Disciplined Trading - feedback appreciated

My point is none of this advice is going to help next time he gets into a trade, he will do what his mind tells him to do, and everyone who is disciplined learned it the hard way, no other way. Basically, you touch the stove enough times, you know it is hot and you JUST DON'T TOUCH IT AGAIN.

There is also one more way to get smashed with bad discipline, overtrading. The most damaging games I have took have always been putting up shot after shot looking for a prayer when the market is doing absolutely nothing, and I get stopped out one after another. If your style is aggressive, it is very hard to combat churning, as you will inevitably take shots when you should be taking them.

I know someone who was flawless for second half of August, entire September and so far in October. I also know quite a few traders with 1 or 2 down day's a month. A lot of people put up lame excuses for being down, market is crap, not used to long side biase, blah blah, any given day you are down, it is because you messed up, not because the market was bad because on any given day there are a lot of opportunities catered to different styles, this is why that in my journal despite of the fact that I mention the market was tough I will also note how I messed up, did I miss a very good pop, a nice leg down, a sector move, etc . . .

Discipline brings consistency, and you can not ever be top tier if you average more than 1 down day per week (at least for non-summer months).
 
Hitman,

Basically, you touch the stove enough times, you know it is hot and you JUST DON'T TOUCH IT AGAIN.
While I don't disagree with your premise, it's just not that simple for people on the other side. If so, there would never be an Alchoholics Anonymous or any of the other Anonymous organizations to support people. A drinking alchoholic knows what will happen each time they start drinking, but that's not enough deterrent by itself. Telling them to JUST DON'T DRINK falls on deaf ears, even though what you are saying is accurate. Same for traders.

Discipline brings consistency...
Taken by itself I have to disagree with you. I've known a number of highly disciplined traders, with religious money management, tight stops that they always stuck to, and yet they slowly or quickly bled to death and fell out of the game. Why? Because their strategies had a negative expectancy, and over time all the discipline in the world couldn't save them. Now if you said discipline plus a positive expectancy system bring consistency, then I would agree.
 
Being an alcoholic is not anyone else's problem, you ruin your life if you don't change. Being an undisciplined trader is not anyone else's problem either, you blow up if you don't change.

In both cases, ultimately, it comes down to the person him/herself, and no amount of treatment nor lectures can do you any good, you either do it or you die.

Maybe I am the type of person with very strong mind/will/opinion, but I don't believe in psychology as a study, when I am onto something no one on this planet can make me change my direction (well, except one person, but I am not going there).

Books about trader's psychology, total garbage, you read one you have read them all, EVERYONE KNOWS what has to be done unless they are BRAIN DEAD, cut your losers, let your winners run, blah blah, VERY FEW can do it, and it takes more than a few posts on a message board or a few volumes written on the subject to change someone's fate.

Either they learn the stove is hot or they lose their hand. Put a note on your monitor, you don't have to look at that note when you trade, you are probably looking at tape/chart/futures, not to mention your plan often gets thrown out of window when something unexpected happens, and it always does. Use hard stops, they can be removed in a single click, and a lot of good traders do not use hard stops in fear of getting shaken out by the specialist and/or get a bad fill, think of every trade as one of thousands you will make, still hurts like hell when you are long size and the thing spreads you half a point, you just got shaken out and that happens to be the bottom and you watch it go up a point or two. Cut your sizes? At some point you have to bring it up again, and how many times you cut your sizes, get a few wins, upped your sizes and get smacked back down? Positive expectancy? How do you know it is negative until you have blew half an account in it? Just how exaclty do you create a positive expectancy trading system in day trading? Risk a quarter and make a point? No one said the thing has to go up a point. How many positive expectancy styles turned negative over the last year or so? Never average into losing trades? A lot of size traders take a small position and add to it when they see say, a large BID, even when they are out of the money, of course, when they do that they are ready to get out as soon as the BID is hit, but in the risk is taking heavy slippage if they are wrong and are unable to get out in time. Cut your losses most of the times? A few stop-out's coupled with some slippage will end up as a diasterous day. Fighting the trend and waiting for confirmation, oh I love this one, how the hell do you confirm a trend until it is too late? Text book trend reversals only exist in text books, you always have to be early in day trading or by the time you get in you are already more than half way through the move.

The only way to learn discipline is to be punished when you lose it. I have been trading professionally for almost one year and I turned a $1000 up day into a $3000 down day, I also lost 3 points in a little stock called DST in a matter of minutes and watched it print against me tick by tick. Even with those bad experiences, I still take more damage than I should in a trade every once in a while (getting out a quarter too late, when it is not an issue of slippage, is a quarter too much), I still get emotional and overtrade in the afternoon every once in a while (churn a $200 up day into a $100 down day when no real opportunity was present, is $300 too much), when the day I finally stop this 100% of the time, my trading will be purified. And nothing, absolutely nothing can help me to develop that nerve of steel, vein of ice water, I am the only solution to the problem.

JUST DO IT.
 
I read somewhere that the imagination is stronger than the willpower. I believe it. Our thoughts create our reality. Try focusing on one problem until it is taken care of. Paper trade at first, then do small shares until you've eliminated the problem. Try a visualization exercise: relax your mind by listening to your favorite song, now just close your eyes and see yourself performing the mistake and correcting yourself. See yourself cutting the losses or refusing to average down.
Michael Jordan and Tiger Woods use techniques like this to be the best. You can too. The important thing is to do this consistently or else it's is pointless. What Hitman said is right but this might help you EXECUTE what he recommended. In the end that's all that matters.
Also, watch the Matrix. Everyday.
 
I think its kind of useless to condemn different approaches to correcting problems. We are all different and what works for one may not work for another. I don't have much use for the psychology books but a lot of people swear by them so the evidence suggests it works for some. With seven years experience though, Im sure you must have tried all these things so my advice is stop trading and try something else for awhile. Take a nice long vacation and think about your priorities. Your primary priority is obviously not trading or you would do what is neccessary to succeed.
 
3. b. Eliminate the "looks overbought" stuff. Quantify overbought. Trade it if you must. Keep tight stops to get you out ASAP if you are wrong.


stock punter, can you expand on "Quantify overbought." in the answer you gave?
 
I don't use the concept of overbought/oversold myself, but there are a number of indicators you can use to quantify this, such as RSI for example.

The point I was trying to make was to be quantifiably rule-based in your determination of conditions, rather than going with your gut feel about where the market currently is.

-- Punter
 
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