forex system, money management, and psychology, which among the three you put the most weight on?

Quote from a forex factory member's post


Thank you for your kindness to post in this thread. I am a firm believer;

* Where there is will there is a way and
* There is always a better way.

I also believe that we don't trade the markets but we trade our BELIEFS about the markets. We don’t see the world as it is but we see it the way we have been conditioned to see it. Same is true about markets. At any given moment in time some see it as a sell signal and some see it as a buy signal. Here the problem is not with the eyes but the thinking process. Everyone’s mind processes the same data differently. I have tried to get out of that black hole by not doing any market prediction for any reason.
· People use different indicators to predict markets. Moving averages, MACD, RSI, Momentum, Pivot Points, and Trendlines just to name a few. Then people use different time frames to trade. An indicator might give you a buy signal on one time and give you a sell on the other time frame exactly at the same time. WOW. One is buying using the same indicator and the other is selling using the same indicator. That is why whenever you make a transaction at any one time there is always someone at the other end of the bargain to complete the transaction. All those indicators take past price data and convert it into some kind of visual effects to make us believe what we want to believe is happening.
o IT IS HARD NOT TO BELIEVE WHAT WE WANT TO BELIEVE.
When we have made up our minds about an instrument that it will go in a certain direction; we try to find indicators that support our view. We don’t interpret the indicators as they are but as we want to see them. For example; I am bullish GBPUSD. My MACD is telling me on 4H to sell. I don’t like that MACD at that time because it is trying to contradict my view. I will change the time frame to see if it is giving me a buy signal on 1H, 30 Min or anywhere. If it does and surely you can find a time frame where an indicator can support your view; you will get even stronger on your bullish aspect about GBPUSD. You will only pick that goes with your brain. YOU will only see what you want to see. Then you see other indicators and surely some indicator at some point will support your view. You add up together, MACD on 30M bullish, Moving Average cross of 5 and 21 on one hour, Trendline on 5 min is holding, candle on 1 hour is bullish. Price breakouts from channel on 30 min. BUY. And you pull the trigger. This is mostly how trading decisions are made mostly by 95% of crowd who come with a dream of getting rich quickly trading the forex markets and end up donating their equity to their brokers account. I did this for 5 times in a row. I always changed brokers so everybody out in the markets can benefit from my donations.
If you try a little harder, you can find more indicators that do not support your view but that’s not what we want to see. So what is important? Indicators or the way we see them? Do they tell us something is going to happen? NO ABSOLUTELY NOT. They tell us only what has happened. And that too with a considerable lag and out of all that mess we will only see what we want to beleive is happening.
I would like to quote from Dr. Van K. Tharps Book "Trade your way to Financial Freedom"
There are probably hundreds of thousands of trading systems that work. But most people when given such a system will not follow it. Why not? Because the system does not fit them. One of the secrets of successful trading is finding a system that fits you.
Most successful market professionals:
· Achieve success by controlling risk. Controlling risk goes against our natural tendencies and requires tremendous internal control.
· Have success rate of 35% to 50%. They are not successful because they predict prices well. They are successful because the size of their profitable trades far exceeds the size of their losses. This requires tremendous internal control.
· Are patient and are willing to wait for the opportunity. That also requires tremendous internal control.
Ralph Vince once did an experiment with 40 Ph.D.s. They were asked to play a 100 trials of a simple computer game in which they would win 60 percent of the time. They were each given $1000 in play money and told to bet as much or as little as they wished on each of the plays. None of them knew about Money management. Only 2 out of 40 had more than their original at the end of the game. Or 5 %. If they had bet constant a $10, they would have ended with $1200. And if they had bet optimally for achieving the maximum gain ( which was to risk 20% of their new equity each time—not recommended here) they would have ended with $7490 ( on average ).
Look at the following two scenarios and see for yourself what it means:
· Which would you prefer:
o A sure loss of $9000 or
o A 5% chance of no loss at all and a 95% chance of $10000.
· Which one your prefer:
o Sure gain of 9000 or
o A 95% chance of a $10000 gain plus a 5% chance of no gain at all.
In the first case More than 80% of the public does not pick the sure loss and picks the risky gamble which works out be a bigger loss (9500).
In the second case more than 80% of the population picks up the sure gain which works out to be less profitable (9000) whereas the second option is a gain of 9500.

He also divides Trading as following:
SYSTEM: 10%
MONEY MANAGEMENT 30%
PSYCHOLOGY 60%
So, my point here is that system is probably not as important as we think it is. After spending thousands of dollars and thousands of hours of screen time I have finally came to the point where I started from but with this time my beliefs are totally different and that is big change. Now I Know that:

* If I have to succeed, I am on my own.
* I have to devise a system of my own that fits me

I am just on my way to self discovery and trying seek some help from people like you who have spent considerale time here and are more experienced than me.
Thank you again for your kindness and post.