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Psychology of the market?


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Psychology of the market?

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  #1 (permalink)
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Hi I hope this is the correct section of the forum to post this in. I've been a trader for about 4 months now practicing in the sims as well as using a $500 account to trade the MES to get a handle on how it feels like to trade with real money.

I've been mostly a technical trader since the beginning as my trades range from 30 seconds to maybe an hour max. I've been watching a lot of videos and streams of live futures trading and a common theme from them all is that they all seem to know how the market works psychologically, if that makes sense. I was just wondering what would be the best learning resources for me to go from "oh the moving averages are crossing/RSI shows oversold so BUY" to "the price went that way because there are trapped sellers/buyers" or "they're getting filled at this level".

What I've been doing so far is after each trading day, I review my trades and why I took them and then try to understand the reasoning behind the signals. I talk myself through the trades but sometimes I really have no clue why the price went the way it did. I understand that the market can be completely random sometimes though. Is there any books/videos out there that can help give me a better understanding/mindset about this? I know I still have a lot to learn.

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  #2 (permalink)
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blubird View Post
Is there any books/videos out there that can help give me a better understanding/mindset about this? I know I still have a lot to learn.

Welcome blubird. There are several books about psychology but my advise is to search this forum. IMO you will find most users dealing with similar problems and offering helpful viewpoints.

There is the journal section where you see traders journaling their trades systematically as well.



Good luck.

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There isn't one book or one course that's going to do the trick here, trading is very private journey. In fact I'm of the opinion that its better to avoid books and courses and gather information as you move forward on the topics that you find relevant step by step, otherwise it will be just some information dump and you will never catch the essence.

fyi, there isn't any "correct way" of reading the market either. People who make money generally just have more probable and repeatable edge, earning that edge is a "very long and exhaustive" process.

And bit controversial, but I would also suggest not to spend too much time on sim, many will disagree here but this is just my personal experience with it. Generally it builds bad habits. I would rather suggest to invest that time in building systems, it doesn't matter how basic they look, even moving average crossovers are fine, you just build and test them in real market data, see what is happening and what makes that system useful or useless. If you keep doing that again and again, sooner or later you will have collection of good ideas of your own, which will be your personal edge and something you can trade. This is also applied to psychology. I would suggest reading Linda Raschke book just to get general idea of what that journey looks like from the professional.

This is just my 2c, I'm not an expert and newbie myself,be warned

Welcome to the forum and good luck.

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blubird View Post
Is there any books/videos out there that can help give me a better understanding/mindset about this? I know I still have a lot to learn.

I have read a stack of trading books, I have went to Day Trading School. Personally I would say the best information is on this website and practice.

If you do what you love, you'll never work a day in your life. Allow your passion to become your purpose.
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blubird View Post
I've been watching a lot of videos and streams of live futures trading and a common theme from them all is that they all seem to know how the market works psychologically, if that makes sense. I was just wondering what would be the best learning resources for me to go from "oh the moving averages are crossing/RSI shows oversold so BUY" to "the price went that way because there are trapped sellers/buyers" or "they're getting filled at this level".

...

What I've been doing so far is after each trading day, I review my trades and why I took them and then try to understand the reasoning behind the signals. I talk myself through the trades but sometimes I really have no clue why the price went the way it did.

I don't know if anyone actually "knows" why other traders do what they do -- not that the question isn't valid, and not that you shouldn't ask it, but you may have to settle with knowing less than you would like, and also less than people seem to know on YouTube and who can explain everything, but after the fact.

As far as actually answering the questions, it sounds somewhat as if you have been looking at some traders who use order flow, or perhaps just apply concepts to price movement that are also used in order flow -- in broad terms, what are the buyers and sellers doing, as shown (usually) by the flow of buy and sell orders. Disclosure: I've never used or understood this way of trading, but I know it's something that some good traders do. But other than letting you know that such a thing exists, and that there are traders who swear by it and traders who ignore it, I can't add anything about it. Sorry.

On the other hand, there are also traders who just look at price action, and base their trading on what price does. There are traders who combine the two. There are traders who use one or another form of technical analysis. There are traders who do other things entirely. It would be good advice to read widely here on this forum, especially in other traders' trading journals, to see what rings the bell for you. But, since you regard yourself as a "technical trader" and it seems to be working fairly well for you, I would not make changes too quickly.

One other thing is that the trade review you are doing after trading is probably the best single thing you can do. When you do that, one thing you can ask yourself is not necessarily why did other traders do something, or even why did the market do what it did, but why did you. You cannot really get into other peoples' heads, but you can figure out what you did, why you did it, whether it was a good idea or not, and what to do the next time. This is more a matter of your psychology than the market's, but it is also something that you can observe and understand directly. Many people find that understanding their own psychological responses to the market will be of greater help than anything else they do.

Good luck, and I hope you find your answers.

Bob.

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blubird View Post
Hi I hope this is the correct section of the forum to post this in. I've been a trader for about 4 months now practicing in the sims as well as using a $500 account to trade the MES to get a handle on how it feels like to trade with real money.

I've been mostly a technical trader since the beginning as my trades range from 30 seconds to maybe an hour max. I've been watching a lot of videos and streams of live futures trading and a common theme from them all is that they all seem to know how the market works psychologically, if that makes sense. I was just wondering what would be the best learning resources for me to go from "oh the moving averages are crossing/RSI shows oversold so BUY" to "the price went that way because there are trapped sellers/buyers" or "they're getting filled at this level".

What I've been doing so far is after each trading day, I review my trades and why I took them and then try to understand the reasoning behind the signals. I talk myself through the trades but sometimes I really have no clue why the price went the way it did. I understand that the market can be completely random sometimes though. Is there any books/videos out there that can help give me a better understanding/mindset about this? I know I still have a lot to learn.

