with the fear and still jump. This model can be applied to trading, whether it is slowly building a position size, executing an edge every time it is present, or getting comfortable being in the market with looming uncertainty. Fear can often be debiliating, and is a major hurdle to overcome when transitioning from an amateur to professional trader. The most common result of fear is "anaylsis paralysis" where a trader is unable to make an action due to information overload. There are many different types of fear that occur while trading. Fear of failure, success, missing out, leaving money on the table, and mistakes, just to name a few. It is normal to feel uneasy when putting on a trade or while in a position. The problem lies within hesitation when fear prevents you from entering an otherwise reasonable trade, or any other necessary market action (take profits, cut a loser, hold longer, ect). If you find yourself not entering a trade, there are only two reasons why. First, the trade does not meet your edge criteria, which is a completley valid reason to not enter a trade. The second which is a problem, is fear. When a trader stops entering trades meeting his criteria due to internal fears, he begins to cherry pick trades, and skews his traders equation. This can mean the difference between a profit and a loss at the end of a series of trades. Understanding and recognizing fear within yourself and the market is vital to profitable trading. Awareness of fear within yourself is the first step to overriding and correcting it. And recognizing fear in the market is often a good opporunity to position a profitable trade. It can also be helpful to realize fear only exists in terms of one's ego and is not actually real, only percieved. Using "Halfsky" position to overcome fear Many traders experience fear and hesitation after a series of losing or winning trades. When he passes on a trade which works, he is upset he missed out. If he enters and loses, he is upset he gave back profits. This back and forth continues to build, and again leads to cherry picking trades as he believes he can identify w
Education
by tradersmentality
Trading Psychology 2 How Strong is your Trading Mentality?How strong is your Trader Mentality? Signs of an "Amateur Mindset" If you identify with any of these characteristics while trading, you are suffering from an Amateur Mindset. These are normal when first learning how to trade, and even common in advanced traders who have not yet mastered their trading psychology. Very succesful traders may still occasionally experience some of these symptoms while increasing positions, but as far as day to day, do not. Hesitation to enter positions meeting edge criteria Fail to exit trades not performing to expectations Feelings of fear (missing out, failure, success, leaving money on the table, etc.) Upset/mad when prices go against you or happy / relief when prices go your way The market is too painful to watch (pain avoidance) Market actions led by emotions / feelings / stress Forms and applies rigid rules for entry / exiting market Afraid to make mistakes / upset after mistakes Signs of a "Probability mindset" or Professional Trader Enters or exits trades without hesitation Does not experience internal conflict while entering, or managing trades Willing to take a loss (accepts his risk) Flows with the market seemingly effortlessly Not attached to outcome of any trade Emotions / stress do not lead to market actions Enters / exits however necessary Accepts mistakes and moves on Interestingly, it is easy to separate a professional trader from an amateur, not based on profits or losses, or the amount of ticks he makes a day; but based on his actions in the market. By observing how a trader interacts and engages with the market it is obvious if his actions were led by emotions or intuitively based on what the market told him to do at the time. Professionals flow with the market, and do not fight or resist it in any way. As a result money seems to flow effortlessly into their accounts, and their equity curve is that of a healthy bull trend. Amateurs are constantly fighting the market and themselves, with actions led by what they think, perceive as a threat, or the false belief that they know what is going to happen next. The outcome is a slowly depreciating account balance, and an equity curve that is flat or in a bear trend. The later is a sign of trading errors made by the trader and not that of an edge being executed properly. Continued...
