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I realize that this is getting away from the thread's question but it's important to understand that this is an uphill struggle with more prevailing forces (overheads) than just market dynamics and Buyers vs. Sellers.
Yes, it is a fallacy. But it's actually worse. It's a negative sum game when all the overheads are taken into account. Without that negative attribute, Exchanges, FCMs, IB's, software developers etc. etc. could not exist - but at least it would then be a zero sum game.
You're describing one, non-zero sum 'trade' between one Buyer and one Seller and confusing it with zero sum 'game'.
While your example occurs many times every day, so too does.......
You could be LOSING on a 240 minute swing from a trader who just LOST from a 5 minute short scalp. You can both LOSE money. The trader on the other side may have TIGHT stops with multiple scale-ins, so even if he shorted at the RIGHT time, his trade could still be UN-profitable.
Those are a wash which means that it IS a zero sum game if not for the overheads.
I think mine is taking too-small profits, or "not holding winners" as it is called in the poll.
I find knowing when to close a trade that is in profit really terribly difficult and it feels like whatever I do will be wrong, and is.
I wonder if dividing the trade and partially closing is the answer. But how, exactly?
(I nearly said "Insufficient trading capital," because indeed I have absolutely none! But I decided that this is not a "weakness" and that I can cheekily answer just about demo trading, as I have done, hoping nobody minds.)
My trading is initiated/closed by my trading algo. So I can step away for short periods of time provided that my computer is running and the algos are turned on and running. So my weakness is not having enough trading capital. I currently trade live with about a little over $10K but if I had say $100K, I could handle draw down without the risk of ruin.
If I had more capital I can diversify my portfolio and trade more than one instrument (currently trading only MNQ). With more capital I would likely stick with my current system and not system hop or adjust it to decrease the stops to preserve capital. I also stopped trading for a few months when my mother passed away last year and used some of the funds to help with funeral expenses.
Other than that, I am slowly getting out of debt so I can increase my trading capital.
"Opportunity comes often. It knocks as often as you have a trained ear to hear it, an eye trained to see it, a hand trained to grasp it, and a head trained to use it." -Anonymous
My biggest weakness is overtrading. What I mean by that is say for example, having the patience for a setup, taking a trade, trade going bad and then going back into the market without a proper setup trying to make up for the loss. It is like the anguish of a loss and not being right would make me just want to get the money back with taking other trades without a proper setup.
Really this is just about having patience, accepting the loss... trade didn't work out, thus wait for the next setup.
* Note, this was the reason for failing at trading prior... but I imagine other traders have done the same. My trading plan I have today has helped me to stick to sitting on my hands and waiting for a proper setup.
I think that most people do a lot of things subconsciously without even realizing what they are doing. Short term trading is extremely difficult in fast moving markets for just about all human beings. One of the main psychological biases is contrast bias. Its where you think the market isn't producing any good setups for a long, long time. Then, something happens, and you think, this is an ok setup, or this setup is not that bad, and you take it. Later, you think, that setup was no good, why did I take that? That is something that I've done in the past. The way to overcome it is of course, realize what it's all about, and then, make your trading setup criteria more specific, and easier for you see that it is a proper setup faster. The more complex it is, the harder it will be for you to do when it comes to a fast moving market. So, the setup criteria needs to be simple and easy to process very quickly.
Two other biases I have dealt with are optimism bias and confirmation bias. Optimism bias might make you think that you can be successful at something you're not likely to be successful doing, like trading against major market trends. When you have a couple of slight successes, confirmation bias tells you that you can indeed be successful. You overcome this by developing a realistic and consistent way of trading that you trade over some time, developing confidence in your capability to execute properly.
In all of this, you tend to see the simplicity of the subconscious mind. It is really trying to, when something bad happens, it wants to avoid that at all costs, whens something good happens, it wants more of that. Sort of a punishment reward kind of system, where it wants more rewards and less punishment. That certainly makes sense if we were living as hunter gatherers thousands of years ago. However, you can get rewarded for doing something bad. That, of course, confuses things. One defense against it all is that you consciously think everything out all the time. However, this is not really realistic in short term trading where you have to make split second decisions. So, we must figure out how to do other things in order to overcome the natural tendencies of our subconscious minds.
When I started trading my first trades were out of spite because I had naively told family, my plans. And my dad was the one who told me "the markets are to risky" "unlimited losses". I gave rebuttal of plans for risk management. He jumped over and said don't, again. I funded my account right after and started trading crude which made sense because my day job i was in fuel sales.
My first few trades I won and lost some but I didn't fund my account with enough capital up front. I only started with $250 which in hindsight by the way I trade, I would have had risk down way lower and come out on top with a lot more capital.
