May

27

Last week I attended a project management course called Prince2. It was very interesting, but also challenging. The written exam lasted about three hours. At the end I was exhausted. The questions were difficult and you had to manage your time very well.

English is not my mother tongue and may be this is also why I got so tired. The instructor asked me: "How was it?" I said, "Very difficult. I am not happy". The reply was, "You are never happy. You are a pessimist".

Perfectionism, is often confused with pessimism. In the end he was right from a certain perspective. You do not live well always looking to "the next step" in order to improve your results. Traders must be optimists because they must be confident in their system when they take risks. Optimism does not have to be confused with superficiality - "things will go fine anyway".

The optimist looks at the next market move confident that prices will go in his or her direction. A pessimist will never start trading because the improvement process will continue forever. A pessimist will work out the details and analyze risks thoroughly. A pessimist suffers during trades, projecting reversals and fakes to his positions. A balance should be found.

I think, however, that the approach should become as mechanical as possible to leave out emotions and attitude. A tested approach has to be followed with discipline. A trading methodology should be designed, tested, and applied in a scientific and mechanical way leaving the human factor out of the game. I am not sure how intuitive traders can do. The validity of their approach is not measurable, although their results in the long term are. And there are many successful intuitive traders out there.

From James Lackey:

Perhaps the reason "emotion and attitude" get a bad wrap is they're not measured and tested. In hindsight all bad trades were due to "emotion and attitude." What about the good trades? Are good trades always entered with the so-called proper no emotion and humbleness? Of course the proper way to exit a good trade is with reasonable humility.

Discipline is only good after the desired result. Discipline with bad results is insanity, doing the same thing over and over expecting a different result.

I have seen a few mechanical traders fail. After the fact they might blame their interference for their demise. After pointing out their system wasn't good enough in the first place, they argue that, no it was their lack of so-called discipline for not sticking with a winning system. Yah, right. If the system were winning big the emotional response would be to go out and celebrate or promote for even a greater monetary gain off a bigger stake.


Comments

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search