Skip to main content

What's more important: Trading Method or Trading Psychology?

Ancient argument:
What's determines success in trading:
  • A successful methodology 
  • Psychology and discipline? 

Answer: BOTH!

But this is not a "chicken or egg" dilemma. Clearly in this case method comes before mind.
I don't care how much self-discipline you have. If you don't have a viable trading methodology, then you will lose money.

So method is more important.

Well, maybe "more important" isn't the right phrase to use. But it definitely comes first.
The reason I say it may not be more important is because there are many valid trading methodologies available. Yet ironically, traders keep jumping from one method to another ...
  • one indicator after another 
  • one book after another 
  • one mentor after another 
  • one seminar after another 

This is the infamous "search for the Holy Grail."

Sorry ... doesn't exist.

Like most things in life, people keep looking for the answer outside of themselves, when the answer was inside of themselves all along.

Like Dorothy in the Wizard of Oz ... You had the power all along.

Okay, we've all heard that the psychological aspect of trading is the key to success. But HOW do you tap into it?

There's only one way I know.

Though the hard work and the daily drudgery of keeping a trading log of every trade you take.

By recording, and reviewing every trade you take (along with the ones you didn't take, but should have), you'll learn more than from any book, seminar or video.
This feedback mechanism is the key to success.

Like all subjects of Master:

You begin by adding. You need to acquire the information, the principles, and rules of successful trading.

After you spend a long time accumulating all the information, then you strip it away. You simplify until you find an approach that works for you.

Then you simplify further by eliminating your mistakes.

Someone once told me: "Successful trading is simply a business of not making mistakes.
We're not aware of how many mistakes we're making until we keep a trading log of every trade, and then review it every day and again at the end of every week.

I haven't met a trader yet, who following this discipline, hasn't been absolutely amazed at what a large percentage of their trades broke their own trading rules (the definition of a "mistake").
Beginners work on trading.
Masters work on themselves.

Dr. Barry Burns
http://www.topdogtrading.com
barry@topdogtrading.com


Labels:

Popular posts from this blog

Extreme TMA System

The market, like a pendulum, is a never ending sequence of extremes. It forever tries to reach the mean but never succeeds, constantly overshooting it´s mark, reversing and trying it again but always failing to reach balance. This system attempts to capture those extremes. It is a compendium of my understanding of the market, brought to it´s simplest expression. The principles are not complicated. The first indicator, the TMA shows us the average of the path that the price action in the market is following. As such, it is a backward looking indicator and attempts to determine the future from the recent history. It corrects itself by repainting itself. It has two outer bands that show us the outer boundaries of price movement that we are searching for. Our second indicator, the TMA Slope indicator will show us the relative change in the slope of TMA as compared to previous candles. It determines in which direction a trade must be placed and also shows divergences to price. For examp...
Read more

YADIX – The First-Class Trading Environment for Forex Scalpers & EA systems

Yadix is a leading ECN/STP Forex Broker providing services and trading facilities to retail, institutional and professional clients globally with particular focus on forex trading strategies such as scalping and the acceptance of forex scalping systems. The management team at Yadix boast years of experience from operating within the financial industries with a wide range of experiences and skills that helps Yadix truly understand the needs of the modern-day trader, forex strategies and EA developers. As their clients, you are their most valuable asset, their philosophy is to provide an unrestricted trading environment for forex scalping strategies including the use of scalping systems and EAs. Yadix offers a range of valuable tools to clients such as multiple trading platforms, EA hosting and zero stop levels to compliment the STP trading conditions, superior execution and to comfortably accept all forex trading strategies without discrimination. Visio...
Read more

Tom demark Trendlines

anyone here used TD T'L's? they are over 70% (closer to 90) accurate with breakouts. using TD TL can profit on all timeframes down to 15M. scalpers and long term traders can profit from this. Also, u might not wait on a break of a TL but can trade its bounce i.e: the price is bouncing inside a triangle drawn by TD TL. here are the breakout qualifiers: Upside breakout qualifiers Qualifier 1: The price bar prior to an upside breakout must be a down close. Qualifier 2: The current price bar’s open must be greater than both the current TD Supply Line and the previous price bar’s close and must then trade at least one tick higher. Qualifier 3: The previous price bar’s close plus the previous bar’s “buying pressure” must be below the current price bar’s TD Supply Line price level. Qualifier 4: The current price bar’s open must be above both the previous two price bars’ closes, and the current price bar’s TD Supply Line must be above the previous price bar’s high. Downside breakout qu...
Read more