I love studying psychology and I’ve devoted my life as a trader to studying its role in a trader’s performance as well as its role in a strategy to profit from the markets. I’d like to start a discussion on this and learn from what you all have struggled or triumphed over as well as contribute what my studies have shown.
[Don’t read the following until you polled. Otherwise it may bias the result!]
Anyway, something that I’d like to share is the turning point that I had during my trader development. I remember my first trade being a winner of a measily 20 pips that was levered up enough to make my heart race faster than the bullet trains wizzing past my apartment in Tokyo. However, my overconfidence was fleeting, and after developing some risk control my account drifted down slowly for years. Eventually I came across something that I thought to be an edge and I was actually profitable for a couple years. However, market conditions changed and I lost money and confidence. It wasn’t until I came across the realization that my confidence was based on the wrong thing that I turned my trading around. When my sense of certainty came from learning to understand how markets actually worked (i.e. the decision making patterns of its participants) and my ability to adapt to change, the correlation between my level of certainty and my account P/L diminished. I owe a lot of this to my friends at fixed income and derivatives desks at banks and lots of reading, and it changed everything for me.
I’m opening up this thread for you all to share any epiphanies you’ve had regarding certainty, and even struggles you are currently having, so please share your thoughts!
-Kris
[Don’t read the following until you polled. Otherwise it may bias the result!]
Anyway, something that I’d like to share is the turning point that I had during my trader development. I remember my first trade being a winner of a measily 20 pips that was levered up enough to make my heart race faster than the bullet trains wizzing past my apartment in Tokyo. However, my overconfidence was fleeting, and after developing some risk control my account drifted down slowly for years. Eventually I came across something that I thought to be an edge and I was actually profitable for a couple years. However, market conditions changed and I lost money and confidence. It wasn’t until I came across the realization that my confidence was based on the wrong thing that I turned my trading around. When my sense of certainty came from learning to understand how markets actually worked (i.e. the decision making patterns of its participants) and my ability to adapt to change, the correlation between my level of certainty and my account P/L diminished. I owe a lot of this to my friends at fixed income and derivatives desks at banks and lots of reading, and it changed everything for me.
I’m opening up this thread for you all to share any epiphanies you’ve had regarding certainty, and even struggles you are currently having, so please share your thoughts!
-Kris