learning about impact of state of mind on trading

m_dl · Mar 31, 2007

I rarely have a good trading day on Fridays. The mornings seem fine, but the tone of the market response in the afternoon seems dificult. Is it how I feel, or because the smart money goes home, and one is dealing with a million retail traders?

Also, I made the worst trade today, that I have made in 2 years. It occured at the end of the best week I have ever had, (98% positive trades). I woke up at 4:30, (on the west coast), and had some anxiety about some health issues, (real things happening).
As the market opened I felt unclear, as I was distracted. I should not have traded. But I did any way, as I was having such a good week, and I wanted it to continue. I made foolish mistakes, entering into a momentum trade that was way out of scale. It turned against me, and rather than get out, as I have been very good about doing, I just watched it, thinking, I would not get rattled, and it would come back. Some how this made me feel stronger! I saw it cylce near my entry point several times, and could have had a small loss. But no, i waited, and lost way too much. Then I entered another trade and had another small loss. I knew better than entering this last trade on the heels of a loss. I can't believe I did this. I wonder if I didn't listen to my better judgment because I was distracted, or because I somehow unconsciously wanted to sabotage my good week.
just some thoughts.
m_L

infooo · Mar 31, 2007

you write non sense

hate me if you want but here is the truth

you seem to be trading by the seat of your pants

what do you mean your worst trade

are your losses not predetermined and equal year to year

do you not have exact rules as to when to enter and exit

why are you thinking about trading

you should not be thinking about your trades if you have a strategy that works

I think you are thinking because you are still at stage of actually learning to trade

you need to have rules that are like science

in other words, if you don't see your method as programmable by a team of people

than maybe your way is no good.

m_dl · Mar 31, 2007

I am still learning; you are correct.

I usually do follow my plan, but today, i blew it off, and did something stupid. That was the point...

m_L

Dackster · Mar 31, 2007

Quote from m_dl:

I am still learning; you are correct.

I usually do follow my plan, but today, i blew it off, and did something stupid. That was the point...

m_L

Don't do it. Point over.

Dackster · Mar 31, 2007

Quote from infooo:

you write non sense

hate me if you want but here is the truth

you seem to be trading by the seat of your pants

what do you mean your worst trade

are your losses not predetermined and equal year to year

do you not have exact rules as to when to enter and exit

why are you thinking about trading

you should not be thinking about your trades if you have a strategy that works

I think you are thinking because you are still at stage of actually learning to trade

you need to have rules that are like science

in other words, if you don't see your method as programmable by a team of people

than maybe your way is no good.

How long have you been trading?

pairsarb · Mar 31, 2007

If you want to succeed, don't quit. Others will say quit. Screw them. If you want this, don't quit. Hey, the best strategy for being a trader is: Don't Quit.

Even if you lose your money. It's the tuition you didn't spend on a Masters, if you choose to learn the lessons.

Get some kind of system down. Dont' make it the best cause it's not what will make you great. Its part of the equation.

My final point is, if you want to be a trader, if you are a trader, then you don't quit learning.

Trade at a level that you can learn at. Trade at the level where you see the market and can see what its telling you moment to moment.

When you do this, you will be in the zone occasionally. You will know it.

I don't agree that your rules have to be science, but you need to listen to your rules. Not doing so will show you the bad feelings of losing big.

Perhaps you need to feel those feelings of losing big. What's the message? You will lose big until you experience that and learn.

But if none of what I said hits home, or you think it's crap, or other posters rip it, I think the best advice is don't quit.

giles117 · Mar 31, 2007

Quote from m_dl:

I made foolish mistakes, entering into a momentum trade that was way out of scale. It turned against me, and rather than get out, as I have been very good about doing, I just watched it, thinking, I would not get rattled, and it would come back. Some how this made me feel stronger! I saw it cylce near my entry point several times, and could have had a small loss. But no, i waited, and lost way too much. Then I entered another trade and had another small loss. I knew better than entering this last trade on the heels of a loss. I can't believe I did this. I wonder if I didn't listen to my better judgment because I was distracted, or because I somehow unconsciously wanted to sabotage my good week.
just some thoughts.
m_L

So you traded DNDN eh?

dandxg · Mar 31, 2007

Quote from m_dl:

I am still learning; you are correct.

I usually do follow my plan, but today, i blew it off, and did something stupid. That was the point...

m_L

Can I make a suggestion. May seem extreme or silly, but here goes. You need to have pre-determined written consequences for breaking your trading plan. For ex., it could be if I break my plan I don't get to trade with real money for 2 days until I demonstrate on sim that I can consistently follow the plan. This requires a robust trading plan that can handle things like emergencies in the market and such. Read through your plan, let it evolve, and follow it every day. Ppl. are more motivated by pain than pleasure. Once you start feeling the pain on not being able to trade I guarantee you will follow the plan. It how the military teaches discipline, it's how you learned as a kid, etc. Trading is no different in that it requires discipline and consistency otherwise you will fail. Good luck.

Dan

m_dl · Apr 1, 2007

These replies have been great! Much more than I expected. Thanks very much.

Giles117:
How did you know?! What else....I think it was because I am in seattle and have been watching that stock for a long time, yet had forgot about it lately... Still I knew better than to enter into such craziness. Never-the-less it was pretty fascinating to observe, with all the painful details in sharp focus...! i had some stupid idea that the (40%) shorts would start buying to cover in the last hour--but of course that's what everyone would expect, so the opposite happened, and the price dropped instead. I should have known this. I knew this...

Pairsarb:
You are right in all you say, and I like the sentiment. I think persistence is a requirement to succeed, a long with the ability to preserve precious capital. I have the desire to stay in this, and have spent years now refining my approach. I am just now, starting to see consistent gains over losses, (80/20), after 2 years part time, and 1+ years full time. I was 50/50 for a while; too long, as I learned. I want to be 90/10. I started out as a retail broker, but I really loved the market, the way information moves, how markets are created and destroyed, (speaking in the larger sense of the word), and how the price and volume of a stock both influence politics, and daily life, and are impacted by events in the world. It is an amazing opportunity to get to observe both the big picture and the details, at the same time.
I need to refine more and learn much more; and not let my emotions dictate destructive actions. I think using your emotions in trading is useful, as long as you do not fall prey to destructive needs.

Davidxg:
Pain as a motivatorâabsolutely; but I donât like this truth. I don't like that I am inclined to learn this way. It does seem that I almost subconsciously create painful opportunities to "wake up", and learn something new. But this seems so unnecessary. Maybe it is a bad method of learning that I/we were all taught? I want another one. I want to change/grow on smaller signalsâ¦

giles117 · Apr 1, 2007

I Knew because I, on a whim bought it on Tuesday. it had jumped 60 cents the day prior and appeared on one of my stock searches as a possible. I jumped some more on tuesday so I jumped on it. LOL. I wasnt even watching my stocks that closely friday, Been watching my Ag trades more so last week, and then decided to flip to my stock watchlist page in TWS. (I only had 4 positions this week, and they were moving decently. Imagine my surprise when I realized I was up $12.00)