One good "rule" always wait for the setup, not the buy signal. For example, earlier this week QQQ gave a buy signal, but came back down, resulting in a nice set up for a long entry (in my opinion). I guess this relates to greed and fear - don't be greedy and jump at the first buy signal!
Emotional ruts and what to do about them
- Thread starter zorrotrader
- Start date
This is easy for me but I don't know if it will be easy for you - every time I enter a trade I ask myself if I feel I did the right thing, I don't look at the quotes after I enter, I just ask myself did I have good reasons to initiate the trade, is the market strong or weak, did I prepare myself for this trade or I didn't give it enough thought before I entered. Now here comes the tricky part - if I think that I shouldn't have put the trade in the first place - I get out immediately. It's that simple. If you know you did an "impulse trade" - just scratch it and forget about it.
The problem is that once you realize you've made a mistake by putting the trade, you don't want to admit that by putting the trade off, thus making a second mistake. You've made two mistakes instead of just one. Now it gets even harder to admit two mistakes, so you keep the trade and still hope that you might be right. But a mistake can not be corrected. It has been made. You must admit it immediately after you recognize it and act accordingly. Even a successful system trader with experience and knowledge of the markets can make mistakes but he is quick to admit and forget them.
So once again, if you make one of those impulse trades, just close them. You close them not because they will not work but because you made a mistake by putting them
Quote from neutrino:
This is easy for me but I don't know if it will be easy for you - every time I enter a trade I ask myself if I feel I did the right thing, I don't look at the quotes after I enter, I just ask myself did I have good reasons to initiate the trade, is the market strong or weak, did I prepare myself for this trade or I didn't give it enough thought before I entered. Now here comes the tricky part - if I think that I shouldn't have put the trade in the first place - I get out immediately. It's that simple. If you know you did an "impulse trade" - just scratch it and forget about it.
The problem is that once you realize you've made a mistake by putting the trade, you don't want to admit that by putting the trade off, thus making a second mistake. You've made two mistakes instead of just one. Now it gets even harder to admit two mistakes, so you keep the trade and still hope that you might be right. But a mistake can not be corrected. It has been made. You must admit it immediately after you recognize it and act accordingly. Even a successful system trader with experience and knowledge of the markets can make mistakes but he is quick to admit and forget them.
So once again, if you make one of those impulse trades, just close them. You close them not because they will not work but because you made a mistake by putting them
Nice comment on mistakes. It is so true in time sequences that mistakes cannot be corrected.
We all need time erasers once in a while but they are difficult to come by.
do you think these trades are the results of laziness... ??!
Never understood why most of us have gone through a stage wherein we entered trades, and later realized that we really couldn't articulate a reason therfor in front of a room of experienced traders. Next time you get lazy and enter a "hope" or "wish" trade... i.e., take a three point shot rather than waiting to pass to a teammate in the paint... use imagery and ask yourself how you would explain this trade post-market, if you were meeting with a small group of successful long-term traders... and also including WDGann the Arrogant...
, and if said explanation would draw loud laughter, sarcasm, scorn and cause real embarrassment. If not, then maybe your trade was correct and the market disagreed... can't win them all.NEXT!
ICe
You always need to be mapping your trading methodology to the current market environment. If you're trading volatility breakouts and the market isn't volatile and you have 8 losing trades in a row, then it really is your fault for not having an effective counter-trend trading strategy or worse not recognizing the market for what it is and stepping aside. Or, you can choose to build up your intellectual capital and enhance your techniques while waiting for the market to come to you.
I wholeheartedly agree that for the most part, the psychological aspect is bull -- unless you simply can't pull the trigger. Then you've got real issues. There is a bubble in trading psychologists, coaches, and mentors.
But back to trading... I never accept a loss on its face value unless it's an overnight position with a gap that goes against me. Or some f'ing jackoff NASD bureaucrat who decides that trades over a specific 8-minute interval have to be cancelled and they steal your money.
Analyze, analyze, analyze.
Code, code, code.
Test, test, test.
Trade, trade, trade.
Regards,
PTR
I wholeheartedly agree that for the most part, the psychological aspect is bull -- unless you simply can't pull the trigger. Then you've got real issues. There is a bubble in trading psychologists, coaches, and mentors.
But back to trading... I never accept a loss on its face value unless it's an overnight position with a gap that goes against me. Or some f'ing jackoff NASD bureaucrat who decides that trades over a specific 8-minute interval have to be cancelled and they steal your money.
Analyze, analyze, analyze.
Code, code, code.
Test, test, test.
Trade, trade, trade.
Regards,
PTR
I have learned (the expensive way) that to trade well, I have to be relaxed. If stressed, I make mistakes.
The only way I know to make the process of trading less stressful is through repetition; you have to focus on the the trades, not the money. As tedious as it sounds, you have to expect to place 1000s of 100 share trades until you simply don't care if you make or lose money on any individual trade. Then move to 200 shares etc.
I used to use a stop watch and monitor my pulse! If my pulse went up I knew I had to be careful. This actually allowed to to "catch" myself before I got stressed out.
This has finally allowed me to focus on trading and not the "random" aspect of how much money I've lost or made at any given point in time.