AMEX:SDSEducation
by tradersmentality
Trading Psychology Introduction to Trader Psychology There is evidence of technical analysis dating back to the 17th century. The candlestick charts most of use everyday to trade were created in the 18th century by a Japanese rice trader. By this point one would think technical analysis should result in more profitable traders and lead atleast a quarter of price technicians to a profit. However, this is not the case and in fact the opposite is true as most traders fail, even after years of studying price action. With this said, it is obvious learning how to read a price chart alone is not what leads to consistent profits. So what is it that seperates the very few succesful traders from the so many failures? Is it their strategy, their money managament skills, IQ, were they born with a different skill set than most, do they work harder than most, or are they just plain lucky? All of these sound plausible, but are they really the driving factor behind consistent profits? The short answer is no, none of the above. Perhaps we have been looking for the answer in the wrong place all along. In fact, most traders never even consider the possibility that it is their attitude or mental habits which prevent their success. What truely seperates the winners from the losers has nothing to do with external factors, but rather what goes on internally while observing and engaging the market, in other words; a traders mentality. "If the next bar is a bull follow through bar, the bulls have a 60% chance of making a profit. If the next bar is a bear bar that means....." Absolutely nothing! Unless you can structure a trade plan, and abide your plan as the market unfolds, without questioning yourself or your plan, and execute it flawlessly. Most beginning traders believe if they study harder and learn more setups, they will eventually become profitable. This is the fallacy of price action analysis. In fact, most economists and price analysts do not make good traders. Why? Because they form rigid rules and ideas as to what prices should or will do, and in turn fail to recognize and accept the "now opporutinty" the market is offering to traders who are open to all possibilities, including a lower probability event. Even more debilitating is the false belief that they can pick out winning trades, and avoid the losers, which leads to cherry picking through a traders edge. If the market spends most of its time with a probability between 40-60%, why is it so hard to generate a consistent profit? Understanding prices and their tendencies is only half the battle of becoming a Professional Trader. The other half and harder to develop, is the traders mindset. What makes a good trader is not only his knack for reading prices. It is the ability to flow with the market as it is unfolding, and the art of doing the right thing at the right time; without questioning himself. If the market is only offering X amount of profit, he takes it. If the market is unfolding in a way that he did not expect, he exits. He is willing to take a loss, and more importantly does not care what happens to "himself" in the market. He does not take it personally, and carries on throughout the day executing trade after trade. Continued...
Education
by tradersmentality
Skulls, Bones And Candlesticks - The Margin CallIf you are a beginner in the wonderful world of charts, patterns and indicators, this post is for you... Almost all traders have on day faced an account crash and anyone knows that it is a damn bad moment to go through. My goal here is to identify what is the main reason leading to this morbid situation that make us crash our accounts...and provide some tips to avoid being in panic when the margin call happens. The leverage and margin level. The trading world is seen as an eldorado for most of people, especially because it seems so easy to make much money very quickly. It is also a path to financial independency which is a dream for many people. Working from home or simply working with only a smartphone and make money like that. It seems so nice. Let's be clear, If the leverage did not exist we would not be here on Tradingview. If trading knows as much succes, it is also because we can invest much more than we have in fact. With $1,000, we are able to invest up to $500,000 in the market... from our smartphone... Simply insane. Difficult to stay cold being aware of that. Who has never been in margin call here? This situation should never happen. If so, then your trading behavior is at risk and you will crash your account sooner or later. My solution: Always respect the 10% rule. Your overall margin including all opened position should never exceed 10% of your account. If your capital is $1,000 then your max margin would be $100. Even there it is only for agressive traders. Why the 10% rule can help you to succeed? In fact, you can use it as psychological barrier. As an example, you can face the case where you have a position in loss. I identify 3 main situations: A) You position is in an important loss. You are tempted to average down the entry price of the position by adding a new one on the same pair. Clearly the badest behavior. With the max margin at 10% you cannot add multiple positions without breaking the rule. It is your alert. B) You can also let the position run in loss without doing anything. Your stop loss? Psychologically, you are not able to handle such a loss so you pray for the market to reverse. It is possible depending of the fundamentals and technical configuration, if a huge support is broken, better worth closing the position. Letting the position run is risky but clearly much more acceptable than the A situation. C) Your position is in loss but you use a stop loss. The stop is hit but you accept this loss and look for a better opportunity to enter in the market again. Ideally on a support or a resistance. In definitive, being in margin call should warn you that your trading behavior is dangerous in a medium to long run. The probability for you to crash your acccount sooner or later is damn high.
