“I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where you buy and sell.”
Tom Basso – New Market Wizards
About FXTraderPaul
A professional Trader and Coach, FXTraderPaul blogs about his adventures from the front-lines of FX Trading. A Trader and educator who can walk the walk as opposed to merely talk the talk!
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January 20, 2011 at 4:40 pm
Hey Paul, I’ve heard this many a time, but i believe that the investor also needs a robust system and that is just as important as great psychology and risk control. Because if your risk control is awesome and psychology is awesome but your system sucks then you will surely bleed to death. Or maybe its impossible to have a sucky system with great psychology?
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January 20, 2011 at 6:41 pm
Hi Jay, thanks for your contribution. It’s true that everyone needs to develop a trading methodology with an edge. If you have the right money management and the right attitude then you’ll last long enough to gain experience and be able to gather enough data from your trading records to help you refine your approach. If your mindset is right then you’ll have the awareness required to work out whether it’s you, your system or the market that is out of sync. I’ll give you a hint though. It’s usually the first one. For example you like to trade trends and have a great trend following system. However you’re getting chopped up because the market is consolidating. A trader with the right attitude will know what to do when he and his system are not in sync with the present market dynamic. They’ll either scale down or sit on the sidelines until the market has entered a trending phase. Hope that helps.
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