I'd like to become a better trader

[PO]

Quote from Laissez Faire:

Way to go, PO

Yes, a steady rate of return with low drawdowns and increasing size is what you should aim for, IMO. Homeruns are just a bonus when you are lucky to get them.

Thanks LF, I need to keep working. How has your trading been?

 

[PO]

EE, thanks for you comments and advice. I definitely need to focus more on the process and not on the results, and learn how to deal with the "fearful voice"

Quote from ElecEquity:

Leave your performance expectations at the door. It seems like you fear losing A LOT. Trading involves losing OFTEN (at least for me it's around 50% of the time). Manage your risk and TRUST your rules. Try "expecting to win" when you take a trade instead of fearing a loss.

Expect to win. Expect to follow your rules. Expect to win and be sure to manage your risk. Focus on executing your process and quit worrying about the results. If your process is legit, your results will take care of themselves if you can remain process-oriented.

EXPECT to hear that fearful voice in your mind when you put a trade on. That voice that rambles fear of loss and blah blah blah. Expect to hear it BEFORE you take the trade. Create a plan for how you will deal with this voice or these unhelpful thoughts. When you hear the voice, focus on your process or your breathing or price action or whatever else. Don't be a slave to your thoughts. YOU choose your thoughts.

What's the point of worrying about losing if you already know where your out is if you're wrong? Manage the downside and let the profits take care of themselves.

It's difficult to do many of these things when you're accustomed to doing the opposite. If you want to succeed in this business you have to have a viable strategy, a strong psychology and adequate capital. The best setups in the world will fail if your mind is in the wrong place b/c you won't trade the setup as it should be traded. Books on trading psychology are great but you can't just read these books once and put them away. You have to take the content from these books and make it a real part of your life -- during trading hours and after-hours (the after-hours work is more important IMO). My $0.02.

 

[PO]

Quote from Redneck:
So when…, and how – will YOU do what I quoted above – specifically (meaning all bullshit aside) to recreate yourself into a trader.

RN, welcome back and thanks for posting, your advice and encouragement.

I think you've helped me answer your own question above. This is what I'm going to do next - write down answers to the following questions, analyze them and keep practicing...


How would PO the perfect trader think, and act ?

How is PO the trader thinking, and acting now ?

What is keeping PO from acting like that perfect trader ?

 

[PO]

How would PO the perfect trader think, and act ?

Focus on the process, not of the results.

Perfect traders

Make money from the market (but then so can blind monkeys)
Have losing trades, but remain emotionally unaffected by them
Have learned to take all set ups, (never know which will work, and which will fail)
Have learned to cut losers – immediately once the setup has failed – then never look back
Have learned to move on to the next trade
Have learned to stay in profitable trades, till their target is reached
Have learned the importance of sitting on their hands – while either in, or out of a position
Have learned one trade’s outcome means squat with respect to the next trade’s outcome
Have learned to remain in a trade, even though price is coming back to their entry – because setup is still valid
Have learned to trust their eyes, and their self to take the appropriate action(s) – without second guessing or hesitation
Have learned to ignore their PnL, and trade price
Have learned they are human, and susceptible to the same human frailties as everyone else
Have learned to be their staunchest supporter, their harshest critic, and their most objective observer
Have learned they are far from perfect – and that’s okay

 

[PO]

How is PO the trader thinking, and acting now ?


Afraid to lose

Put too much into one trade’s outcome

Close trades before my target is reached

Trade my PnL instead of price

Have difficulties of sitting on my hands

Does revenge trading

 

[PO]

I've read Ray Dalio principles over the weekend.

http://www.bwater.com/Uploads/FileManager/Principles/Bridgewater-Associates-Ray-Dalio-Principles.pdf


Here is a short summary:

Reality
+
Dreams
+
Determination
=
A Successful Life

So what is success? I believe that it is nothing more than getting what you want, and you must decide what that is for you. It doesn't matter whether it is being a master of the universe, a couch potato, or anything else. What is essential is that you are clear about what you want and that you figure out how to get it.

Another principle to keep in mind is that people need meaningful work and meaningful relationships in order to be happy. I have observed this to be true for virtually everyone. The work doesn’t necessarily have to be a job, it can be any kind of long-term involvement that leads to personal improvement. To be happy we have to keep evolving.

So, the bottom line is: You need to truthfully understand your reality, decide for yourself what you want and then go after it in the best way for you.


Pain + Reflection = Progress

It is a fundamental law of nature that to evolve one has to push one’s limits, which is painful, in order to gain strength—whether it’s in the form of lifting weights, facing problems head-on, or in any other way.

Do not feel bad about your mistakes or those of others. Love them and learn from them!
Remember that 1) they are to be expected, 2) they’re the first and most essential part of the learning process, and 3) feeling bad about them will prevent you from getting better.

 

[PO]

Today was another one of those completely messed up days for me. It didn't help that I've lost money yesterday.

It all starts from one losing trade in the morning, then follows by a few impulsive revenge trades. And then it all spirals out of control. I can see it clearly now, but not when I'm in the middle of it.

When I'm trading I think that the next trade will be good and will bring me out of the hole my PnL is in. I'm afraid to miss the next move that will bring me to break even, and start throwing darts anywhere hoping one will stick. As a result I take too many trades and get stopped out. Today I took 24 trades, about 18 of them got stopped out for -2 points.

It looks insane, I know. I need to change that.

I will take day off tomorrow to reset my mind and think what I need to do to fix that.

 

[PO]

P&L -24.5 points

before everybody will be very concerned, I'd like to clarify that I'm still trading in the Simulator.

 

[PO]

P&L 5.6 points

It was an OK day, made a few mistakes and was a bit nervous.

The main difference between my losing days and my winning days is my first couple of trades. If my first trades are winning or b/e, I'm trading more rational. It's when my first few trades are losing then I'm losing it.

I need to focus on my first few trades and make sure that I take only my set ups, and if I'm stopped out at a loss, I need to monitor my behavior for signs of emotional trouble.

 

[PO]

Do yourself a favor – Embrace the journey.

Accept the fact that it may not be a man-made road that goes straight and smooth. Expect the ride to be a bumpy one and keep yourself upbeat even if the situation looks grim. Enjoy winning your tough battles but remember that pride comes before the fall. Learn from the mistakes and move on.

All the marks left on you from your daily battle in trading will toughen you up and make you stronger as a better trader.

Be proud of who you are.