Education
by Traderscope
1
Today's Lesson (#4) : Adjusting the leverage to volatilityIn this educational content video I had to cover one the biggest noob trader mistake, trading with too much leverage. That's basically what flushes out almost 80% of the noobs. Getting the margin call, putting more money into trading than you initially expexted. All of this is well known as gambling problems. And the recent flow of beginners who went to the markets with hopes of easy gains, most are now feeling the painful experiment of what the market is doing to fools. So I hope you'll learn something important today with that lesson. Cause if you don't, then you'll probably have to learn it the hard ways later...
BITSTAMP:BTCUSDEducation
by PRO_Indicators
13
The big issue with technical analysis. In this video I give a few minutes of preview before discussing what I see on this weekly time frame. Bear with me as you'll see where I'm heading. In the second half of the video I show how I estimate the big probability from the weekly time frame. I'm not interested in being right in this. That's not what I want to get across. Whilst technical analysis is a useful 'tool', I assert that there is a bigger issue of individual psychology in the background that is hardly ever spoken about. Loads of new traders especially, will spend a disproportionate amount of time on indicators and fail. They're missing where the big issues are, and it's nothing to do with charts or technical analysis. So, I'm saying that all new traders really need to dig deeper. Yes - learn about technical indicators, but focus on the unseen i.e. biases, emotions, justifications, coping with loss etc. I'd be delighted if other traders out there can share their experiences (good or bad ones). Come on be brave!
Education
by Captain_Walker
2
The dangers in listening to the newsI'm sharing a chart to give my sentiments about listening to the news. New traders especially tend to listen to the news and website opinions about where markets are heading. I show a bit on how I approached a particular situation on the US30. A lot of news is late and people who create news items or blogs have their own biases, based on the information they have. The news can be dangerous to trading as it can cause a trader to become apprehensive, doubtful and stay out of trade setups that may be quite sound for entry. News can be depressing and cause a trader anxiety. Some very important earthshaking news may be useful e.g. some major monetary policy change in Europe or America. But on the whole, listening to or reading news is fraught with problems. I've found that I make better decisions when I approach the markets with a kind of fearlessness described by Mark Douglas . The fearless state of mind is not 'recklessness'. It is about calmly making decisions and accepting risks in a reasonable way, based on a tested strategy. None of the above or the video is advice to traders.
FX:US30Education
by Captain_Walker
Self-discipline - what's that?Whilst I am on a roll, I'm pushing out loads of questions and thoughts that have occupied me for the last two years. All this is well ' Beyond Technical Analysis '! In too many trading/training videos out there, I've heard the words 'discipline' and 'self-discipline'. These are so commonly used words that many take their meaning for granted, or as something very elementary. I know - because I was one of those people who thought I knew what the words meant. However, there is also a thing called self-deception which works against self-discipline. Self-deception at its heart, is the ability of the mind to justify anything! Quite simply - it's dangerous. The Collins Dictionary defines self-discipline as, " controlling of oneself or one's desires, actions, habits ... .. the act of disciplining or power to discipline one's own feelings, desires... with the intention of improving oneself. " It's easier now to see how this connects to trading environments. A sound trader needs a lot of personal self-control over actions, habits, feelings and desires. I add 'thinking processes'. Certainly there must be a routine that improves one abilities, as the markets are not static. Their behaviour changes so one needs to improve to match those changes. The obvious question for many (especially new traders) is, " How do I become more disciplined? " I'm afraid there is no magic formula that I can prescribe. I can only share a few personal experiences that drove me to become more disciplined. It's like a weird sandwich: A firm and unshakeable desire to make myself consistently profitable. Pain i.e. painful mistakes. Non-acceptance that if others could do it, I couldn't. Pain drives people - let's not debate that. By pain I include from the worse kinds of suffering to the more subtle kinds. One can include things like frustration, anger and disappointment. Pain stood like a distasteful filling between the two sides of my sandwich. I just couldn't ignore it. If I wanted to make this thing right I had to fix the pain; all sources of it. I was/am my own pain. My enemies arise from within me to cause me pain. My mind plays tricks on me in trading environments. To deal with the sources of pain I had to deal with my own mind, else just give up. I'm no quitter! So whilst I do not claim near-perfect discipline now, I have been addressing the trickery of my own mind - those inner enemies - that thwart my thinking processes. After all, if I don't the whole sandwich (three bullet points above) become nothing - and I'd have to join the 90-odd percent of people who give up on trading in the first couple years. Am I saying that pain is a necessary ingredient for everybody to reach a greater self-disciplined state? Well yes I am! In every walk of life people have to suffer some sort of discomfort in achieving their goals. If you wanted to become a top-rated lawyer, you would have to suffer the 'pain' of years of study, and the trauma of being beaten in court rooms. If you want to get to the North Pole on foot, that involves pain and personal sacrifice. But nobody gets to the North Pole alive, with poor discipline. I shan't go on to mention other areas where people suffer extreme discomfort in order to achieve their goals. If there are take away points to consider, traders should to find out what they are about and anchor themselves on what they want and what they won't have. Then, systematically whittle away at all obstacles by robust self-refection. It takes time - and bargain for pain! Do the time - take the pain. Don't blow up a live account.
