Becoming a student of the market

[spreadbetting]

By definition you can't actually lose from an 'edge' over the market, but you can obviously lose if you veer off script and don't impliment it properly. The problem with 'edges' is that they're usually very small and people can't accept the small returns or have the patience to follow them to the letter and generally throw their winnings away elsewhere. I'd imagine the majority of the forum have some winning edges it's just that they either don't realise it or also have far too many losing strategies to see them clearly. I'd agree with northbound that people continually look in the wrong places for their edges and I just happen to put psychology as one of those places.

One of my dog bots has been playing overnight and so far won £37 from 55 markets starting around 2am , no pyschology needed, simple straightforward strategy. If I wasn't able to do it automated would I do it manually, I very much doubt it, the hours are bad, it's not scaleable, well below minimum wage and luckily I have more profitable strategies so it's not really needed. Would other people do it manually, I doubt they'd be many wanting to work those unsocial hours for a capped small return. Any that did would most likely start looking elsewhere to up the profit/excitement and most likely end up throwing any profit away.

[spreadbetting]

Don't know whether Caan is correct with his ten-a-penny statement either. But now that I'm starting to discover edges and slowly showing consistent profits, I do agree with spreadbetting when he says that most people would be shocked at how simple some winning strategies can be.

I do think people love to overcomplicate trading , it's possible they go in with a set mindset thinking it's one of the hardest things to do and then try to prove it to themselves by taking everything to the nth degree. At the end of the day we only win money if we take value bets whether they're our opening/closing bets or ultimately both that's the key to winning gambling or trading. How much money you retain from your 'edges' is down to your mindset but value bets will get you into that position to have money to retain.

[Derek27]

Whatever happened to backing high and laying low?

[northbound]

Whatever happened to backing high and laying low?

[stueytrader]

I think it's important to say that I don't think anyone is claiming psychology would ever be the only edge in trading. Of course there are numerous other factors that can define, detect and implement your edge over the market for sure.

I think the point was that psychology forms a crucial aspect of a trader's weapons - as pointed out earlier, to give you the 'eyes' (and I'd add hands) to find and act on those other edges correctly.

Of course, without any other knowledge then mindset alone will never get you anywhere.

[spreadbetting]

I think it's important to say that I don't think anyone is claiming psychology would ever be the only edge in trading. Of course there are numerous other factors that can define, detect and implement your edge over the market for sure.

I think the point was that psychology forms a crucial aspect of a trader's weapons - as pointed out earlier, to give you the 'eyes' (and I'd add hands) to find and act on those other edges correctly.

Of course, without any other knowledge then mindset alone will never get you anywhere.

But it's being touted as 80% important in the opening post. I run some profitable bots and can get by with VBA/excel to code them but I wouldn't call that an edge over people who can't code. There are thousands of better coders than me out there and on here, my coding knowledge doesn't win me money.

I'm not having a go at anyone, I just think so many newbies are led down blind alleys by putting far too much emphasis on the psychology/mindset of trading when they'd be much better off looking for edges within the market that will make them money. It's like Peter's said so many times the markets are so tight these days you really don't need a massive edge to profit from them. I might not agree with him saying trading at random is pretty much break even, less commission, but it's certainly a very good starting point for people to look at before they reach for that copy of trading in the zone.

Psychology/mindset just seems to be a very good scapegoat for failing traders who probably didn't even a profitable edge over the market in the first place.

[ruthlessimon]

I think it's important to say that I don't think anyone is claiming psychology would ever be the only edge in trading.

Again like SB, I have an issue with the weighting.

If psychology takes up 80%, then max, this is how much you can devote to excel:

[arbitrage16]

I think it's important to say that I don't think anyone is claiming psychology would ever be the only edge in trading.

Again like SB, I have an issue with the weighting.

If psychology takes up 80%, then max, this is how much you can devote to excel:

That's a very misleading, straw-man argument. One book does not represent the totality of learning that can be derived from psychology. Consider, all of the psychology literature on performance and the mind (!) that one can delve into, versus what has been written about programming excel for trading...hmmm!

Someone else has already said it; trading can never be either or, one must support the other.

I think the upward range of what I am able to extract from the markets manually per day is around £1500. How does that compare with someone who is purely using bots and excel? Genuine question as I have no experience of the latter

[ruthlessimon]

Consider, all of the psychology literature on performance and the mind (!) that one can delve into, versus what has been written about programming excel for trading...hmmm!

Exactly, & I think there's a lot that can be read into that. Just why is there so little info on data, excel, etc. Maybe because it's actually directly applicable if done properly! I think you'd be very very hard pressed to find; on a mainstream scale; someone publicly stating 1. what data they're capturing 2. why they're capturing it 3. how they're analysing that data. 4. how they plan to apply the knowledge. Hell most "pro-educators" won't even post up a regular track record. Hmmmmmmm

For example, if I see a massive £10k bet back go on the fav, & wonder - "is it a +ve expectancy to follow this person". Mark Douglas isn't going to help me answer that, Peter Webb, on the other hand, could - more than could, he could probably tell me how the expectancy varies via time, varies via course, varies depending on what the other runners do etc etc etc. & he didn't learn how to perform that type of analysis from a psychology book. That's a student of the market IMHO.

Also imagine not knowing if it's a +ve expectancy. Of course I'm going to be nervous, of course I'm going to grab a loss quickly. & when I grab that loss, Peter sees the nervousness in the market; but he knows the trade is still on - & he takes my exit. All bred because I don't have the data behind me - although there is an argument that this all could come under the umbrella of "intuition"; but I think the majority of traders don't fully understand (myself included) what intuition really means - to an expert trader.

