You bring up a good point worthy of discussion, although it seems to me there are many MANY case studies of people attempting to use the same exact system as successful traders, and getting very different results. The Turtles may be the most famous example. To me, that suggests the problem must be psychological and not systematic.
In fact, I know one successful trader who tried to teach his system to others, by telling them live EXACTLY when to enter and exit. They were all in the same room. About 8 of them. And he assured them if they followed his lead but lost money on their trade, he would personally cover their losses. So they had no real risk. And yet, you can probably guess what happened -- most of them still couldn't follow the system and they lost money.
Those psychological blocks are real. And they remain intact when traders jump from one system to the next.
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I have to agree, with clarification. Both the items you mentioned, an edge and proper psychology are required in my opinion, and in that order. Without an edge, all the proper psychology won't make you profitable so that is required first. Even with a proven edge however, a lack of accompanying "traders psychology" will render the edge useless, so the psychology is required to apply the edge for sustained profitability.
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This post has been selected as an answer to the original posters question
I have heard of these studies and I do agree they show that most traders cannot follow another traders system successfully. But in my opinion "psychology" is not the reason why then fail.
Any successful discretionary trader has internalized market structure and patterns to a very large extent, that is a large component of being a successful trader. It is virtually impossible to transfer that knowledge to another inexperienced trader. That is why new traders in these studies fail, they simply do not have the knowledge or experience of the market to follow a successful system. It is not that they have some psychological barrier to success.
It is an axiom of trading that a trader must develop their own method and style to be successful, copying someone else's method simply does not work in the vast majority of cases.
In my hypothetical "guaranteed" trading system I was more thinking of a quantitative structured system if that exists.
Last edited by Seahn; August 31st, 2015 at 08:01 PM.
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I think it's a slow process of testing, failing, and seeing what works. You have to be honest with yourself and know if that even if something works it might not be practical to trade. I found a lot of patterns that worked, but realized over time that I didn't have the patience to wait all day so I had to find something a little more versatile and flexible. Trading is like morphing / evolving process. I wouldn't get too caught up in the minutia, just keep chugging along gaining experience.
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What surprises me about this thread, is that it is only 2 pages long as of 9/2/2015.
I would think it would be the main subject of the entire process of trading.
I--being an old fellow look at it this way: A child is already thinking, yet cannot recognize that it is thinking. You tell them the truth of his/her already thinking--but she still she does not realize. Then, for no reason at all, a few days later, or a couple months, realizes what thinking "is"--the "is-ing" of it, and in that moment there is a quantum shift, (not logical) and she "gets" she is thinking. I think this is the essence of the whole art in itself.
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As Rande Howell points out in his book, trading "is like a scalpel, it cuts right through to the ugliest psychological flaws you may have". Specially those flaws buried deep inside, like a need to prove yourself to others, a need to be always right, or a fear of being wrong, fear of death (losing money) and so on.
An edge is important? Definetely!!
But without the proper psychological structure to take advantage of that edge, the edge is pretty much useless.
That also explains why some people are star traders in demo (where the psychological "dirt" usually doesn´t show up as blatantly) but losing traders when risking real money. The mind can play really messed up games that will screw up even the best of edges. Once you learn to keep those mind games in check, it becomes far easier to follow your edge.
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For me, it was the realization that I had the temperament of a 3 year old when it comes to taking a loser. I still struggle with it. Bad behaviour followed a loser. Rules got thrown to the ground quicker than a broken toy.
True, but @BrooksElms was talking about mechanical tactics (He specifically mentions the Turtles).
In Curtis Faith's Way of the Turtle, he writes at length about how the group was given specific execution signals and told to take every one, but only some would execute. That was the point of the experiment.
Last edited by Leon of Pizza; September 5th, 2015 at 06:29 PM.