Education
by Captain_Walker
Courses, horses - or the mind?If you’re reading this looking just for the best course to attend, you may be disappointed. I go deeper than the simple issue of 'which courses' or 'what course is best'. The sharing of my personal experience may be of value to new traders but also for more seasoned traders. INTRODUCTION I’m sharing a summary of my experiences over the last 4 years, so that others can see something more about ‘courses’ – and what courses can never give you. I am nobody known or big in the trading world. I do not offer advice in this or any other post. I do not train anybody. I do not seek anybody's money for any service. I do not require recognition. Take all of what’s written here as 'what I've learned' and cautiously apply the parts of it that you find of any value. Where I use words like ‘you’ and ‘yours’, this is my self-talk as if I’m advising myself all over again. I do this all the time. You're not mad if you're doing self-talk. It is an important thing to do. I started off with binary options and lost a fair amount of money. I watched numerous videos on YouTube about how to trade these, with numerous so-called successful strategies. In my searches I came across Spreadbetting, and did the same. More money lost. I then signed up with various trainers and spent more money there. More losses. I'm to blame I was led to understand because I didn't follow the rules. That's true to some extent - but something fundamental was missing. Why could I not follow the rules of some strategy invented by others? It's about why this post is in the Trading Psychology section of Tradingview. I followed various gurus on websites, paid more money and still no success. Most of these gurus had state of the art audio-visual equipment and studios. They usually appeared with large microphones, conspicuous and 'in the face'. Is that really necessary? Some will say it’s all about better sound quality. Then I got into ‘trading diaries’ and other things people out there said I should do. Still major problems. So, what was missing? To put it in a nutshell the problem was grappling with my personal psychology . This is about the way I work - how my mind functions in relation to risk, which would be different to everybody else. Psychologists may be able to tell you a bit about how minds in general work. They cannot tell you exactly how ‘your mind’ works. GURUS? Most of the gurus I came across would mention psychology several times but never get to the heart of it. Naturally they're not psychotherapists, so they can't tell me how to sort myself out. Most trainers focused on 'discipline' which is fine, but they couldn't tell me how to become disciplined. What? - am I just supposed to pull myself together and follow a script? Some would say 'yes'. But this is not how the human being operates. If everybody could just pull themselves together and follow a trading plan and a set of rules, then everybody would be rich. Come on - we all know that's silly. ... truncated . This post became so long, that it cannot fit on Tradingview. It is accessible here where I go on to explore: GURUS? RECOGNITION METHODOLOGY AND STRATEGY MIND AND PSYCHOLOGY PATTERN REWRITING IF I COULD TURN BACK TIME I do apologise, and hope Tradingview allows this post to remain.