Someone else has already said it; trading can never be either or, one must support the other.

Again true, but the 80% really bugs me - if we're talking about "being a student of the market". I wonder; when Peter was in his trading infancy; how much of the "out of market hours time" (devoted to trading related activities); was specifically aimed at psychology. I struggle to believe 80%, more like 20% max imho. But there's only one man who could clear that up Even today, when perhaps he doesn't need to be so rigorous with his analysis - I'm pretty sure a big (more than 20%) portion of his time is still devoted to improving/creating new market-based models.

[ShaunWhite]

Respectfully, these percentages are meaningless. If you can't help yourself from doing stupid things then psychology is 100% the problem. If you're as calm as a mill pond and not succeeding then 100% of the problem is lack of edge.

These things aren't slices of the pie, they're links in a chain. Weakest link breaks you.

[ShaunWhite]

.... example, when I started out I soon realised I could pretty much break even (excl commish for arguments sake) with my eyes shut. But being impulsive, ill disciplined, wreckless and an ex gambler, everyday I'd f it up. I hit the psych stuff hard and after a looong battle I broke my bad habits (6 months probably) The problem then became turning the breakeven into profit so the numbers took priority. I never look at the psych stuff these days, but if I start to slip into old habits, I'll be closing excel and getting the books out again pronto.

Work on whatever is your highest priority bug, but make some time available every week for the lower priority stuff or it will always be at the bottom of your in-tray.

[ShaunWhite]

I wonder; when Peter was in his trading infancy; how much of the "out of market hours time" (devoted to trading related activities); was specifically aimed at psychology. I struggle to believe 80%, more like 20% max IMHO.

From what I recall, sorry Peter if this is wrong, other than learning to take more risk (ie no serious personality flaw) his early priority was always stats. It's as time has progressed he's become more interested in the human condition.

Exact opposite to my position and I suspect many others. I sense you're starting from a position close to Peter's, my starting point is far nearer LeTiss who, and I hope he doesn't mind me saying, began with an unwelcome compulsion to gamble and to see red mist from time to time. Now both successful guys.

[Korattt]

for me I think people can look for stuff that isn't there, & with my experience with what I know now I'm guilty of that.

For example Monday's & Tuesday's I'm starting to get the message that they really aren't bothering with because the edge I've become confident with doesn't really work on those days, what I'm saying is that I used to treat all days the same & look for the same opportunities all day every day but for me just doesn't work.

I use to meticulously copy & paste the BF Graphs & 'chop them up' to see of I was able to spot anything - just ain't worth it - total waste of time, feel stupid & silly now even thinking of me doing that.. what a numpty.

What moves markets?, money, when do punters put their money down?, when they've lost their money on the last race, the trick is to spot where the money is.. the genuine money at that, basically have an idea what you want to do, wait until you see something & then act on it, this isn't easy but you can do it, you can, just takes time.. a lot of time, I've been off work since mid February with a broken foot, every day, I've watched videos I've recorded, been in the markets day in day out from, I've had the PC on from 6am sometimes watching Euler's videos, getting them carved into my brain, asking myself, "why, how, when, why, how, when" & the work out how you are able to get the best out of what tools are available to you to achieve similar results.

Peter on his YT videos mentions that he is quite rare with the fact that he has the ability to read markets like no one else, that's what I aspire to, that's the level I look to, if I can get near that then it will be all worth it but I will need to work at it, we all do & damn hard as well, the thing is many people will attempt trading in their spare time, maybe over two weekends a month (due to work / social commitments et al) but not get down & dirty with it so to speak, that's where people fail (I think), not prepared to take the time it needs to tackle it seriously, to go through the mistakes, the money lost, the head scratching through looking for stuff that ain't there et al, the desk banging & everything else that goes with it.

[stueytrader]

There is a bottom line to this discussion, in that ultimately all trading comes down to psychology in a certain sense.

Even bots were programmed by humans, with their own psychology at work during that time. And if we move into manual trading then of course every single action comes essentially from a person's psychology.

To ignore that (especially in your own trading) is surely missing a key point.

[ruthlessimon]

Even bots were programmed by humans, with their own psychology at work during that time. And if we move into manual trading then of course every single action comes essentially from a person's psychology.

Cor blimey, you've really blurred the lines with that one

That's like saying "exams are all psychology". True, but not applicable.

The people who do best in those exams (the top 5%) - tend to have revised, tend to have had expert 1to1 tuition (tailored to themselves). Now yes, they could crack under the pressure - but by revising - they've stacked the cards in their favour (hedging against the psychological pitfalls). In a trading sense, people simply don't know how to revise. & the people who do know how to revise, are bloody quiet! "Do I look at a market then back fit something? But if I cut my losses... How do I prove that this is better than a coin flip? etc etc?"

Maybe there are some super talented people who just "get it"; but most consistent top performers, don't "wing it". Imagine Guardiola at halftime going, "yeah just wing it lads, it's all in your head". No, he doesn't do that, he's a tactical genius never resting on his laurels. "As soon as we lose the ball, you've got to track 8. As soon as we win possession, I need you getting chalk on your boots. 6 is a lazy defender consistently ball watching - go exploit him, quick one-two should be all it takes.". It's quantifiable, actionable advice.

Note how if the advice is "yeah just wing it lads", I could be a football manager; we all could. Exactly the same with trade psychology, & why it's so prevalent - anyone can be an expert.