Sonny2010 ES discipline

[Sonny2010]

I thought I'd start this to keep myself accountable. I only say this because I've been making the same mistakes repeatedly, and it's been costing me. I've been consistently profitable in the AM sticking to my strategy religiously, but frequently screw it all up in the afternoon by wanting more and not following my system.

The interesting thing is that I've noted these psychological errors several times, but never really held myself accountable. I started writing my basic "a-ha" moments on a sheet of paper next to my trading desk.

A simple look at my performance reveals that if I hadn't traded after, say, 12PM, then I'd be green/break even every day. Instead, I bleed out in the afternoon because I can't stay out of it. Also, the PM movement doesn't really sync with what I do. Another reason to stay away from it.

What ends up happening (I think*) is that the first post-12PM loss I take wounds the ego of a healthy morning and I start to take wild punches. It makes sense from a psychological point of view.

I remember Mark Douglas saying, "there was a guy who should only trade 1 hr. a day then walk away for the day." I need to apply a similar concept rigorously.

Learning the nuisances of how to trade successfully has been a costly process. I sometimes wonder whether long-term successful trading could be learned without the early losses. My hunch is almost definitely not. What the experienced traders say regarding "learning about yourself" is certainly true, and it is a unique way of learning another side of you. I'm entirely confident that when I learn to stay disciplined within my rules, I can be profitable long-term. That is the only reason I keep paying the market such an outlandish tuition.

Other behavioral observations: I'm pretty calm in the AM during my session, waiting for the right plays, and I go. I'm calm and so the "execution" side is smooth and relaxed. I get a bit jittery by the afternoon and also make finger errors in the PM. This, of course, bothers me even more. So, here is to cutting it off by 12 PM.

New Rule 1: Had a great AM? Cut it off by 12 PM.
New Rule 2: Had a terrible AM? Cut if off by 12 PM.

I've no doubt the second will be infinitely more difficult to follow than the first.

 

[Nobert]

......not following my system.....

.....I bleed out in the afternoon because I can't stay out of it

Try writing down those trades on paper journal , it stays there & it's painful to look at, because you know that at those moments, you were your own worst enemy. The only one.

It helped me & in time, you realize, either i stick to my rules 100%, or in time , - im out of the game.

 

[SimpleMeLike]

I thought I'd start this to keep myself accountable. I only say this because I've been making the same mistakes repeatedly, and it's been costing me. I've been consistently profitable in the AM sticking to my strategy religiously, but frequently screw it all up in the afternoon by wanting more and not following my system.

The interesting thing is that I've noted these psychological errors several times, but never really held myself accountable. I started writing my basic "a-ha" moments on a sheet of paper next to my trading desk.

A simple look at my performance reveals that if I hadn't traded after, say, 12PM, then I'd be green/break even every day. Instead, I bleed out in the afternoon because I can't stay out of it. Also, the PM movement doesn't really sync with what I do. Another reason to stay away from it.

What ends up happening (I think*) is that the first post-12PM loss I take wounds the ego of a healthy morning and I start to take wild punches. It makes sense from a psychological point of view.

I remember Mark Douglas saying, "there was a guy who should only trade 1 hr. a day then walk away for the day." I need to apply a similar concept rigorously.

Learning the nuisances of how to trade successfully has been a costly process. I sometimes wonder whether long-term successful trading could be learned without the early losses. My hunch is almost definitely not. What the experienced traders say regarding "learning about yourself" is certainly true, and it is a unique way of learning another side of you. I'm entirely confident that when I learn to stay disciplined within my rules, I can be profitable long-term. That is the only reason I keep paying the market such an outlandish tuition.

Other behavioral observations: I'm pretty calm in the AM during my session, waiting for the right plays, and I go. I'm calm and so the "execution" side is smooth and relaxed. I get a bit jittery by the afternoon and also make finger errors in the PM. This, of course, bothers me even more. So, here is to cutting it off by 12 PM.

New Rule 1: Had a great AM? Cut it off by 12 PM.
New Rule 2: Had a terrible AM? Cut if off by 12 PM.

I've no doubt the second will be infinitely more difficult to follow than the first.

Hello Sonny2010 and Welcome.

I applaud you and I can definetly relate to you. I recently had to handcuff my trading time frame as well, after 1pm. Done, winning or losing. 1-3 trades, Done, winning or losing.

My mistakes in my trades have been costing me as well. You are not alone. The little costly mistakes eventually offsets the good wins and the account balance. It is brutal self learning process if not practicing discplined and focus trading. My journal is filled with my rights and wrongs.

