How can you stop thinking in money terms?

bln · Feb 2, 2011

Dont worry, you get detached as your account grow and you get more of an "air bag". Your confidence in your abilities and trading method grows.

My account is currently at 200k and sometime I see weekly swings of +/- $30,000 on open pos, I don't even care anymore, no excitement, no grief, totally numb..

ammo · Feb 2, 2011

Quote from macroman:

money is the reason for trading.

H

thinking about losing the money is like a tight rope walker looking down,ruins concentration,think about winning the money makes you hold on for the big homerun (how many times did babe ruth strike out)and miss the turns,college trader said treat it like a game,i agree

Millionaire · Feb 2, 2011

Quote from turkeyneck:

I remember reading that in Market Wizards. How can you stop doing that? It's easier said than done.

Think in percent risked.

You are risking x% to make y%.

I been think like that from day one, even when my account was 1/10th the size it is now.. so i just keep thinking like that.

Actually i think in R Multiples (risk multiples), read Tharp.

deaddog · Feb 2, 2011

Quote from turkeyneck:

I remember reading that in Market Wizards. How can you stop doing that? It's easier said than done.

Reward yourself for following your trading plan.
If you followed the plan and lost money, itâs a good trade with a bad outcome.
Concentrate on making good trades. If you have a sound plan the money will follow.

cornix · Feb 3, 2011

You may think in money terms, but will still do well if you believe that your method makes you consistent profits (assuming it truly does, of course).

AAAintheBeltway · Feb 4, 2011

Quote from bln:

Dont worry, you get detached as your account grow and you get more of an "air bag". Your confidence in your abilities and trading method grows.

My account is currently at 200k and sometime I see weekly swings of +/- $30,000 on open pos, I don't even care anymore, no excitement, no grief, totally numb..

This approach has apparently worked for you, but it is not one I would endorse. You are basically saying that 7% weekly equity swings are nothing to worry about. I would have probably agreed with you at one time, but now I see that sort of volatility as very dangerous.

The key stat for a speculative trader is drawdown. Not percent winning trades, not profit factor, not return on equity. Drawdown, because drawdown will blow you out. Drawdown will cost you your job or turn that 200k account into a 20k account.

I believe it was Paul Tudor Jones who said he aimed to return three times drawdown per year. You have to play a very tight game to do that.

deaddog · Feb 4, 2011

Quote from bln:

My account is currently at 200k and sometime I see weekly swings of +/- $30,000 on open pos, I don't even care anymore, no excitement, no grief, totally numb..

When do you start to care and get exited?

bln · Feb 5, 2011

Quote from deaddog:

When do you start to care and get exited?

If I'd make a big hit, something like +50k on a single trade I guess I would feel some exitment and happness about it.

In 2008 during the Leman crash in september I lost 65,000 in two weeks, that I did take hard and felt depressed as my account was at 90k at the time, and then you take a big hit like that in short period of time it felt like everythings ruined and it was game over.

Notes123 · Feb 17, 2011

Quote from turkeyneck:

I remember reading that in Market Wizards. How can you stop doing that? It's easier said than done.

At present, I think you can't.

I may change my opinion in the future.

If you want a quick solution, some posters have already given you one: automate. But your method may not be automatable.

Even if you can automate your method, you may find that an automated system is a totally different animal from a discretionary trading method. The former is rigid and ignores the market flow. If automated systems work, there would be many many rich traders. For example, you set a 20 cents target and a 10 cents stoploss and walk away (a solution to your problem). But the market moves in your direction for 12 cents and reverses to trigger your stoploss. A discretionary trader would book the profit instead of letting it turn into a loss.

If an automated trading system works, trading wouldn't be considered the hardest job of all. A couple of years ago, one did a survey on 1000 mutual funds and found that, in a one-year period, 999 of them lost money and 1 brokeeven. You wouldn't think they were not aware of automated systems, would you?

Automated system is a mirage, it doesn't exist. If it did, Madoff would have bought one and wouldn't have become a victim of the ponzi scheme started by the banks (According to his interview with a book writer, he, his wife, and his two sons knew nothing about the ponzi scheme of the banks until investors asked for their money back).

ElecEquity · Feb 18, 2011

Quote from Notes123
If an automated trading system works, trading wouldn't be considered the hardest job of all. A couple of years ago, one did a survey on 1000 mutual funds and found that, in a one-year period, 999 of them lost money and 1 brokeeven. You wouldn't think they were not aware of automated systems, would you?

Automated system is a mirage, it doesn't exist. If it did, Madoff would have bought one and wouldn't have become a victim of the ponzi scheme started by the banks (According to his interview with a book writer, he, his wife, and his two sons knew nothing about the ponzi scheme of the banks until investors asked for their money back).

Flat out wrong. In addition to having my own automated profitable system (and so do two friends of mine), you also assumed that everything can be automated. It can't.