If I KNOW How to Trade and Manage Risk, Why Can't I Do It When the Money Counts?

[Lucias]

First, LONG TERM SERIOUS simulation trading DEFINITELY prepares one to make the correct decisions. DEFINITELY. Especially, if you track your performance in public because public failure is one of the biggest fears. Does it feel the same?

I've placed real money trades, trades on my account where my subscribers are trading real money, and on the simulator with no money at risk. Each feels different. When I lose my own money, that's a certain kind of loss. When I lose on my record then that's a certain kind of loss. When I lose other peoples money then that's a certain kind of loss. Losing in public is worse is then losing a little money but not as bad as losing a lot of money. Losing other people money is the worst feeling. It is worse then even losing my own money.

One thing is that if one is trained to make the proper decisions then it doesn't matter how you feel. If I'm excited and jumping up and down or scared to death is inconsequential provided my analysis is correct. I can give a great example. One of my subscriber just lost over 4k on me. It felt terrible but I was trading one of my most effective systems. Sure I could have go back and look and see how I maybe could have won on that trade or lost more too. But the point is that.. it wouldn't matter how I felt because I was trading a system signal. If I had been at my best maybe I could have avoided the loss.. maybe not.

Problem is.. most people refer to paper trading as tracking results for a few days or starting over.. they don't treat it serious -- 1 record over a long term -- like I have. If you do then you really start to appreciate the seriousness of it and the value. Of course, you're not going to be confident by "paper trading" for a few days. Keep an audited track record for months then you can start to feel confident.

I have place trades in my simulator and with real money at same time to evaluate the differences and how it felt. For me, there is very little difference in trading sim vs real money. If I have an unusual +5 or +6 losers in a row then I would get more concerned on real money.. I traded through 12 straight losers with real money. That was difficult but I did it.

So, my lesson is it doesn't matter how you feel provided you make sound decisions. Better not to get stressed out though.

One thing though,....

I always trade on simulator as I would with real money except I can be careless which can be a help or a hazard. I mean that I'd always put a certain dollar loss on a trade when trading real money because I don't have to be stuck in a bad way -- like I have been. However, I don't always put a stop on simulator. This can be a help because stops hurt performance but it can also be a risk of taking that 1 huge hit. I plan to eventually go to an automatic risk of 3% to 7% risk per trade and have C2 to automatically hold me to that. Within that amount of risk, I can choose to manage the risk using stops or not.

I will say that if you trade more often and at a larger size then you are more prone to having gambling type problems. I mean I never had a motivation for a revenge trade when trading my normal 1 to 2 day trades. I've had it happen once when trading a more active day trading style.

But really I doubt many professionals deal with things like "revenge trading" more then in a rare passing. This is more of a retailer notion. Most professionals are more concerned with placing the best trades possible -- like I am.

 

[iceman1]

Quote from jokepie:

if risk is driven by PnL, then their risk management is still in kindergarden. Risk management should be in the trading style. Risk tolerance when calculated prior to the trade is too immature. It needs to be more dynamic.

like what for example? I mostly trade options; maybe you trade futures or equities.

 

[Rande Howell]

Quote from otherguy:

I would like to direct you to Arthur Schopenhauer, reason verses the will. When trading if we are governed by the will we loss, if governed by reason it�s a profitable day.

Good luck. If reason ruled, then the markets would not be such a great place to lose your money.

Rande Howell

 

[Rande Howell]

Quote from atticus:

Rande, you're selling shit so you need to become a sponsor or stop posting links to your site.

There must many dung beetles moving in your excrement.

Thank you.

Rande Howell

 

[Rande Howell]

Quote from oraclewizard77:

I was trading on sim for a couple weeks including Mon trying to prevent revenge trading and test new strategies. On sim, I revenged traded once, then got better. I started having no losing trades including yesterday.

I went live real money again today, and 1st trade was a winner although I killed my target 1 -3 ticks early to lock in gains when I should have just waited for market to take my target out on a limit exit.

Right after making the profit, I felt the need to trade again right away with or without a setup. I was able to prevent myself by switching back to sim and taking the trade in sim. It was not a good entry, but once I was in the trade, I was actually able to turn it into a small profit.

Seems I may still have some problems of waiting for my setup. Setting proper stops and targets, and not over trading. I am trying to prevent over trading like I was able to do today, by limiting the number of times I trade.

I think one of the worse losses was on a day that started profitable for me, and then I took a loss. This made me want to make back all of the money that day, and I started to do a bunch of trades which of course made a bigger loss.

What can be learned from your loss that can help you to understand and change the psychology that traded?

