Excellent question. And just to add, why don't you take that system/method that you have deveolped and practiced, and now knowing what you do about live trading, use your simulator in real time but with paper money and trade your system for a full week. See after the week is over what your results turn out to be. See if you can really execute your system as well as you thought you could before. Until you can generate HONEST profits for a week, there is no reason to make any additional losses in your account.
Aphie's REAL Trading Journal
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Excellent question. And just to add, why don't you take that system/method that you have deveolped and practiced, and now knowing what you do about live trading, use your simulator in real time but with paper money and trade your system for a full week. See after the week is over what your results turn out to be. See if you can really execute your system as well as you thought you could before. Until you can generate HONEST profits for a week, there is no reason to make any additional losses in your account.
Here is an answer. Trading involves strict discipline. If you have a cut and dry system, it is immensely hard to sit there for 6 hours at a time and not do anything with the market. Basically, it almost feels like you are some "order operator" that is just mechanically operating according to your system. Another part of me wants to be discretionary.
I must learn how to control those things that damage my mindset and to focus on those things that make me successful. The only remedy for that is time and some money.
This is tuition. It amazes me how so many people on ET say that you have to blow out an account or two to ever become successful, yet I take some heat for doing exactly that and finding my own way.
It is easy to sit there and dish out advise to someone when you have already mastered your emotions, but it is another thing entirely to act real-time in a dynamic market.
I will trade some next week in a simulated mode and phase in and out of real trading.
I'm not sure precisely what path I need to walk since the path isn't always obvious, but I do know when the path I'm going down is definitely the wrong one.
Part of becoming successful, in my opinion, is doing something that is wrong and learning from it and then going a different direction until you get it right.
This is not about systems, it is all emotions and mental discipline.
I've learned more about the dynamics of bid / ask on QQQ and trading it during two trades than I have reading "How to daytrade and make one million."
In fact, I must now go back and reread Douglas' book and, for the first time, truly understand what it is he is really talking about.
If you read that kind of book BEFORE you begin trading, its just words on a page. After you've experienced pain and after you've experienced being scared shitless while in the market, then you can go back and re-read his book and really understand it for the first time.
A lot of people get a good laugh when I say I'm going to review my few trades. Well, that's what I think I need to do. I'm not reviewing the system -- because I didn't follow it. I'm going to sit down and review precisely why I didn't follow any system.
You will be surprised where I end up in 6 months.
Brother,
And after you re-read his book 100 times you will still be scared shitless.
This is because.. you are playing w/ too much size... and I bet your system (discretionary or mech.) has a min. stop loss of atleast $100.. which is too big for you to take. Once you put the trade on.. you are scared and nervous because you know there is a good chance you will lose $100.
If an ES contract was worth $10 a point.. and you had a 2 point stop loss.. I bet you would not be scared shitless... and would follow your system w/o hesitation.
You are only trying to fool yourself that you are emotionally ready to trade the emini's. No book, or advice will help you. You know what's right. Everything else is just mind games.
You honestly have to find your threshold of pain per a loss.. and that should be your stop loss (adjusted to your plan) . With a $5k account.. anything more than $50.. is crazy. Therefore you should not be trading the emini's or daytrading.
You have to be in a state of mind where a win or loss has absolutely no effect on your mindset. A book or post will not get you there.. nor will paper trading.. nor will reviewing your trades 100 times. Reduce your size.. this will take care of your emotional problems and make trading "somewhat boring" and more routine.
There is no way to master being neutral to losses regrdless of experience or being a veteran and trading 20 years. This is only done.. by making the loss irrelevant. A trader that moves $250k per a trade on a $5mil account.. can take a loss of $1k and not even blink. The only reason is.. because the loss is tiny (0.02%)relative to his account... not because he has better emotional control than you or any trader with a $5k account.
I have been there.. done that.
just my 2 cents
--MIKE
Aphie be honest here..
Imagine trading was like making $3 when right and losing $1 when wrong.. and you have an account of $5,000.
If that was truly the case.. then trading would be boring, and so routine. You would not hesitate the slightest bit to take that $1 loss. You dont have to read any books or take anyone's advice to get to that level.
