There’s been a lot of attention given to trading and psychology lately. I’m a fan of Van K Tharp’s work; I have a number of his books and I’ve learned a lot from each one of them. Tharp says that when he first started teaching trading courses, he believed that success in trading was 25% technical (your trading system, rules, etc.) and 75% psychology. Later on in his career, he went even further and said that success in trading is 100% psychology. In other words, the technicals, the entries and exits don’t matter. It’s all in how you think about it.
Given that I’m much more comfortable writing software that trades than placing trades myself, I can attest that there is something to Van Tharp’s statement. I know I can make a simple successful automated trading system that holds a trade for a day and then closes it. If I actually had to trade that system manually, I probably couldn’t do it. There’s too much disbelief in the way.
There are so many things going through your mind when you trade — did I do my analysis right? Why is the trade going against me? Should I just get out now? Should I move my stop to break-even? Does this system even work? Did I back test enough? How much money am I going to lose if my stop gets hit? Isn’t this my 4th loss in a row? Why did I just make another dumb mistake?
Do you get those thoughts too? Well, help is on the way.
One of my favorite trading personalities, Rob Booker, has just started offering a trading course structured around the psychology of trading. Rob is a really creative and interesting guy, and I found his TFL365 course very helpful for me when I first started. This new course is going to be even better.
Check it out. If you trade manually as well as using automated systems, you owe it to yourself to be the best you can be.