Very interesting aspects on trading psychology are discussed with one of the most valuable people in the field of trading psychology. Unfortunately deceased, Mark Douglas has written two very good books on the subjects, The Disciplined Trader and Trading in the Zone.
Some of the ideas covered in the books come up in the following interview, definitely worth a watch, since trading psychology is probably the most important factor in trading. If you are struggling with your trades and can’t really see yourself moving forward, you might just find the interview valuable. No one is perfect and especially the psychological factors are an issue a trader has to deal with all his life. However, besides Risk Management and Trading System, aspects of trading psychology are the most wishy-washy and difficult to handle. Always improving, working on them and becoming your own observer, is therefore crucial.
Some of the main ideas of the interview:
Winning requires no skill at all.
People are not used to learning mental skills.
Mental errors occur because of thinking, assuming, believing that our technical method is telling us what is going to happen next. But technical methods are not desinged to do that. They put the odds in our favor over a series of trades.
There is no way to know in advance what the sequence of wins/losses will be over a series of trades.
There is a random distribution between wins/losses over any series of trades.
Learn to think in probabilities.
Prices are people-generated events.
All price movement is based on what people believe is going to happen in the future.
Price is a data point which is the transformation of what people think about a market.
[…] and many more.