2012: The Battle for Survival
- Thread starter neke
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Its not a a disease, its a natural human behaviour in the market.
Virtually everyone does it at some point. New/inexperienced traders do it all time. Neke is not a new trader, however he is under a lot of pressure and stress because his lifestyle now needs trading profits. Under stress people dont think clearly and stress levels turn extreme when an already stressed person starts to lose even more money. Traders try to fight their way out losing positions by averaging down or not taking a small loss.
Neke, I felt as if I am reading my own journal. It is crystal clear to me now that you and I suffer from very similar psychological issues. No amount of determination, automation, or any other tool seems to help. In the heat of the moment, its very easy to deviate from the plan. Lately, I have found one very simple solution that has helped me immensely to overcome this problem of discipline. I am confident that within next 1 month, I will be able to overcome this problem once and for all using this simple technique.
The solution is: "Involve someone else closely in our trading".
When you have someone sitting next to you the whole day and talking trading and overlooking your trading, in the morning and every hour after that, you guys can talk about your set of rules every hour or so - if you do this, you will never err from the plan. Because the other guy will tell you "dude you can't do this" whenever you are about to deviate from the plan. This is a very simple solution but this will really help you.
E.G. 1) PitBull - Marty Schwartz lost 800k in one single day when his trading partner (his wife) went shopping. There was no one to control him and he kept selling S&P when the market was locked limit up!!!
E.G. 2) Victor Niederhoffer in preface to his "edu of a speculator" talks about he was up 22 million dollars in the hunt brother's silver manipulation event of 1980 and had given clear instruction to his girlfriend to close the trade if he loses 50%, even if at that time he says not to close. He was out playing a tennis match when his position went down to 11 million, his gf called he shouted don't close the position - it will come back, his gf was smart enough to remember his original instruction and went ahead and closed the trade. I think due to slippage and the big size he had and other delays he could retain just 2 million from that trade, but he did retain 2 million, instead of losing it all!!!
Above 2 example shows, that the problems you face and I have faced have been faced by giants of trading before us. But these are problems for which simple solution exists - namely to involve someone in your trading as an assistant.
If you ask me, it will be best to hire someone cheap say for 2k a month, with his only job responsibility being to make sure that you don't deviate from your set of rules. You should give him a prepared 1-pager with all the rules clearly written and give him 2 weeks to master the drill. Say you want him to go over the rules with you every hour initially and then at every 2 hours interval. After initial 2 weeks training, you should make it known to your employee that if your employee lets you do even one mistake, you will fire him. This will be the solution to your discipline problems.
Finally, even if you agree with my suggestion, I think it will be very hard for you to implement it from tomorrow, since you have traded alone for 10 yrs and it will be hard to open your trading to someone else. Also, who wants to fork out 2k per month just to control his own discipline issues. You might keep thinking that I can overcome this problem myself. I would say "lets not delude yourself". Lets take the bitter pill, hire someone and you will find solutions to your problem. But sooner you take this step, better it will be for you and your trading account. If you are smart, you know what I mean.
Good Luck.
Finally, even if you agree with my suggestion, I think it will be very hard for you to implement it from tomorrow, since you have traded alone for 10 yrs and it will be hard to open your trading to someone else. Also, who wants to fork out 2k per month just to control his own discipline issues. You might keep thinking that I can overcome this problem myself. I would say "lets not delude yourself". Lets take the bitter pill, hire someone and you will find solutions to your problem. But sooner you take this step, better it will be for you and your trading account. If you are smart, you know what I mean.
Good Luck.
Neke trades from work so cant really hire a risk manager to monitor his trades next to him.
However if his account allowed multiple logins he could hire someone to close out his 'rogue trades' something his automation is supposed to do but he overrides. But his account really is too small to hire anyone now. His wife might make a good risk manager however he might not be happy to involve her in his trading or perhaps she is not suitable personality wise for such a job.
However if his account allowed multiple logins he could hire someone to close out his 'rogue trades' something his automation is supposed to do but he overrides. But his account really is too small to hire anyone now. His wife might make a good risk manager however he might not be happy to involve her in his trading or perhaps she is not suitable personality wise for such a job.
Multiple logins is a great idea.
There are ways to do it even with a small account - if trader has a profitable system. Maybe Neke doesn't has a systematic strategy but he has 10 yrs discretionary trading experience and has taken out more than 500k from the market. He might be able to convince some college student to do this job for him for free, in exchange for teaching him how to trade. He might also offer the college student a part of his PL say 20% of his PL subject to annual cap of 20k or so. Just saying - he will have to get a bit creative.
Hi Neke,
I really can´t believe what I was reading in your post.
Up to this point I was convinced that you were able to turn the wheel around an get back on track. But a loss of more than 10 % in a single trade has just wiped it out. Where was your money management ???
Simply by sticking to a strict 1%/trade maximum might have limited the loss to about 1.5k (incl. slippage). But you erased more than
2 months of withdrawals in just a couple of hours. Don´t get me wrong, I won´t drag you down further but just keep thinking about the risk you took in this trade. 16.000 shares that´s 320.000 $ (or less as the price was slipping). That´s a leverage of 3 on your whole account. Just spend some seconds on the thought that in that final hour of trade when you were fully loaded on that particular stock there would´ve been more bad news from the company itself or a competitor which might have caused another sharp fall. Can you imagine the result it would have on your account ?