As far as emotions go, the difference between you and a pro is the account size. THe pro's losses and gains are much greater.. but the risk is about the same. Emotional control is probably the same too.
Let's assume one has $5,000 to start trading. Right off the bat.. risk something like $20 to make $50.. IB's low commisions are great. This can only be done via swing trading ( due to PDT rules.. dont even think about the NQ
). Then every few weeks raise the level of risk by $5.
After a few years your size will be greater.. and your emotional control will be equivalent to the $20 loss you were taking in the beginning when you started trading.
Your other option.. is to trade emini's in $5k accounts.. and blow through multiple accounts until you become neutral to blowing up accounts. This is not meant to belittle you.. its the advice others are giving.
--MIKE
Imagine trading was like making $3 when right and losing $1 when wrong.. and you have an account of $5,000.
If that was truly the case.. then trading would be boring, and so routine. You would not hesitate the slightest bit to take that $1 loss. You dont have to read any books or take anyone's advice to get to that level.
As far as emotions go, the difference between you and a pro is the account size. THe pro's losses and gains are much greater.. but the risk is about the same. Emotional control is probably the same too.
Let's assume one has $5,000 to start trading. Right off the bat.. risk something like $20 to make $50.. IB's low commisions are great. This can only be done via swing trading ( due to PDT rules.. dont even think about the NQ
). Then every few weeks raise the level of risk by $5. After a few years your size will be greater.. and your emotional control will be equivalent to the $20 loss you were taking in the beginning when you started trading.
Your other option.. is to trade emini's in $5k accounts.. and blow through multiple accounts until you become neutral to blowing up accounts. This is not meant to belittle you.. its the advice others are giving.
--MIKE
What are you in it for? Is the journey as important as the destination? I will tell you one thing, in some cases, the brighter you are, the worse it is to be a trader. People think that trading is some glamarous thing. Here is an analogous career - professional poker player. Read this book "Poker Nation" and listen to how he deals with boredom of doing the right thing day in and day out.
A lot of people come to trading because they can't stand the monotony of what they are currently doing. From the other side of the fence, they romanticise what trading is. If you haven't already, go and visit a local professional daytrading firm - what do you see? A bunch of mostly guys sitting in front of a computer screen watching a bunch of numbers go by - this is glamourous?
You continue to underestimate what it takes to be a profitable trader, and there are quite a few ways to make a living. But for every one of those ways, there are 10000 ways to lose your stake.
Trading spoo requires very different skill set than arbitraging bonds. All this stuff you are learning now is the equivalent of balancing the bicycle when you first learn to ride one.
I concur
With experience comes conviction - but the feel of taking heat is the same - the difference is experience tells you when your "fear" is warranted and when it is panic and not warranted. There will be times when you will know that you are right, but the discipline of the method requires an exit. Most people set hard stop loses when they start so that they don't have to take the responsibilty of having to make a choice - that is a good thing when you start out.
For some, the path comes relatively soon, for others...
Trial and error is OK if you are a good learner and have time and patience, and are not undercapitilized. Honestly, if I were you, I would go to Worldco or ETG or Shony and plop down 5K, and trade equities...I believe that one of the signs of the Grandmaster trader is that he would feel comfortable trading ANYTHING. Why does it have to be spoo?
Well, if you are trading a system, then where is the required discipline? Look at Andy, he had a system and had the discipline of a Marine - it doesn't guarantee success...Like I said, this stuff of the mental game is the foundation, it is not the house...
This surprises you?
YES!
GOOD!
Best of luck to you, but don't burn out...
nitro
Trend Fader is correct.you need to reduce size until you get the process figured out and then your emotional problems will be controlable.paper trading will not do it.you need real money on the line even if it is only 10-20 shares in the beginning.the ib price structure allows you to do this easily.
you will just have to postpone your plans to take 5k to a million for a few months.lol
you will just have to postpone your plans to take 5k to a million for a few months.lol
Magna
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You've stated words to this effect a number of times, and while true, they are essentially useless to the recipient. Imagine a new recruit showing up at Paris Island for Marine basic. The Drill Instructor greets the men and espouses your philosophy. The recruit thinks, "hmm, probably true what he says, but SO WHAT? The only way I'll find out is by trying, so knowing this information in advance does me absolutely no good whatsoever...."
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