How can you stop thinking in money terms?

Quote from NoDoji:

Thinking about profit/loss trade by trade will be detrimental and probably drive you to drink. You’ll start picking and choosing trades instead of trading all valid setups per your plan, you’ll take profits too soon and mess up your R:R ratio; you may start to stray from your plan altogether.

Similarly, a good trading entrepreneur will provide his/her trading account with every valid opportunity to turn a profit. A setup may appear unqualified (“this thing’s been running up all day, it can’t possibly go higher so I’m not going to trade this pending breakout”), yet turn out to be the most profitable opportunity of the day (in fact, this happened to me just today).

Losing trades are simply a cost of doing business and are meaningless within the bigger picture of your trading plan having demonstrated a statistical edge of profitability over time.
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+1

Great jewels of wisdom throughout that post.
 
Quote from turkeyneck:

I remember reading that in Market Wizards. How can you stop doing that? It's easier said than done.
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We sit in front of a computer all day – isolated with only our thoughts… And since most of us can’t shut down our brain – we must be thinking about something
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NOD wrote the why… let’s see if I can come up with the how

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Write down the steps you go through to trade;

In generic speak…..

Step 1; observe
Step 2; set up context
Step 3; identify a set up
Step 4; enter
Step 5; exit

Repeat…

Formulate your steps into a process – as per example above

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Next, and this step is entirely optional….

you should know how much you lose on each failed trade (and if you don’t then why not)…, knowing this means you also know how many losing trades you can stand in one day…

Follow the process you created above…, and at the conclusion of each trade, note the tally


Trade Win Loss
1……….1…………0
2………..0………..1
3………..1………..0

Wins = 2 loses = 1

No clue how much I made – (but I know if I had racked up 3 losers before I had a winner I’m done for the day)


Once/ if you hit your maximum number of losing trades – especially if they come right in a row – quit for the day

If you find counting winners screws you up (iow you get nervous/ anxious because you had XXXX winners in a row and may never see another one) – get a clean sheet of paper and start your tallying over at midday

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Finally focus your efforts solely on following your process…., even grade yourself on how well you followed your process – each day


By focusing on the process, (focusing on one thing) you’ll soon lose sight of everything else (fact is we can only think of one thing at a time)

It’ll take time and effort to change – but change is possible

Also don’t be surprised if you incur a set back, or few – before the change takes hold permanently… You are after all changing you….. Simply keep on keeping on

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One thing you can do to help engrain this change – get a recorder, tape your process, then listen to it over and over


Even listen to it while falling asleep – slower the brain’s waves – the more conducive to learning it is

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As with all things… it’s simply a matter of how bad do you want it… And how hard are you willing to work for it..

RN
 
Quote from Redneck:

Finally focus your efforts solely on following your process…., even grade yourself on how well you followed your process – each day


By focusing on the process, (focusing on one thing) you’ll soon lose sight of everything else (fact is we can only think of one thing at a time)

It’ll take time and effort to change – but change is possible

Also don’t be surprised if you incur a set back, or few – before the change takes hold permanently… You are after all changing you….. Simply keep on keeping on
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Yes, my business plan was the part of the process where you prepare to open your business. (If you've opened your personal trading businesses without this kind of preparation you've likely blown an account, lost a lot of money, or been treading water for a long time.) This is where you think in money terms.

Once the business is open, you think in terms of following your plan, focusing on the process as RN describes.

I always review my trades end of day, and last year I realized that any time I had 3 or more losing (or unnecessary break-even) trades in a row, it was a result of not following my plan/rules. Every time. Either I didn't wait for a setup to trigger an entry (jumped the gun) or I didn't put on the trade when triggered and chased an entry far too long after the move was underway, or I traded counter-trend without a reversal signal of any kind or I moved my stop loss earlier than my rules dictate, or I traded when price demonstrated no sense of direction (range/flat MA).

Another common cause of mistakes/straying from the plan is allowing previous trade results to influence current or pending trades. This is where thinking in money terms when you should be strictly thinking process can have a very negative influence. As an example, one thing I've done is when a trade is moving nicely in my favor but I have a hole to dig out of from previous losing trades, is take profits on the current trade when it covers the previous losses. This feels good psychologically, but the current trade is a separate trade that has no idea what happened before. The right thing to do is to manage the current trade exactly by the rules. The current trade could be the one that exceeds profit target many times over.

Just recently I implemented a report card, because as individual traders we have no boss or supervisor to provide performance reviews.

I grade myself on the percentage of trades I take out of valid setups each day and also on how well I followed my rules for each trade.

The goal eventually is to be able to focus solely on the process and at the end of the week/month your P/L should reflect the anticipated results based on your business plan.

Reaching that point often seems like the most difficult task in world.
 
Quote from NoDoji:

As an example, one thing I've done is when a trade is moving nicely in my favor but I have a hole to dig out of from previous losing trades, is take profits on the current trade when it covers the previous losses. This feels good psychologically, but the current trade is a separate trade that has no idea what happened before. The right thing to do is to manage the current trade exactly by the rules. The current trade could be the one that exceeds profit target many times over.
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I've done that far too many times over the course of my career.
 
You are not a successful trader Inky, so you can not and you should not be giving advice on what to do. :)

Quote from increasenow:

you can not and you should not...trading in the markets is to...make...$$$
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I'm afraid that you can't unless, you start winning consecutively over and over. And your confidence grows enough that you don't give a shit anymore about the money and more about trading.

Imagine sitting on a poker table, it is easier (psychologically) to go all in with your chips, then to go all in with actual cash/coins. Or betting 3-4 hundred a hand compared to 50-75 bucks on blackjack, the chips are all the same size just different colors. :)
 
Once you put on the trade, you could set the stops and targets or have them preset, and then stop watching the screen until you hear a stop or target hit sound.

Now before you enter a trade, you have to be clear to yourself what your goal is. I may say to myself, ok, this is my last trade win or lose to prevent over trading, and you need to stick to that.

Then after the market is closed, you can go back and review the charts to see what you should have done.

Then the next trading day you need to take what you learned, and apply it to real time charts.

One of the hard things is starting to over trade or revenge trade. For example, you take a loss, and you want to get right back in and make it back. However, its unlikely a setup is going to occur instantly after you just finished a trade. You need to wait for the next trade. As noted, you could also have some idea of how much you want to risk for the day vs days where you have winning trades. For example, if you normally win $ 200 in a day, you don't want to take a $ 1,000 loss for that day. Maybe you have an emergency stop at $ 400. Losing days and trades can occur when the market starts to behave more randomly. This can sometimes occur right after a report, or in a slow volume chop day.

On Friday, I had 3 trades, 1st winner, 2nd loss, and 3rd winner. I was thinking I wanted to trade more, but I decided that was enough trades for the day and I was net positive. Today, I am reviewing the charts, and notice some new areas of possible confluence on the ES chart when I put different charts side by side that I plan to try to act on for Monday to see if it helps me make a better informed decision.
 
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