Education
by Captain_Walker
Let D4 Try Again: Psychology Of A Market Cycle!Hey Friends This is a re-reupload. I was not allowed to write swear words. I hope you will give IT A BIG LIKE, and support this chart again due to its educational purpose! Thank you, my friends This is an educational chart about the Psychology of a market cycle. Every market is determined by people's feelings. In this chart I have illustrated how people tend to feel through a market cycle. D4 has used BTCUSD as an example but it applies to every market. Enjoy! D4 loves you <3 Please give a BIG like - It really means a lot to me <3
BITSTAMP:BTCUSDEducation
by D4rkEnergY
20
Patience vs TradingPatience is a great quality in trading. Why ? Simply because it helps you not ceeding to impulsivity and it helps you decreasing mistakes. Patience in trading is similar to patience in poker. A good poker player will wait hours to get the best hand possible. He will wait for a very good pair like AA or KK instead of risking losing with weak pair like 44 or 66. Of course having AA or KK is not a guarantee of winning but you get a much higher probability to do so. In trading you face the same problematic. Sometimes the market doesn't give you anything, no info, no pattern. In this case, you should close your laptop and do something else. Really !!! The more you trade, the more you are exposed to make big mistakes. I used to make scalping for a time but I quickly realized that it was not for me. Staying all day in front of a laptop waiting for an opportunity, no, many opportunities to get 2 to 10 pips only. Some traders are very good scalpers but I am not. I am a swing and day trader. I look for 30 to 20,00 pips on each trade. You really need patience to get 1000 pips profit ! And obviously I have a dedicated account for this kind of investment. Why ? Because, after having made 100 pips, the temptation is huge to take my profit and close the trade. On this account you only have very long term trades where potential is 500 to 20,000 pips ! Patience is also a quality when you do not see any opportunity on the market. You are frustrated, you want to feel the adrenaline of trading. Calm down, stay cold. The market always gives opportunity, It will happen very soon trust me but at this moment, use this time to improve your skills, reading, learning, analysing or simply deconnecting totally from trading. Think how you feel good without the stress of a losing position when you are always looking after your smartphone to check the price. Be patient, wait for the optimal opportunity wen you can sell high and buy low. The opportunity which gives you the best risk-reward. Patience vs trading ? No ! Patience = Trading !
BITFINEX:BTCUSDEducation
by Traderscope
6
The Escalation Of Failure In TradingThe escalation of failure in trading ! : 5 reasons why most of traders lose their money ! Reason 1 / Step 1 : The "I DON'T ACCEPT LOSING" syndrom Reason 2 / Step 2 : The "I MOVE MY STOP LOSS" temptation Reason 3 / Step 3 : The "AVERAGE DOWN" disease Reason 4 / Step 4 : The "RISK EVERYTHING" game Reason 5 / Step 5 : The "I SWEAR IT WILL NEVER HAPPEN AGAIN" lie to yourself Let me tell you the story of JOE the gambler : Joe creates an account with $1,000 with a broker offering a x500 leverage. Virtually, Joe could invest almost $500,000 on the market ! Amazing ! Joe thinks that he is a reasonable investor and start investing with 0.05 lot. Joe creates an account with $1,000 with a broker offering a x500 leverage. Virtually Joe could invest almost $500,000 on the market ! Amazing ! So Joe has $1,000 on his account. He has a very good investment strategy which has worked very well for 1 month on demo account. Joe's projections gives $250 profit in one month. It is time now to pass on real account. Joe has read many articles about money management and joe wants to risk only 3% of its capital on each trade. Joe's strategy is to take trades only if a combination of several indicators give the same signal. Joe always use stop loss and take profit. The plan is the plan no matter what ! Right ?! Joe bought 0.05 lot on EURUSD at 1.2200 with a SL at 1.2150. He thinks that the price will increase from 100 pips at least in the next hours to reach 1.23. Reason 1 / Step 1 : The "I DON'T ACCEPT LOSING" syndrom Problem, the price falls from 40 pips. Joe starts panicking. Reason 2 / Step 2 : The "I MOVE MY STOP LOSS" temptation Joe decides to move the SL from 50 to 100 pips at 1.21. Reason 3 / Step 3 : The "AVERAGE DOWN" disease Problem, the market decides to go down again and the position shows a 80 pips floating loss. Joe decides to move the SL from 100 pips to 150 pips at 1.2050 and take a new position of 0.05 lot on EURUSD at 1.2120 with a SL at 1.2050. Problem, the market continues its fall and the