Rande Howell

 

[Rande Howell]

Quote from hitnrun:

if a trader has enough money that there drawdowns don't effect them in negative way then they have the best chance for success

You have to have enough captial that it does not affect your trading behavior

trading scared money is the biggest problem for most traders

overtrading & feeling compelled to be in a trade all the time are your worst enemies

You have to trade the setups & not your pnl is the best approach for the trader

with greed & fear contolling your every move then trading becomes difficult for most to manage on a daily basis. The market is a emotional rollercoaster for most people

emotions destroy the trader in making bad decisions with money at stake is what often happens to many of us at times

trading should be considered boring but rewarding for those that work hard & stick to a gameplan that protects there capital & allows you to execute your trades according to your rules

at the end of the day it comes down to focusing on being profitable each week & always protecting your working captial to stay in business

if someone can stick to a gameplan with applying discipline, patience, & confidence in taking quality trades then they could put the odds in there favor

quality vs quanity is what matters . It's all a mental game

trading is a marathon not a sprint

There is a historial organization of the self that has to be changed so that there is an openness to change. Other wise the brain stays locked into the certainty of its learned ways. And failure continues.

Rande Howell

 

[Rande Howell]

Quote from jokepie:

Trading as a process is immaterial, as anyone can press buttons, understand EMAs, pivots, find trends, master the economic indicators and still fail to make money.
Risk management is the only factor that will push one over from just trading to profitable trading consitently.
Risk management is beyond - setting stop loss and risk reward ratios. Calculating risk per trade is another indication that the trader is still stuck in this eternal loop of learning.

What I know is this: there has to be a shift between the hardened pattern of certainty mandated by the brain and an opening to probability orientation which the brain is capable of doing with intentional guidence. Reworking fear is the door that opens to a new world of perception.

Rande Howell

 

[Rande Howell]

Quote from piezoe:

What paper trade platform were you using?

Doesn't matter. The moment that risk of capital loss is introduced, the game in the mind changes. Mind recognizes the difference between pretend loss and actual risk.

Rande Howell

 

[Rande Howell]

Quote from iceman1:

what is Randy Howell's claim to fame so far as coaching traders?

I would rather have George Soros or Richard Dennis than some charlatan; someone who has actual done it. This guy's website shows no credentials to understand markets.

No. Just minds that attempt to act. And the ignorance that stops them from making progress.

Rande Howell

 

[Rande Howell]

Quote from Lucias:

First, LONG TERM SERIOUS simulation trading DEFINITELY prepares one to make the correct decisions. DEFINITELY. Especially, if you track your performance in public because public failure is one of the biggest fears. Does it feel the same?

I've placed real money trades, trades on my account where my subscribers are trading real money, and on the simulator with no money at risk. Each feels different. When I lose my own money, that's a certain kind of loss. When I lose on my record then that's a certain kind of loss. When I lose other peoples money then that's a certain kind of loss. Losing in public is worse is then losing a little money but not as bad as losing a lot of money. Losing other people money is the worst feeling. It is worse then even losing my own money.

One thing is that if one is trained to make the proper decisions then it doesn't matter how you feel. If I'm excited and jumping up and down or scared to death is inconsequential provided my analysis is correct. I can give a great example. One of my subscriber just lost over 4k on me. It felt terrible but I was trading one of my most effective systems. Sure I could have go back and look and see how I maybe could have won on that trade or lost more too. But the point is that.. it wouldn't matter how I felt because I was trading a system signal. If I had been at my best maybe I could have avoided the loss.. maybe not.

Problem is.. most people refer to paper trading as tracking results for a few days or starting over.. they don't treat it serious -- 1 record over a long term -- like I have. If you do then you really start to appreciate the seriousness of it and the value. Of course, you're not going to be confident by "paper trading" for a few days. Keep an audited track record for months then you can start to feel confident.

I have place trades in my simulator and with real money at same time to evaluate the differences and how it felt. For me, there is very little difference in trading sim vs real money. If I have an unusual +5 or +6 losers in a row then I would get more concerned on real money.. I traded through 12 straight losers with real money. That was difficult but I did it.

So, my lesson is it doesn't matter how you feel provided you make sound decisions. Better not to get stressed out though.

One thing though,....

I always trade on simulator as I would with real money except I can be careless which can be a help or a hazard. I mean that I'd always put a certain dollar loss on a trade when trading real money because I don't have to be stuck in a bad way -- like I have been. However, I don't always put a stop on simulator. This can be a help because stops hurt performance but it can also be a risk of taking that 1 huge hit. I plan to eventually go to an automatic risk of 3% to 7% risk per trade and have C2 to automatically hold me to that. Within that amount of risk, I can choose to manage the risk using stops or not.

I will say that if you trade more often and at a larger size then you are more prone to having gambling type problems. I mean I never had a motivation for a revenge trade when trading my normal 1 to 2 day trades. I've had it happen once when trading a more active day trading style.

But really I doubt many professionals deal with things like "revenge trading" more then in a rare passing. This is more of a retailer notion. Most professionals are more concerned with placing the best trades possible -- like I am.

Thank you for your thoughtful reply. This is the kind of dialogue that I seek to open. My only comment is that I encourage traders to risk only 1-2% of their capital on a trade. Your psychology apparently is open to more risk than most retail traders.

Rande Howell

Rande