need for psychology books

#1
Hi Friends,

We know that psychology is very important to trading success. Every website, every blog, every forum tells us that it is important, but no where it says why it is important. Can anyone help me understand the need for trading psychology and the need for reading psychology books please..

Karuna
 
#2
Request you all to contribute generously on this topic. I am extremely confused with regard to trading psychology. Absolutely unable to understand the need for it. Please guide. Thanks..

Karuna
 

pratapvb

Well-Known Member
#6
the question is can we keep ourselves committed to our (backtested) system and rules or do we do something adverse due to

1. Fear

2. Greed

3. Bias

etc
 

pratapvb

Well-Known Member
#7
the question is can we keep ourselves committed to our (backtested) system and rules or do we do something adverse due to

1. Fear

2. Greed

3. Bias

etc
Fear

mkt has been moving down throughout the day.....and then the system gives a long signal....will you hesitate due to fear that it may just go up a little and then continue down taking your SL? or will you pull the trigger because your system says so...or see the mkt running away and curse yourself that you did not take the long, etc

you have been in long and it has moved some pts in your favor...the system says book partial....will you book without hestation or think that a strong trend is in place so better to hold on as pb may be shallow because you are afraid that you may not be able to get back in into the trend if it continues with shallow pb. but by holding against your system aren't you bringing YOU into play and what if pb is not shallow and all profit vanishes before your eyes?
 
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pratapvb

Well-Known Member
#8
the question is can we keep ourselves committed to our (backtested) system and rules or do we do something adverse due to

1. Fear

2. Greed

3. Bias

etc
Greed

something similar to the 2nd pt above but because of greed
you are in say long open position and system say get out....but you think it may go up further so though you are trading 5min chart you rationalize that 15min is in long and keep wider SL...what if it comes near that? will you take that or rationalize that 60 min is in longs and now that most profit has anyway gone....better to hold and see if things will go back in your favor and so on

of course some of above is also Hope (another emotion)
 

pratapvb

Well-Known Member
#9
the question is can we keep ourselves committed to our (backtested) system and rules or do we do something adverse due to

1. Fear

2. Greed

3. Bias

etc
Bias

some people have permanent short bias (thinking that mkt goes up only to fall so keep shorting resistances) or permanent long bias (thinking that mkt going down is a pullback and one should keep buying support)....is this good? or should you be following the system

what about temporal biases? say mkt has been down for last few days and then gaps down...and starts to recover and your system says take long? will you take that long or ignore it because of your short bias or maybe because you have positional shorts and so you ignore intraday long (though you are also trading part of your capital in intraday), Can you keep the two separate?

Look at bank nifty Feb 4, 2014...will you be able to take longs and hold it till end of day because your system is saying to do so?
 

pratapvb

Well-Known Member
#10
many such things come up in trading where you have to keep the YOU out of trading and that is what this whole business of psychology in trading is all about

Hope I have been able to convey some of the points....there are good authors and books on the subject that may deal with the topic in a better way
 
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