The Mental Game of Trading by Jared Tendler M.S

Author:Jared Tendler, M.S.
Language: eng
Format: epub, pdf
Tags: Trading, Trading Psychology, Trading in the Zone, Fear, Greed, Trading Mindset, Best Trading Books, Sport Psychology, Options, Day Trading, Investing Psychology, Behavioral Finance
Publisher: JT Press

When your actions cause further losses, it’s always harder to swallow. This is especially true when you lose control, despite working hard to increase the size of your edge and understand the randomness in the market and distribution of outcomes. While you have no control over luck or variance, take the time to better understand the reasons why bad variance stirs anger, and you can regain command of your execution.

Believing You Are Unlucky

Look beyond how you think you should react to bad luck and be honest about why you get angry. Do you feel like you don’t get your fair share of good luck, are cursed, or get more bad luck than you deserve? If so, you may have drawn that conclusion from a long-term research project you’ve been unknowingly conducting since you started trading.

The problem is that your research has been compromised by bad data, and thus your conclusions are wrong. You aren’t cursed, you get your share of good luck and not as much bad luck as it seems—you’re just not measuring it correctly.

There are two primary errors that cause faulty coding in this way. First, you attribute your mistakes to bad luck, and second, when you have good luck, you attribute those results to skill. These errors bias the scales of trading justice to make variance seem unfair when it’s not. The next two figures illustrate this point.

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