Facing our demons

[Hook N. Sinker]

Quote from Old School:

As I sit here on a saturday night - very comfortably drunk , I thought I'd write my first post here in the psych room. As you can see from my join date, I am a ET newb, so first and foremost, greetings to my fellow traders who place an importance on the psychology of trading.

What I want to talk about tonight: Facing our demons

We all have 'em.

Can't pull the trigger, can't stick to my stops, averaging losers, getting out too soon, one bad loss ruins your day/wk/yr, you get the picture. Many traders suffer from it. Not much has changed over the last 2,000 years of trading. You can bet that traders back then also had similar demons. Why? Because human nature hasn't changed.

So what's the top ONE demon that keeps haunting you over and over?
If you got rid of that demon, how much would your P&L improve?
Would you give up your left nut to finally get over your demons?

Hmmm...I need another beer.

There are no demons. You are responsible for your behavior. You describe your life. It is the life you picked. It is the life you create.

Step one = take your life back from alcohol.

 

[Bitstream]

Quote from Rearden Metal:

My #1 trading demon: Overtrading a dull market instead of patiently waiting for real opportunities.

that is my #2 demon; the #1 is i get pissed when i miss a fill on a huge winner or i cant get out a winner/loser in time and give back all my profits or take much larger losses than i expected: that typically send me in tilt and ruins my day completely. i have improved lately and am more collected but i still fell me pulse racin' non stop and then do revenge tradin' that more often than not yields bad results.

 

[Old School]

lol,

Last night when I started the post, I was drunk.

I didn't mean to imply that my demon was alcohol. I was just having a few on a saturday night and this topic came to me.

Some good responses. Let's see if we can tackle a few today.

 

[Old School]

Quote from ksonsinc:

but hey u might learn from it then to do it again

ksonsinc,

That comment is the whole problem isn't it? Further, if you learn from your mistakes but then "do it again", did you really learn from it? Some humans learn but can't follow the lessons learned. It's when we finally start putting our lessons into our trading that traders improve significantly.

Thus my battle cry,

"It's not that we don't know what to, we can't do what we know"

 

[Old School]

Quote from acronym:

He he.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=53597&perpage=6&pagenumber=6

Scroll down , etc, is that what you meant old school?

acronym,

"Three bar reversals, trust, you must not.
Lead you to the dark side, they will, yes. Longer time frames only, will you see the force with....powerfull, the dark side can be."

lol - cute, but not what I was referring to. By the "dark side" I meant that we as traders will always have our demons lurking in our heads ready to mess with us. That we MUST as traders always be vigilant to our demons or else hear ourselves saying, "^%$@#$! I did it AGAIN!"

As an example, say your demons are trading in low vol markets because you're a trader with the "need for action" demon. Recognizing this, you've set up some defenses against it. Let's use a simple T/A indicator as an example. We use a range indicator or somethingelse to tell us if a particular market passes the test. Further, we see that it does not meet our criteria. Some of us get married to not positions but to enter positions. So here you are looking at a mkt you should not be trading, but our "need for action" demon convinces you that this is an exception. For whatever reason your demon implants into your head, you take the trade.

We know the results of course.

Just one example, perhaps not the best, but I think the point is clear. Our demons are never quite defeated in imho, they are a part of us and therefore we must always be vigilant that its ugly head doesn't pop up exactly at the worst times, as it's usually the case. Yes, I am one that feels when you break the rules, the markets make you pay for it in spades.

 

[Old School]

Quote from austinp:

<i>"My #1 trading demon: Overtrading a dull market instead of patiently waiting for real opportunities."</i>

Ditto, <b>Reardon</b>.

Overtrading: Probably in the all time top 5 if not top 3 list of demons.

The problem when facing our demons is that we have over 4 billion - is it 5 billion now? - human beings on the planet with as many personalities. I found in many cases, the same demon attacks traders differently based on each trader's personality traits.

Some desire action, some have a fear of missing trades, some are ego traders and need to be in something every tic, something for everyone. We see why the demons are so good at what they do. They prey upon our weaknesses as individuals. Bassturds.

 

[Old School]

Quote from Dackster:

I stopped trading whilst under the influence of alchohol. I've got no trading demons, never really have. It was other demons that messed my head up.

See my comment about alcohol above and you are one of the lucky ones without any demons.

 

[Old School]

Quote from Hook N. Sinker:

There are no demons. You are responsible for your behavior. You describe your life. It is the life you picked. It is the life you create.

No, yes, yes, yes, yes.

It's #2 that seperates the men from the boys in my book. The moment in your life when you can actually "do it" rather than talk about it. Yup, difficult indeed - for most of us anyway.

Step one = take your life back from alcohol.

lol - no more comments about that.

 

[Old School]

Quote from Bitstream:

the #1 is i get pissed when i miss a fill on a huge winner or i cant get out a winner/loser in time and give back all my profits or take much larger losses than i expected: that typically send me in tilt and ruins my day completely. i have improved lately and am more collected but i still fell me pulse racin' non stop and then do revenge tradin' that more often than not yields bad results.

Ask this:
What % of fills in your career will you get the price you want? Lot lower than what we want. Consider how much it costs you in opportunity cost for not being in the zone for the rest of the day. Is it worth it in the long run? Sometimes a new perspective on a condition may be just enough to break through.

 

[Old School]

a note:

I do not profess to be Tudor Jones nor some trading shrink guru.

Take all this with a grain of salt. I have no idea what I'm talking about.

Your mileage will vary.