Fear

[Grob109]

Quote from jztrading:

I was wondering if anyone can shed light on the subject of fear in trading. I'veworked in the business for 15 years the last 87 as a marketmaker, I've done well, but like the rest of the trading world I was a victim of downsizing.I've been day/swing trading for the last 5 months and hav'nt made much. I beleive it is do to fear of failing or loosing too much money as I am the sole supporter of my wife and daughter and have high monthly bills about $6000. I know i can trade but cant get past that certain level and tart making money. has anyone ever been or is currently in this situation. Any feedback would be appreciated, thanks

If you were a beginner, your monthly work requirement would be 2 hours a day, 10 days a month. Start with a minimum of capital and just transition to the effort level you want. More capital after a while and less time. Attached is a beginner print. (3 hour time offset) Print a 5 min chart and annotate it to get a better view of swing trading during the day.

Obviously, you are going to make the transition in a short time.

 

[dbphoenix]

Quote from PuffyGums:

I've never understood that phrase at all.

In other words, is the capital one is using for trading coming from what would otherwise go to feed one's children?

 

[Durango Kid]

Quote from jztrading:

I was wondering if anyone can shed light on the subject of fear in trading. I'veworked in the business for 15 years the last 87 as a marketmaker, I've done well, but like the rest of the trading world I was a victim of downsizing.I've been day/swing trading for the last 5 months and hav'nt made much. I beleive it is do to fear of failing or loosing too much money as I am the sole supporter of my wife and daughter and have high monthly bills about $6000. I know i can trade but cant get past that certain level and tart making money. has anyone ever been or is currently in this situation. Any feedback would be appreciated, thanks

I am in the same boat. 12 years in the industry, and decided to take a stab at trading for a living. All I can say is that it is a tough nut to crack and alot different then you imagine it to be. I have been trading "professionally" for 4 months now and have yet to turn profitable. Fortunately, my wife is paying the bills right now. However, money is tight and I can't fund losses forever.

But then again, I am going to be profitable the first month, um the first three months, make that the first 6 months, ok first year...

Before you make a decision to try this, make sure your wife is completely onboard. Then after you begin, make sure your wife remains on board. Then after you continue, make sure your wife is still with you.

Another thing to consider would be taking a job where you could have 9:30 - 11:30 free to trade. That way you wouldn't feel the pressure to make money while you are paying your tuition.

 

[ertrader1]

1. Scared money, Money you cant afford to lose, trading with that can be very stressful.

6K a month? not sure what that covers......if its just basic needs for now, then there really isnt much you can do.

However, if you house is 700,000, and you drive a car for show, and you belong to this racket ball club or golf course....etc....the smartest thing you can do is to bring it down a few notches until you build up a nice account.

Everyone that i have experienced ,as a trader who trades for a living, blew out for the very reason of having high overhead (one the truly did not need) and the pressures of maintaining it. Im dead serious...they blew out way before anyone else.

The ones that lived below their means, which i even do now although im successful, were able to weather changes in the market, losses, mistakes, etc.

When I was at Schonfeld, a very wise mentor said that should be my number 1 rule always, live BELOW ur means if you wana stay in the game beyound Daytrading because one day I will wake up and that "game" will be over and i have to move on to the next.

Best advice ever given to me.....

 

[zorrotrader]

Quote from grob109:

If you were a beginner, your monthly work requirement would be 2 hours a day, 10 days a month. Start with a minimum of capital and just transition to the effort level you want. More capital after a while and less time. Attached is a beginner print. (3 hour time offset) Print a 5 min chart and annotate it to get a better view of swing trading during the day.

Obviously, you are going to make the transition in a short time.

grob,

Nice attachment. That is a very nice afternoon for a beginner, even a beginner who is sharing the button pushing duties. I have annotated my 5min and 1min charts.

I have tried to correlate your button pushing with numerous ideas you have presented here and elsewhere the past 12 months and have come to a several conclusions. tell me if i'm off base. First, i can probably remove the stochastic indicators from my charts since stochastics as previously discussed doesn't appear to be part of the data gathering for any of these trades this afternoon. I'm guessing the same can be said for MACD but i'm less certain about removing that one.