I like your confidence and keep at it.

 

[SimpleMeLike]

It helped me & in time, you realize, either i stick to my rules 100%, or in time , - im out of the game.

I like that.

 

[Sonny2010]

Try writing down those trades on paper journal , it stays there & it's painful to look at, because you know that at those moments, you were your own worst enemy. The only one.

It helped me & in time, you realize, either i stick to my rules 100%, or in time , - im out of the game.

Thanks, Nobert. You're correct. I've been writing more things down as I progress. Seeing/remembering the feeling is helpful. Right, the 100% discipline rule is non-negotiable.

 

[Sonny2010]

Hello Sonny2010 and Welcome.

I applaud you and I can definetly relate to you. I recently had to handcuff my trading time frame as well, after 1pm. Done, winning or losing. 1-3 trades, Done, winning or losing.

My mistakes in my trades have been costing me as well. You are not alone. The little costly mistakes eventually offsets the good wins and the account balance. It is brutal self learning process if not practicing discplined and focus trading. My journal is filled with my rights and wrongs.

I like your confidence and keep at it.

Thanks, Simple. Handcuffs indeed. Glad to see I'm not alone.

I notice the market slows down precipitously after 12 PM. I've noticed the process works between 12 PM and 1 PM for me, but it is very slow and painful to watch. This makes me prone to boredom mistakes. Plus, I don't like being in the market that long even if it's not moving. So I think I'll stick with 12 PM.

 

[SimpleMeLike]

Thanks, Simple. Handcuffs indeed. Glad to see I'm not alone.

I notice the market slows down precipitously after 12 PM. I've noticed the process works between 12 PM and 1 PM for me, but it is very slow and painful to watch. This makes me prone to boredom mistakes. Plus, I don't like being in the market that long even if it's not moving. So I think I'll stick with 12 PM.

No problem Sonny2010,

I'm in the same boat. Just today I made two mistakes. The root cause of mistakes was not properly follow exit plan.

Yes, after 12 it's slow price movement. You have to make a decision and stick to it regarding the cut off time. As a trader we have to know when our trading method has the most odds of sucess. I know we get caught up in the take every trade scenairo, and that works for some people, but from my experience and how I trade I have to be limited for now until I get more experienced with my own trading. So to prevent overtrading, I hand to handcuff myself. 1 to 3 trades per day. Later in the night, I do review the charts and document what setups I missed, win or lose just for practice.

 

[Sonny2010]

3/14/19: Red

I was perfectly flat (which counts as a green day for me: see below), but took 2 more trades (out of boredom?) that went against me. I put my honest mistakes below and added some thoughts from the last 24 hrs.

Learning from Losses: I was re-analyzing some of the Wizards series since I find outside opinion becoming more important as my experience grows. JS was mentioning that the Wizards had a peculiar ability to learn from their mistakes and actually implement something meaningful after their mistakes. He was harping on this point. Most of us don't learn from our mistakes in any tangible sense. This is why we bleed to death. We make a mistake, but we don't think "how do I make sure this never happens again, ever?" He mentioned Tudor Jones was nearly wiped out once in the cotton market, and he created a strict discipline out of that major loss. It was real for him like it is real for us. He stuck to an improved risk-management plan for decades as a result. Other similar stories are in there. JS' personal take to me is important since he's a strong reporter and has reflected much on these interviews over the years. He was also there when the interviews happened, so he knows how to give weight to which parts of the interviews based on the personal interactions he had. I believe him on these points.

Behavioral Intelligence: When I first read the books years ago as a young academic, I was looking for a strain of thinking or certain blends of intelligence that gave these guys the ability to do what they did while everyone else watched in jealousy. I've slowly come to learn that it is actually a blend of behavioral traits combined with an intelligence floor. Lots of really smart folks on and off the Street won't trade well. It's not about how smart you are. JS mentioned this as well. It was the behavioral intelligence that gave these guys the edge. They were very finely tuned to their own behaviors and how to discipline it/learn from their own mistakes. They also really, really wanted it. Behavioral Intelligence.

Sit On It: Trade less. I've read the Livermore book and part of Livermore's own trading manual on time element trading that he'd written years later. I know the axiom that "you make more money by sitting rather than doing something." He specifically meant you need to hang on to winners longer in a trending market to make it big. Livermore was, of course, a "stock market operator." Since I'm trying to develop skill in the intra-day futures market, I'm not sure how applicable this is for my process.

