Australian Markets

A recent video on our YouTube channel – it is an interesting question that deserves a more complete answer than you can generate in the comments section under a video. The question was as follows –

Could the main source of psychological problems be a lack of technical knowledge and skills?

One of the most persistent myths in trading is the belief that psychological problems are simply a by-product of insufficient technical knowledge. According to this view, if traders just had better indicators, more refined entry techniques, or greater analytical skills, their fear, hesitation, and inconsistency would disappear.

It is an appealing idea. It suggests that trading discomfort is a technical deficiency rather than a human one. It implies that somewhere, hidden behind the next indicator or the next refinement, is a version of trading that feels easy.

It is the reason why technical/charting programs are as popular as they are, with thousands of indicators they either include natively or can add.

The simple answer is that if indicators solved problems, then everyone who owned a charting package would be wealthy.

The Turtle Experiment: The Ultimate Test Case

In 1983, Richard Dennis and William Eckhardt conducted what remains one of the most interesting experiments in trading history: the Turtle experiment. Their goal was to answer a simple but profound question: Are great traders born, or can they be trained?

Dennis believed they could be trained.

To prove his point, he recruited a group of ordinary individuals. Some had trading experience, but many did not. They were taught a complete, rule-based trend-following system. The rules covered everything: entries, exits, position sizing, pyramiding, and risk management. There was no ambiguity. 

More importantly, the Turtles were not left to figure things out alone. They were mentored directly by Dennis himself, one of the most successful commodity traders in the world at the time. They were given capital. They were given structure. They were given a proven system. They were given world-class instruction.

In other words, they were given everything traders today believe they need.

And yet, many of them failed.

Not because the system didn’t work—it demonstrably did. Not because they lacked knowledge—they had the exact rules. Not because they lacked mentorship—they had direct access to one of the best traders alive.

They failed because they could not follow the rules.

The Real Source of Psychological Difficulty

The Turtle system was deceptively simple. It involved buying breakouts and cutting losses when the price moved against them. It required holding positions through inevitable drawdowns. It required entering when the market felt extended. It required exiting when the market reversed, often resulting in the surrender of open profits.

These are mechanically simple actions. But psychologically, they are extraordinarily difficult.

Traders hesitated to enter after losses. They second-guessed valid signals. They exited early to avoid discomfort. They skipped trades out of fear. They altered position sizes to reduce emotional pressure.

In short, they behaved like most traders. This is the central truth of trading: psychological difficulty does not arise from not knowing what to do. It arises from knowing exactly what to do—and finding it emotionally difficult to do it.

Indicators cannot solve this problem.

No moving average, oscillator, or proprietary signal removes the emotional reality of loss. No technical refinement eliminates drawdowns. No amount of analytical sophistication removes uncertainty. Indicators can organise information, but they cannot neutralise the human response to risk.

The Illusion of the Missing Tool

Many traders fall into a cycle of technical escalation. When they experience discomfort, they assume the problem is technical. They add more indicators. They refine their rules. They search for confirmation. They attempt to build systems that avoid loss entirely.

But this is an attempt to solve a human problem with a technical solution.

The discomfort remains—not because the system is flawed, but because loss and uncertainty are intrinsic to trading. The trader’s task is not to eliminate these experiences, but to function effectively in their presence.

The Turtles who succeeded did not do so because they had superior indicators. They succeeded because they accepted the rules and consistently executed them, even when it was uncomfortable.

They stopped trying to improve the system and instead improved their ability to follow it.

The Shift From Knowledge to Acceptance

Technical knowledge is necessary—but only to establish a viable framework. Beyond that point, additional complexity rarely improves outcomes. Instead, it often introduces hesitation, doubt, and inconsistency.

Professional traders understand this intuitively. Their charts tend to become simpler over time, not more complex. They stop searching for the perfect signal. They focus instead on flawless execution of a sound process.

They accept that losses are part of the business. They accept that uncertainty cannot be eliminated. They accept that discomfort is not a sign of error, but a natural consequence of operating in an uncertain environment.

This acceptance resolves psychological conflict in a way that no indicator ever can.

The Enduring Lesson

The Turtle experiment demonstrated something both encouraging and confronting. It showed that trading success does not require extraordinary intelligence or secret knowledge. It requires the ability to follow a sound method with consistency.

But it also showed that this ability cannot be replaced by tools. The barrier to success in trading is rarely technical. It is behavioural.

Indicators can assist decision-making. They can structure information. They can provide clarity. But they cannot provide the mental framework needed to follow a system.