Hope this is of some help.
The only way I know to make the process of trading less stressful is through repetition; you have to focus on the the trades, not the money. As tedious as it sounds, you have to expect to place 1000s of 100 share trades until you simply don't care if you make or lose money on any individual trade. Then move to 200 shares etc.
I used to use a stop watch and monitor my pulse! If my pulse went up I knew I had to be careful. This actually allowed to to "catch" myself before I got stressed out.
This has finally allowed me to focus on trading and not the "random" aspect of how much money I've lost or made at any given point in time.
Hope this is of some help.
First i want to say thank you to everyone that took the time to respond or PM to my comments regarding my trading. I have found the comments to be helpful and have caused me to reexamine my trading process and thought process. The brutally honest comments have been very helpful - I have to accept complete responsibility for my trading actions before I can improve as a trader.
I have starting reading Douglas's book Trading in the Zone again and I am amazed how much new information I am finding this time thru. The idea and implication of taking complete responsibility for my trading actions and trading results is really starting to sink into my head. I have written up a set of mechanical trading rules and this week I am embarking on the exercise in the back of his book once again. I must say the head on collisions between my "desire to think objectively in probabilities and all the forces inside you that are in conflict with this desire" have been taking place like clockwork.
Impulse trading and even hesitating on entries has not been a real big issue this week as i tract my progress thru the exercise. I problem i have colliding with this week relates to the following comment from my original post:
My current results for the week from my mechanical rules is down 2 ES points. However, all my errors in not following my system have come as a result of missing trades due to distractions or distractions with rationalizing dialog for not taking the trade. Those two trades are the best two trades of the week for a total of 5.50 ES points. Douglas does talk about this type of behavior and now i must work on taking responsibility for these actions. And start the exercise over again.
I am using grob's 4 stepper as i work thru the exercise as a way to correct certain actions and beliefs. I did find it interesting that Douglas talks about a similar written process in his first book - The Disciplined Trader.
I will try to update my process every once and a while.
I have starting reading Douglas's book Trading in the Zone again and I am amazed how much new information I am finding this time thru. The idea and implication of taking complete responsibility for my trading actions and trading results is really starting to sink into my head. I have written up a set of mechanical trading rules and this week I am embarking on the exercise in the back of his book once again. I must say the head on collisions between my "desire to think objectively in probabilities and all the forces inside you that are in conflict with this desire" have been taking place like clockwork.
Impulse trading and even hesitating on entries has not been a real big issue this week as i tract my progress thru the exercise. I problem i have colliding with this week relates to the following comment from my original post:
My current results for the week from my mechanical rules is down 2 ES points. However, all my errors in not following my system have come as a result of missing trades due to distractions or distractions with rationalizing dialog for not taking the trade. Those two trades are the best two trades of the week for a total of 5.50 ES points. Douglas does talk about this type of behavior and now i must work on taking responsibility for these actions. And start the exercise over again.
I am using grob's 4 stepper as i work thru the exercise as a way to correct certain actions and beliefs. I did find it interesting that Douglas talks about a similar written process in his first book - The Disciplined Trader.
I will try to update my process every once and a while.
Zorro's original post is, if not universal, is certainly familiar to a large percentage of new, moderately experienced and even traders who have been successful for many years. Even traders like that have been known to be successful for long stretchs of time and hundreds of thousands, if not millions of dollars, can get into a phase where they completely blow up as a result of not following their plan. Those who have never experienced this phenomenon are VERY lucky....
He is also correct that the combination of impulse trades and fear seem to be the driving force behind this. Both of these challenges are emotionally based and must be ultimately dealt with via dealing with the emotions. Specific tactics such as trading one set up and others mentioned here can definitely help but to CURE the problem requires becoming aware of the emotions and thoughts - that are unconscious - which to Zorro's great credit he is clearly trying to do. It is nearly impossible to do this without help from another - preferably one who is trained in helping people become conscious.
It isn't easy but it doesn't have to take forever and results can be seen relatively quickly - as long as the right problem, the emotions, is being addressed. Ultimately one can have the emotions and NOT act them out - either through NOT taking the trade or through an impulse trade. The problem lies in that we blame the emotions as opposed to accepting them and working with them. Once they are accepted, then one can ACT out of the intellect.
.at least that is my experience and training.... DKS
He is also correct that the combination of impulse trades and fear seem to be the driving force behind this. Both of these challenges are emotionally based and must be ultimately dealt with via dealing with the emotions. Specific tactics such as trading one set up and others mentioned here can definitely help but to CURE the problem requires becoming aware of the emotions and thoughts - that are unconscious - which to Zorro's great credit he is clearly trying to do. It is nearly impossible to do this without help from another - preferably one who is trained in helping people become conscious.
It isn't easy but it doesn't have to take forever and results can be seen relatively quickly - as long as the right problem, the emotions, is being addressed. Ultimately one can have the emotions and NOT act them out - either through NOT taking the trade or through an impulse trade. The problem lies in that we blame the emotions as opposed to accepting them and working with them. Once they are accepted, then one can ACT out of the intellect.
.at least that is my experience and training.... DKS