Quote from genetrader:
I have been in the financial markets for over 10 years. I recently left my full time job as a professional trader to trade my own money.
Prior to the move, I would swing trade my personal account and have done extremely well since June (over 130% return).
However, once I went out on my own I have fallen victim to my own incredible lack of discipline. Im not sure if its because I secretly feel guilty about the money I have made or I just dont want to day trade (which would be silly because I love doing it), but I become that 'compulsive gambler' type once I start digging a hole and basically bury myself.
Since I have started I have drawn my account down over 22%. I really believe I can trade (as I did it professionally) and I have been successful.
Did anyone ever go through one of these incredibly destructive periods where they were 'almost' trying to lose money? Can anyone give some advice of things they did to stop it, control it and mitigate this problem?
One thing I am trying to do is have a fixed amount of money to be down and then turn off the machines. However, there must be other methods people use to develop iron-clad self discipline...?
Any help, advice or thoughts are greatly appreciated. Sorry if this post sounds nuts but I feel like one of you might have been in a simliar rut...
Thanks again,
-- Geno
You have identified the problem - compulsive trading, or overtrading, or gambling or whatever you want to call it.
The solution then is simple. Stop gambling/overtrading/compulsively trading.
Now, this may be a bit like telling a fat person to eat less and exercise more, in that you know what to do, but you just lack the willpower to do it and break out of your self-destructive habits. In which case you have to find a mental "trick" to stop the gambling, and habituate yourself to a more disciplined approach.
Generally, psychologists say it takes 6-8 weeks to habituate yourself to a behaviour (by doing it daily for that long, you then do it automatically). So my recommendation is this - come into work every day as normal, do your preparations, but then do not trade at all. Just watch the market, make a mental or written note of when your system would tell you to buy or sell, and then at the end of the day, see how you would have done. But do not trade at all.
Repeat this for 8 weeks, watching the markets intensevely, but without placing so much as a single trade. The idea is to force yourself to learn to sit on your hands. Because you cannot trade, you will break your addiction to trading for the sake of it. You will become used to the idea of not trading at all, you will be *forced* to learn how to be patient. And noting down your signals, and the paper P&L you would have made, will help bring home to you how much more profitable a disciplined approach is, compared to the reckless gambler approach.
For best results, tell someone you respect and who knows about your trading, what you are going to do. To them to check up on you, to make sure you have made no trades. That way, the dear of embarrassment will stop you breaking your self-imposed discipline, and doing the odd trade here and there (which will soon turn into full on compulsive trading).
If this is too excrutiating, then a moderate alternative is to allow yourself only 1 trade per day. Once you have made an entry, and an exit, then you must sit on your hands for the rest of the day, without trading at all (you must still follow the market, however).
p.s. I just noticed your 2nd post, glad to see you have "recovered". In this case, try the "sit on your hands" thing for one day only, and see how it feels. It is a useful experiment which helps you get a grip on your own psychology.
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