Perfectionism in Trading

[PolarBear]

Hi all,

I came across this really interesting article.

http://www.thetradingdoctor.com/updatesandalerts/jd_addictiontoperfection.html

I think it touches on some very interesting psychological aspects of trading.

Some good quotes I like from it are:

Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the “Holy Grail” of trading, go from one service to another, from one system to another, looking for a way that they can be right all the time.

This is perfectionism in action. Not only does this type of irrational behavior and belief undermine and demoralize a trader, but it takes away all the enjoyment and fun of being in the markets. It leads to depression, with depletion of psychic and physical energy, and leaves the perfectionist to confront his/her basic and overriding fear: fear of failure.

If you have a perfectionist mentality when trading, you are setting yourself up for failure, because it is a "given" that you will experience losses along the way. You must begin to think of trading as a game of probability. Your losses (which you hope will return to break even) will kill you. If you cannot take a loss when it is small ( because of the need to be “perfect”), then you will watch that small loss grow into a larger loss, and so on, into a vicious cycle of more and more pain for the perfectionist. Trading on hope does not work. The markets can remain irrational for a lot longer than you can remain solvent.

The object should be excellence in trading, not perfection. Moreover, it is essential to strive for excellence over a sustained period, as opposed to judging that each and every trade must be excellent. This is a marathon, not a sprint.

The greatest traders know how to take cut losses and let winning positions run. Perfectionists often do exactly the opposite. They get in at the wrong time, stay in too long and then get out the wrong time. Perfectionists are always striving and never arriving.

Learn from your mistakes, and forgive yourself and make peace with your past. Strive to be better, not perfect; just an amazing human work in progress.

Happy trading,
-Daniel

 

[MichaelD]

I am a horrifically pedantic perfectionist. Fortunately, I figured out long ago that the correct place for this trait in my trading was in following my trading plans to the letter.

Trading errors cause me enormous pain and suffering, but a trade where I have correctly followed my trading plan gives me great satisfaction, win, lose or draw.

 

[nizar]

Perfectionism is when you try to buy bottoms and sell tops of the types of moves you try to capture.

This technique has only been mastered by the hindsight trader.

The world's best traders only need a fraction of the move or the meat of it, there is no need to catch the move in its entirety.

 

[stevo]

Good stuff.

 

[catch.profit]

some thing different and follow the same with megar profit

 

[tech/a]

While I agree with the comments made,I also think that "Perfection" can be achieved.

Mind you my idea of perfection may well be very different to the "Perfection" suggested by the writer.

To me striving for perfection in anything by way of accepting the challenge and achieving goals---even minor ones---along the way are very necessary to improvement.

In trading Perfection is having a consistemtly profitable methodology.
In Business its having a growing profitable company.
In Health its being able to persue any activity that interests you.
In relationships and self developement its happiness,love and sharing.

Understanding that perfection may not be perfect!!

 

[>Apocalypto<]

What I have realized now is that my trading system and analysis will never be perfect. No matter how many hours I spend on it.

I now spend a lot of time on what I think is the real holy grail. Developing a perfect mindset to trade.

Not there yet but getting closer!

 

[PolarBear]

I guess why the article struck interest to me, was that in my early stage of trading education, I'm struggling somewhat of where to draw the line between how much simulation and backtesting to do before plunging in and trading the real thing.

I think the main thing that I got out of the article was that I should strive for "excellence" rather than perfection.
This too can be applied to many aspects of my life - not just trading.

cheers
-D

 

[wayneL]

I guess why the article struck interest to me, was that in my early stage of trading education, I'm struggling somewhat of where to draw the line between how much simulation and backtesting to do before plunging in and trading the real thing.

I think the main thing that I got out of the article was that I should strive for "excellence" rather than perfection.
This too can be applied to many aspects of my life - not just trading.

cheers
-D

One smarty told me a long time ago that perfection is spelt p-a-r-a-l-y-s-i-s.