price displays 1.2070. Joe thinks OK. I move my SL from 1.2050 to 1.1950. It gives more margin to let breathe the market and Joe takes a third position of 0.05 lot at 1.2050 with a SL at 1.1950. The average price is now 1.2123. Problem, the next days the market starts a range between 1.20 and 1.21 and Joe wants absolutely to leave the overall position in profit. Pride ! Joe loses patience and decides to take a new postion of 0.1 lot on EURUSD at 1.2070. The average price is now 1.2102. Joe is stressed and tired of this situation and decides to put an overall TP at 1.2120. The probability to hit the TP is high. Finally the market goes up and hit the TP during the night and when Joe wakes up the the price on EURUSD is 1.2200. Oh my GOSH ! Joe is frustrated ! Why did I change my TP ? I missed a lot of profit on this movement !!! Joe decides to take a new trade on EURUSD at 1.2200 without SL this time because this time is the right one !!! Pride !!! Problem, the market falls from 25 pips at 1.2175. Joe is convinced that he is right so he takes a new BUY pending position at 1.2150. And now the market makes a huge falls from 1.2175 to 1.2050 during the day. Joe has now 2 positions of 0.05 lot size. At this moment, Joe decided reasonably to close all positions with losses at 1.2050. Joe lost 275 pips on these 2 hasardous trades.
Education
by Traderscope
8
A Wyckoff Analysis of january 2018 Bitcoin "bubble"In Wyckoff Analysis, four main phases occur during the trading cycle: accumulation, markup, distribution and markdown. Accumulation phase is when smart money enters on a long position, when general public is not interested. Markup phase is when parabolic movements start, driving media and public attentions, when entusiasm and FOMO make their victims. Distribution phase is when smart money start exiting lasting only newbies' money. During distribution, bulls fail to stablish new highs, a big correction may be seen, driving fear to the market, this correction is followed by a lower high. Usually where traders exit positions and public think everything is back to normal, this is called bull trap. The Markdown phase is when ansiety, fear and pain make general public close positions with huge losses.
BITSTAMP:BTCUSDEducation
by UnknownUnicorn288635
7
Case Study for Mismanaging a Disciplined Trade StrategyIn the most recent BTCUSD dip I made a series of mistakes that put me in a slightly nervous position overall, but still generally favorable. Over a series of trades I managed to find myself in a position with an average buy price of $7486.13. Trading profitably on the dips I reduced this average buy price to $7348.21. Throughout this series of trades I had multiple opportunities to take profit and this discussion will focus on trading psychology and process failure. Early in my trading session I had managed to identify successfully entry levels that were reasonably close to where I could make a "dip" profit. Generally my target is around 2%. Given the big dip from $9.2k to below $8k and given the duration and recovery of that dip from $10k I felt confident that the market was oversold and all of the order book charts indicated an overall strong buying to selling ratio. My price target was just below $8.5k and on the first move up it hit $8.4k and I felt like there would be an orderly move over time. What I learned with this recent price action was that trading bots and whales/funds that control them have disproportionate leverage over price action. Not being fully aware of their techniques, I decided against adjusting my price target and I was "too greedy" and completely missed my profit opportunity after being presented double my normal target over two periods. Now having missed that opportunity I was forced to double down knowing that the next price move would likely be much bigger and deeper. Trading for profit on the way down I was able to recoup some of poor positioning but again, I did not quite understand the techniques of these algo bots until near the end when I was able to make an adjustment to how I choose price targets to better compensate for whale/shark algo bots. Setting price targets for exiting my position and reducing my risk came down to three possible outcomes: 1) Sell ALL at a higher price that would make profit but also leave me no room for error if I missed at $7800. This price level would have still been poor risk/reward overall so this exit strategy seemed like a mistake. 2) Sell ~half (47%) of my position at a profit at $7400 and then sell the other half at $8000 for "break even" on that part of the trade. This seemed like a prudent risk management strategy as I would have funds to take additional profit if the market moved back down while leaving in place a position that could become profitable over a longer duration. 