Some weeks ago you mentioned that you already had a talk with your wife about the problems caused by the continious withdrawals.
Let´s do some simple math:
Net worth of the account: 92.000 and a couple of bucks
Withdrawal each month: 5.000 bucks
92.000 / 5.000 = 18.x months if there are no gains/losses
So far, so good. But as the withdrawals continue each month there is a bigger gain in %-terms needed to keep the account flat (not to talk of expanding it).
Neke, please take a couple of minutes a write down a list of your
trading rules and then stick! to them. You had a couple of fantastic years in the past and there are no reasons why these times won´t come back. But only if you do your best. Keep trading, not gambling.
Finally I´d like to apologize for mistakes and strange English I might have written above.
I really can´t believe what I was reading in your post.
Up to this point I was convinced that you were able to turn the wheel around an get back on track. But a loss of more than 10 % in a single trade has just wiped it out. Where was your money management ???
Simply by sticking to a strict 1%/trade maximum might have limited the loss to about 1.5k (incl. slippage). But you erased more than
2 months of withdrawals in just a couple of hours. Don´t get me wrong, I won´t drag you down further but just keep thinking about the risk you took in this trade. 16.000 shares that´s 320.000 $ (or less as the price was slipping). That´s a leverage of 3 on your whole account. Just spend some seconds on the thought that in that final hour of trade when you were fully loaded on that particular stock there would´ve been more bad news from the company itself or a competitor which might have caused another sharp fall. Can you imagine the result it would have on your account ?
Some weeks ago you mentioned that you already had a talk with your wife about the problems caused by the continious withdrawals.
Let´s do some simple math:
Net worth of the account: 92.000 and a couple of bucks
Withdrawal each month: 5.000 bucks
92.000 / 5.000 = 18.x months if there are no gains/losses
So far, so good. But as the withdrawals continue each month there is a bigger gain in %-terms needed to keep the account flat (not to talk of expanding it).
Neke, please take a couple of minutes a write down a list of your
trading rules and then stick! to them. You had a couple of fantastic years in the past and there are no reasons why these times won´t come back. But only if you do your best. Keep trading, not gambling.
Finally I´d like to apologize for mistakes and strange English I might have written above.
if a trader can not control his/her own emotions, then he/she will never succeed in the market place.
a lose cannon will always be an inevitable loser.
learning to trade is about learning discipline, not learning about patterns, trends, or whatever method out there.
master yourself, and you'll be ready to win the fight. look elsewhere for an answer and you'll be doomed.
First of all sorry for the results, not so much for Neke personally. The way this went is based on a reckless mind which gambles away not only personal but also family's future. This is not going to end until greed (100% in charge as trigger still gets pulled) swaps over to fear - then it's really finished. This change is just in the making now. More than pleased to get convinced otherwise but highly doubted.
Trading is about anticipating what others are doing and not about insisting to be right. There clearly is no edge and if there ever was one then it didn't pass the time test. Funny to mention time as it is not existing in trading nevertheless timing is and no more you need to know in order to make money. Good timing proves you right quickly and if not, well then you don't have an edge simple like that. Bad timing leads to hoping and pushing luck (averaging in) where disaster is just around the corner and doing this over and over again is nothing but plain stupid.
Would you do the same things if there was no money and also no other thrill involved but getting only rewarded by being right or wrong? Definitely not.
Beyond that daytrading and having another job at the same time is the worst possible combination as your understanding for value gets completely messed up which will probably lead to deteriorating at both. Now it might go well when trading an automated strategy with fixed entry/exit parameters but discretionary trading, pffffff. Even harder if somebody always trades the same things and is blind to see market environment changing before Saturdays.
Past is finished and now it's about to decide what you are going to do next. Your wife informed and still with you is a lucky gift, hope you appreciate at least that as for money you apparently do not have any respect (yet).
Find new strategies and trading instruments that fit you better or take off your hat.
My post shall just provoke thoughts and not insult, hope it will (if) be read like that as I personally went through all of this - not over such a long time period before waking up though - and it is hell.
Trading is about anticipating what others are doing and not about insisting to be right. There clearly is no edge and if there ever was one then it didn't pass the time test. Funny to mention time as it is not existing in trading nevertheless timing is and no more you need to know in order to make money. Good timing proves you right quickly and if not, well then you don't have an edge simple like that. Bad timing leads to hoping and pushing luck (averaging in) where disaster is just around the corner and doing this over and over again is nothing but plain stupid.
Would you do the same things if there was no money and also no other thrill involved but getting only rewarded by being right or wrong? Definitely not.
Beyond that daytrading and having another job at the same time is the worst possible combination as your understanding for value gets completely messed up which will probably lead to deteriorating at both. Now it might go well when trading an automated strategy with fixed entry/exit parameters but discretionary trading, pffffff. Even harder if somebody always trades the same things and is blind to see market environment changing before Saturdays.
Past is finished and now it's about to decide what you are going to do next. Your wife informed and still with you is a lucky gift, hope you appreciate at least that as for money you apparently do not have any respect (yet).
Find new strategies and trading instruments that fit you better or take off your hat.
My post shall just provoke thoughts and not insult, hope it will (if) be read like that as I personally went through all of this - not over such a long time period before waking up though - and it is hell.
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