Day Trading Is Mostly Mental
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Today we will talk about trading psychology, and why day trading is mostly mental. If you break trading down to the very basics, much of it is very similar to life in general. It is a catch 22 really, as your trading plan and your mind are normally working against one another. Once you finally make it and you do become a profitable day trader, it really will all make sense, but putting the two together takes time, hard work, sacrifice and a million head aches and heart aches as you try to grasp what really needs to be done.
Rather than me rehash the same old stuff though, I am going to share with you an article that another trader sent me that spells it out in plain English. I normally do not post other people’s work here on our website, but this explanation of trading psychology hit a nerve with me, so I thought it was worth posting for everyone to read.
Traderfeed had the following to say:
Promiscuity and trading: admittedly not the most common of topics in trading psychology, but I think it’s quite relevant.
Alvarez makes a good point: on important matters in which we feel commitment, there is no promiscuity. If you’re committed to physical health and being in peak conditioning, you won’t be promiscuous in what you eat. If you’re committed to a marriage, you won’t be sexually promiscuous. If you’re committed to career or a religious faith, you will necessarily be selective in what you pursue. You can read the entire article at http://traderfeed.blogspot.com/2015/07/the-problem-with-promiscuity-in-trading.html.
So yes, a large portion of success in day trading is related to your mental state. If you are not committed 100% to your trading plan, and if you can not be patient and follow your rules, success will be fleeting. Those that are looking to enter on every new bar are simply going to over trade and find their trading strategy littered with losing trades, even if it is a great trading plan. On the other hand, you can not sit idle and watch great trades set up and go without you. The key is to be patient and wait on the proper set ups, but when they appear, you can not be afraid to pull the trigger.
Day trading is mostly mental, and once you get a grasp on that fact and learn to control your emotions and trade without fear or greed, you can then likely take the next step forward in your trading career.
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Comments
bbdsan July 22, 2015 at
I appreciate that article as well, Mack. This quote really resonated with me:
“I will make a bet:
If we were to cut the types of trades that we take by two-thirds and focus solely on the one or two that reflect our greatest edge in markets and our greatest trading strengths–and if we were to meaningfully increase the size/risk taken for each of those trades–our overall profitability and risk-adjusted returns would rise significantly.
In other words, if trading becomes an expression of a commitment to a particular approach that is ours, many of the problems of trading psychology melt away. In trading, as in any career, dedication is the most durable source of discipline.”
To me that means cut out all the other styles of trading I’ve tried and focus strictly on scalping ES using our PA rules. That’s what I’ve been doing for over 5 months now. I’m still on the simulator but man, I’ve learned so much just practicing this day in and day out. I’ve made many mistakes along the way and learned from them. Gradually I’m making fewer mistakes and improving my win/loss ratio. All without risking a single dime of real money! You can’t beat that.
Mack July 23, 2015 at
This is a very good post and is exactly how every trader that is not profitable should be thinking.
Joe July 23, 2015 at
“fucus strictly on scalping ES using our PA rules” That was my mind set from the beginning. I learned a valuable lesson through golf that gave me this desire to only trade one style. When I first started my golf hobby I beat balls with no direction until I had the worst swing imaginable.From there I took lesson from every wanna be instructor on any driving range. My swing was bad for 15 years until I met a Golf Professional at a Country Club. Months later I had a good swing but what a journey.
If you are going to get involved in a new endeavor learn from the Pro’s. That’s Mack! It was a great lesson for me with my golf and now I’m about a year into PATS and only knowing one style makes it easier to understand.
MRJ July 23, 2015 at
Excellent topic Mack. In my opinion, because the market is random, and the human mind by nature resists random, there ensues the natural struggle we all deal with when taking up this career.
I equate it to being a sniper. You lay in wait for the best shot to appear in your crosshair and then you squeeze the trigger without hesitation. Carefully practiced patients though, that’s what separates the 10% or less that make it in this business from the 90%+ that don’t.
“Patients” (Adjective) DEF: “quietly and steadily persevering or diligent, especially in detail or exactness” – Pretty much sums it up.
I continue to have ongoing internal discussions on how to best hone my patients.
Good stuff, thanks again Mack!
Andrea s August 14, 2020 at
Article doesnt exist anymore
Mack August 14, 2020 at
It’s still there, the link was just not working for some reason? I corrected this, so you should be able to see it all now. Thanks for pointing out the problem.
Bamzor November 16, 2023 at
Excellent article, timeless relevancy…..one of those that I dazed out reflecting. Simple and commitment is hard. Why? because its mental. I call it going Goggins. Before I learned of David Goggins, I had started a weight loss journey. I walked everyday wind rain cold sick 3-5 miles outside for a year- Everyday. People thought I was crazy. That was 6 years ago. I’ve kept over 100lbs off for 5 years next month through choosing to eat what is right and exercising when I absolutely don’t want too.
Promiscuity will lead to wrong traits….its the Devil. btw James Clears “Atomic Habits” is a great book to help curb or hone traits.