3) Sell ALL at the higher price target that would give me a much bigger target but leave me open to poor risk management again. This was definitely the worst option. So I chose 2) which worked ok in that the first trade target was hit as expected. Then, while watching the order book I started to worry because there were big sell walls below $7500. I thought about how stressful it would be to ride that position back through another big dip and because of fatigue also overly focused on this possibility rather than going back to my pre-defined strategy of hodling for $8k on half and trading with the other half. Clearly, stress causes one to adopt a risk averse mental state. And this kind of risk aversion usually leads to the panic selling and "weak hands" phenomenon of selling at exactly the WRONG time, i.e. when you should be thinking about buying. So when I saw the price being challenged at $7k to $7.1k with very clear algo bot action pushing the price in both directions with very light buy order positioning I became a pawn in this algo bot action and decided to exit early and go take a nap rather than have to sit through another big dip with half of my fund at risk. Rather than see any huge sell wall the sell-side volume relented and the price nearly hit my price target of $7.9k. If I had been more disciplined I could have set a contingency (less greedy) target below $8k but I changed my plan using no particular reasoning whatsoever other than fear of these algo bots.
COINBASE:BTCUSDEducation
by powderpc
The markets are there to make you feel stupid or brilliantMany a trader will have made their best analysis based on information at the time and then taken an entry position, only to find that the market does something unexpected. Price may move violently in the wrong direction i.e. not the favoured direction and comes close to a stop loss or actually stopping out the position for a loss. Now with hindsight a trader feels or thinks, " How stupid - I should have seen it coming. I shouldn't have done that. " This happens enough times to new traders. Seasoned traders live with it and have less such self-talk. I think it's important to acknowledge those feelings. These are partly thinking processes and emotional processes. New traders often feel demoralised after 10 or so failures in a row. " Am I doing something wrong? " - they may think. This is a reasonable question. It could be that something is wrong. However, nothing may be found wrong with one's methodology or application of one's personal rules - after a careful reassessment. It's good to check. The BTCUSD chart shows what is some sort of 'head and shoulders' pattern. It's not the best picture of it in the world but something is there. Wherever one takes a position in BTCUSD, it could be wrong. Why? The markets respect no one person. A proportion of traders will have taken a position in this and made some real profits. They will punch the air and with joy go, " YESSSS!! " From my long experience I've learned that 'feelings' of being right or wrong, actually bends the mind a trader. I'm speaking for myself quite clearly. Others may have similar experience. A feeling of being good after a string of wins, often creates a subconscious sense of confidence. Imperceptibly this can creep into future trades and then one realises some major losses. My own strategy is to try at best to reduce trading frequency and exert even greater diligence in entering trades after a series of wins. I aim to expect the unexpected. It's always a tad difficult when I get stopped out for a loss. But I repeat to myself that the stoploss is there to protect against the 'unexpected' - so it's not actually unexpected. It is a limit. It is the expected limit of price moving not in a favoured direction. There is no single path to 'a promised land' in trading. Traders can adopt different methods, different rules, and be consistently profitable. The largest obstacle which is difficult to train out a trader, is their own personal psychology . By this I mean things like attention to detail, biases, emotions, discipline etc. So in many ways feeling stupid or brilliant can affect our future decision-making in imperceptible ways. Traders can lose discipline after losses or big gains. Mark Douglas spoke about these sorts of things. The BTCUSD chart is not intended to attract thoughts on whether to go long or go short. I'm not really interested in whether the H&S is there at all or correctly drawn. I'm taking it beyond that. What happens next to traders who come out of this period - some bruised, some overjoyed? Trading is not about winning one trade or a small handful. It's about the long road ahead. I'm delighted if others can share their experiences.
BITSTAMP:BTCUSDEducation
by Captain_Walker