Markets are driven by fear and greed. You need to develop a firm grasp of crowd behavior in relation to price action and base your trading around this frame of reference if you want to have a chance to know why price went this way or not. Just looking at your past trades and why YOU did this or that is not enough. You may just go around in circles forever without any significant breakthrough. Crowd behavior analysis can help you make an educated guess as to the immediate futures and give you an edge. Shouting fire in a crowded theater is an analogy which is often used to describe the type of prediction you can make as a price action reader. You can bet people will surge toward the exits. This is what you want to achieve when you trade and try to decipher these moments of panic or greed and align your trades with that.

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jamrock View Post
lol psychology of the mkt ha ha ha what is it 2010!

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  #8 (permalink)
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it is obvious i am not a spammer or a bot

it is obvious that for some reason this site seems to feelt eh need to regualate every single post even if it has a difference of opinion!

I used an "LOL" as an answer to this post as i said what is this 2010 because the reality is that computers do 85 % to 90 % of all the trades in an electronic market and there is no psychology to a COMPUTER unless the moderators on this site have had a mind blowing discovery of communication with
0's and 1's but we all know you have not. so what did you do.

you deleted my post. you sent me a warnign that my behavior wont be toelrated because i actually had a bonafide solid answer to the psychology of the market! the psychology is not in the mkt. the psychology is your own psychology the psychology of gambling and risk taking and aversion to and i would venture as an educated guess that i have witnessed in my own trades and hundreds of other peoples in real time phsyically and on electronic trading floors that i hae a million x more experience than most on this site.

I had a lot to offer but not any more.

MOderators. i wont ask you to delete my account i will leave it up to you but i hope you stop ruining what makes a mkt a mkt which is difference of opinion and difference in filtering of the data by machines!!!

have a great day and you moderators have taken controlling the content of this site beyond NANNY STATE.

lol lol lol lol lol feel free to block or delete my posts and understand it wont bother me because in oeder to trade successfully you have to have thick skin you cant be a baby and this site wow. most of the guys or girls here seem pretty legit and above board but the moderators whoa... power trip which does nothing to grow the site or help other people.

stop worrying about the market psychology and start worrying about your own psychology how you handle what you are doing in the market.

by saying is this 2010 that means hello.. it is all computers now most of it. somehow you mods diagree huh

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  #9 (permalink)
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@jamrock

You are intelligent enough to realize that:


jamrock View Post
lol psychology of the mkt ha ha ha what is it 2010!

...was not a:


jamrock View Post
...bonafide solid answer to the psychology of the market...

Had you explained it like this:


jamrock View Post
...the reality is that computers do 85 % to 90 % of all the trades in an electronic market and there is no psychology to a COMPUTER... the psychology is not in the mkt. the psychology is your own psychology the psychology of gambling and risk taking and aversion... stop worrying about the market psychology and start worrying about your own psychology how you handle what you are doing in the market...

...all would be well.

It's all about presentation skills as I pointed out to you here:



And you fully agreed. Reread your response.

Now, I can appreciate a smart ass as much as anybody, I can be one myself at times. In fact, I've done it on this forum a couple of times, albeit to a mild degree. Since then, I've come to realize there is a trading forum that tolerates, even encourages, smart ass behavior, but this is not that forum.

Okay, so I am well into my senior years and when things get a little out of hand -- like now -- I sometimes get the urge to tamp things down a bit.

Hopefully, you will rethink you decision to leave the forum... and, instead, maybe work on your presentation skills... just a little... because mutual respect is key to a rewarding give-and-take.

BTW, I have enjoyed reading some of your posts and it's obvious you have a lot of experience to share and seem willing to do so. I appreciate that about you. Thank you for that.

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jamrock View Post
it is obvious i am not a spammer or a bot



it is obvious that for some reason this site seems to feelt eh need to regualate every single post even if it has a difference of opinion!



I used an "LOL" as an answer to this post as i said what is this 2010 because the reality is that computers do 85 % to 90 % of all the trades in an electronic market and there is no psychology to a COMPUTER unless the moderators on this site have had a mind blowing discovery of communication with

0's and 1's but we all know you have not. so what did you do.



you deleted my post. you sent me a warnign that my behavior wont be toelrated because i actually had a bonafide solid answer to the psychology of the market! the psychology is not in the mkt. the psychology is your own psychology the psychology of gambling and risk taking and aversion to and i would venture as an educated guess that i have witnessed in my own trades and hundreds of other peoples in real time phsyically and on electronic trading floors that i hae a million x more experience than most on this site.



I had a lot to offer but not any more.



MOderators. i wont ask you to delete my account i will leave it up to you but i hope you stop ruining what makes a mkt a mkt which is difference of opinion and difference in filtering of the data by machines!!!



have a great day and you moderators have taken controlling the content of this site beyond NANNY STATE.



lol lol lol lol lol feel free to block or delete my posts and understand it wont bother me because in oeder to trade successfully you have to have thick skin you cant be a baby and this site wow. most of the guys or girls here seem pretty legit and above board but the moderators whoa... power trip which does nothing to grow the site or help other people.



stop worrying about the market psychology and start worrying about your own psychology how you handle what you are doing in the market.



by saying is this 2010 that means hello.. it is all computers now most of it. somehow you mods diagree huh



Why is it so difficult to read something that I agree 100% on? Lol. Please keep him around.

To my limited experience, the computers seem to have only 1 psychology. Get liquidity, more and more, in order to set off larger volumes. Just how I see it.


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