I'm trying to look for the P V relationship for these trades on both the 5min and 1min chart. A best educated guess is a number of these trades were based upon the FBO/FR sequence for entry or exit. I get this from looking at the 1min chart.

A better guess is based upon all of your discussion of DOM and the Indu-YM spread that most/all of these trades were based upon those two indicators along with volume. The problem is when i annotate a spread chart your trades don't match my understanding of stretch-short and squeeze-long. Maybe that is a problem with reviewing charts after the fact. The only way to study DOM is in real time. Is your sequence for entry and i assume exit to gather and analyze in the following order volume -> spread -> DOM? With price confirming the three data points.

Lastly, your beginner must have experienced some fear and hope in several of these trades - maybe not as much as i might in a normal day since your beginner had some profits in the bank to work with. I'm interested in how you and your beginner dealt primarily with the pain of being down in a trade and the hope one feels when you are down and hoping for a wash. The fear of giving back profit seems less of an issue in this example since it appears that most exit decisions were made with excellent timing. Is this done thru the 4-stepper or thru listing emotions that interfere and considering replacement emotions?

anything you can do to move my understanding down the path would be appreciated.

 

[PuffyGums]

Quote from dbphoenix:

In other words, is the capital one is using for trading coming from what would otherwise go to feed one's children?

All of your capital spent on trading is being taken from your children and family. Potentially it ALL could be saved to provide them with a better level of education etc...

The concept of money you can afford to lose is akin to the concept of found money, house's money, fun money or mad money. There are no different kinds of money its all the same kind.

Money that you can afford to lose, you will lose. There is no money that anyone can 'afford to lose.' Money is too important to say that you can afford to lose some of it.

Perhaps you have a couple of million in the bank and can spin off enterprises without any impact on the family budget. Such a person really doesn't need to be trading.

But most REAL floor traders that I knew, ended up committing 100% + of their capital and time to developing their trading business. I'm not saying swing 10 ES and burn through $100K in 6 months. But by the time you make it (if you make it), all of your capital will be at risk (not all of it will be necessarily lost, but all of it will be exposed to the trading business).

 

[hoodooman]

There is such a thing as money you can afford to lose. If you are hedged with instruments like cd's and/or treasury bonds and never lose more than you make on these fixed instrument, the fear is reduced considerably.

 

[monee]

Get a part time job where the hours don't conflict with trading.

Is it possible for your wife to work part time?

See what you can do to lower your monthly expenses.

To lower your monthly mortgage payment (assuming you're not renting) have you refinanced your home to take advantage of the lower interest rates?

Do you have any loans outstanding?

Credit card loans can be paid off with your refinancing, or if you don't mind damaging your credit many credit card companies will settle on 35-65% on the dollar after you are 5 months past due.

As we always see written just remember when you refinance you are putting your house up for collateral and if you don't pay the mortgage you could lose your home.

If you have any car payments consider selling the car and using the equity ( if you can use that term with cars) to buy a used car.

Buy a grill and recipe books to BBQ and make some new meals as opposed to eating out a lot.

If you can get to the point where your wifes income ,your income and any investment income pays your monthly overhead, trading will be much less stressful.

 

[dbphoenix]

Quote from PuffyGums:

All of your capital spent on trading is being taken from your children and family. Potentially it ALL could be saved to provide them with a better level of education etc...

The concept of money you can afford to lose is akin to the concept of found money, house's money, fun money or mad money. There are no different kinds of money its all the same kind.

Money that you can afford to lose, you will lose. There is no money that anyone can 'afford to lose.' Money is too important to say that you can afford to lose some of it.

Either you're missing the point on purpose, or you're very young and have no responsibilities. Everybody else gets it, so I'll leave it there.

 

[jztrading]

I'll try to ansewer all those questions.. Iceman1 I was a mm in N.J.Yes my wife is on board and will always be. Its hard for her to work because she takes care of my daughter who is only 2 years old,and relatives all live out of state.I HAVE SAVINGS WHICH IS HOW i FEED MY FAMILY NOW BUT THAT WONT LAST FOREVER