Master The Psychology Of Trading? Forget About It!

For years, traders have been bombarded by self-proclaimed “gurus” on trading psychology.

They say things like, “If only you could learn to manage your emotional tendencies, you could improve your trading results and live happily ever after.”

But I say, “Forget about it!”

If you had a perfect trading system that consistently generated profits, with rarely a drawdown, would you really need to work on your “trading psychology?”

No.

Traders only study the psychology of trading to help them cope with the shortcomings of trading an imperfect system.

Yet, since a perfect trading system does not exist, professional traders do indeed need something to keep them strong and focused when trades are going against them.

Paradigm Shift

What if such a truly winning trading system actually DOES exist, but it’s just impossible to actually follow all the rules every time?

This is the category that many computer-generated trading systems, such as algorithmic trading, fall under.

For instance, there are trend-following systems that are always profitable in the long run — but can drag on for months with your account in the red.

Such a system could work, but you would need a resident trading psychologist to put you back together on a daily basis (just to have any chance of rigidly sticking to the trading system).

Reality Testing

There is a common element to both of the scenarios described above and it’s called “reality testing.”

My example above of a “truly winning system” sometimes requires a great deal of pain to apply the system long enough to be guaranteed of winning.

Yet, when faced with a new, potentially successful trading strategy, you will always begin with no personal historical experience of its performance.

Sure, you can be presented with (or create for yourself) plenty of back-tested results.

However, true confidence in landing a plane only comes from successfully landing one many times YOURSELF during training.

It does NOT come from reading a manual or guidebook that “guarantees” faultless landings.

Catch-22

In the real world, a successful organism can NOT constantly make huge leaps of faith and expect to flourish.

For example, if you happen to suffer a bunch of losing trades early on, is that just the luck of the draw (and you just need to be more patient) OR is your strategy actually invalid?

Likewise, it would be unwise and irrational to blindly go “all in” and follow a trading approach that you have not already proven to yourself as a successful, profitable strategy.

Given this dilemma, can you really be expected to follow trading rules before you’ve even proven to yourself that they work?

In this case, your lack of positive trading psychology is actually just a case of rational “reality testing.”

Solution To The Dilemma

Maybe there actually IS a resolution to the kind of paradoxes I’ve been discussing.

If someone shows you a system that purports to win 60% of the time, then how long would you need to trade that system before knowing whether it really does what it claims to do?

For example, if you happen to suffer a bunch of losing trades early on, is that just the luck of the draw (and you just need to be more patient) OR is your strategy actually invalid?

Personally, I believe I have finally solved this set of dilemmas, at least for myself.

What if I didn’t need a lot of “trading psychology” to stick to my trading strategy because it almost always results in a profitable trade?

It’s not so hard to adhere to the rules when most trades are closing in the green.

And what if this strategy wins such a large percentage of the time that you only have to make about ten trades to determine its viability?

“Reality testing” becomes easy, confidence builds quickly, and following the rules doesn’t require psychological judo to keep on track.

Someone much smarter than myself came up with a very simple trading strategy that consistently results in 9 out of 10 trades being winners.

During the past eight years that I have personally been trading this approach, I have fine-tuned my application of it to truly maintain a win rate of 90%.

This is based on over 600 trades posted publicly and with sufficient time for others to follow and match my results — not cherry picked after the fact.

Linda Bradford Raschke, a famous equities trader, commented in a seminar that she knew traders who had developed a single trading strategy and perfected it enough to make a living from just that one approach.

Apparently, I am one of those people because my ETF swing trading system matches my personality, my attention span, AND enables me to make a living from trading.

If you find a trading strategy that matches your trading personality and can prove itself with a short amount of “reality testing,” then you won’t need that next course on “trading psychology.”

Numbers Don’t Lie

Since the first week of 2017, I have generated 30 winning ETF trades in a row, as well as 13 back-to-back ETF option trades closed for a profit (just email me at [email protected] for actual details of these trades).

Last Tuesday (March 28), I closed 6 winning trades (4 ETF swing trades and 2 related ETF options trades). But one week before that, my entire trading account was in cash.

By the time the market popped a few days later, I had built ETF positions over a period of several days that amounted to over 22% of my personal net worth.

I closed those trades on March 28, and am now back in cash, waiting for the next set of 5-day swing trades.

What’s In It For YOU

Just shoot an email to [email protected] and I’ll show you these actual trades…plain and simple.

Not A Guru

How It Works: The Beauty Of Simplicity

I don’t have time to pontificate about the market.

I don’t care about what “caused” yesterday’s movement in the market.

All I care about is where my next trade setup is coming from.

I don’t even “suggest” anything; all I do is tell you what I am doing in my own personal account and it’s up to you to follow.
As such, my trading service is intentionally dead simple to use.

Each day, I post my “Final Trade” email about one hour before the market closes.

The email clearly details which trades I will be closing that day, using Market On Close orders (no trading is done during the day).

I’m usually in no more than 2-3 trades at a time, averaging about 10 new trades per month.

These are “swing trades” with an average holding period of 5 days.

At some time during the day, I also share with you a chart of each ETF trade setup that explains why I am taking the trade (no “black box” trading).

After the market closes each day, I then post a status update of each trade I am in.

As you may have gathered by now, this is a very FOCUSED trading service; one basic chart pattern, 2-3 trades at a time, and complete attention to each and every trade.

As I finished writing the above, one of my subscribers phoned me (I always make myself highly available to subscribers) to clarify a point about a trade.

Before hanging up, he also told me, “please never stop providing this service.”

This trader also told me that my strategy could be the one that finally enables him to retire from his day job when his account is large enough.

It’s feedback like this that keeps me going too!

Give my ETF swing trading service a test drive today and find out if my strategy is right for you too.

Please feel free to contact me by email or phone with any questions or comments.

Jack Loftis, PhD | founder

PS – A few months ago, I funded a small $5,000 options trading account because I liked the iPhone app that Interactive Brokers provides. Today, I’m taking $1,000 profit out of that account — for the FIFTH time. Yes, I’ve taken $5,000 profit out of a $5,000 account — and still have $5,175 in the account. So you CAN trade this approach with ANY SIZE ACCOUNT. I will leave you with a few recent testimonials from subscribers…