What is applicable, however, is really waiting for your trade. Jim Rogers said something similar, "I made the most money when I did nothing." Rogers was referencing both staying out of a market he didn't love and trading less. Doing nothing is fine, and probably the best answer most of the time. JS observed that the Wizards always waited for their trades, and never traded out of excitement or boredom. Taking trades when bored is lethal. You begin to rationalize things that are not present, and you trade poorly. My best trading rate is 1-2 per hour; I was nearly triple that statistic today and it hurt. Not trading in the PM is one "fence" I've built to prevent this. I just need to ensure I stay disciplined in the AM.

Flat is Fine: This was important for me. Marty Schwartz said that out of ~250 trading days a year, he's flat on 200/250. It's the other 50 days that he really makes his money. Soros and Druckenmiller have iterated the same sentiment. Accordingly, I expect to be breakeven (a little in the red, a little in the green) 4 days out of 5 or 8 days out of 10, give or take. I'm very comfortable with statistics, so this concept resonates with me. This also made me think about trading smaller on a day-to-day basis. If you're comfortable with a statistical 4/5 days flat (maybe slightly green, maybe slightly red), then sizing down 4/5 days and playing smaller won't hurt your profits. Statistically, it will actually help your profits by further minimizing risk 80% of the time. Save the size plays for the 1/5 days you really see something you want. On a day-to-day, I've decided to scale it down some. Only when I'm really sure I'm right do I go for a larger size.


Mistakes Made:

1. I fat fingered a close order that ended up doubling my position heading the wrong way. That hurt. Instead of protecting me with a small loss, the upsize hurt me with a large loss.

Solution: Do Not Rush. I'm fairly precise and detail-oriented when focused, but in periods of market excitement I tend to rush. I'm slowly working in ways that "force me to slow down" by incorporating multiple steps before I enter a trade. I don't have a better solution to the internal, so I came up with an external solution.

2. I took a trade that was early by my rules. It hurt me. I was not entirely focused, it was ill-calculated, and was a flat out risk.

Solution: The obvious answer is don't break your rules, but this is unhelpful. The correct answer is try to stick to your rules even more closely than you did the prior day. Each day, get meaningfully closer to a 100% rule-based system. I felt a bit closer today, and will continue tomorrow.

The Good:

1. I implemented my "first loss" system on my first few trades and it went well. I felt good about it, and had no problems giving a little loss to the market. A well-played stop-loss feels as good as a well-played profit. Even if I'm wrong and it moves up shortly enough, I never feel bad about bailing. Nevertheless, I need to stick to this with extreme discipline for it to impact the bottom-line over the long run.

2. I was in the green a bit or breaking even as long as I followed the system.

3. I was out by 12:30 PM. I wanted to test the 12 PM- 1 PM frame, and prefer the 12 PM end time.

I've no qualm about a few red days, but the fact that I'm applying my process inconsistently is bothersome. I'm not anticipating green each day, but I am anticipating reaching the point of a consistent execution of my process. I'm not there yet, and happy to admit it.

 

[Sonny2010]

No problem Sonny2010,

I'm in the same boat. Just today I made two mistakes. The root cause of mistakes was not properly follow exit plan.

Yes, after 12 it's slow price movement. You have to make a decision and stick to it regarding the cut off time. As a trader we have to know when our trading method has the most odds of sucess. I know we get caught up in the take every trade scenairo, and that works for some people, but from my experience and how I trade I have to be limited for now until I get more experienced with my own trading. So to prevent overtrading, I hand to handcuff myself. 1 to 3 trades per day. Later in the night, I do review the charts and document what setups I missed, win or lose just for practice.

I'm curious how well this has been working for you. Have you had any results from this, or are still finely tuning? I like idea of setting a limited # of trades since it forces you to make each one matter. I'll think about this...

 

[Sonny2010]

3/15/2019 red after commissions.

Shut it down at 11:30 AM per the discipline. Last 2 trades were profitable, so let’s start the weekend on a good note.

I was profitable on all of my smaller trades, and lost half of my larger trades. Those losses ate me. The smaller trades executed in the same manner as the larger trades, but were “managed” better by me. Why? The emotion of seeing a large trade move against you even a single tick is a different story.

I feel fine. Per yesterday’s comment, I’m starting to trade fewer contracts at a time. This is the best way for now. The smaller the trades in my learning phase, the longer I live.

Stops: I was stopped out twice (fast) when a wider stop would have kept me in the trade for a profit over an extra few minutes. I’m torn between widening the stops and keeping them where they are. I’m also thinking of moving my profit targets to 1 tick instead of 2. I’m guess much higher likelihood of short-term success, but have to back test this. I’m trying to leverage NinjaTrader8’s ATM strategy, but it can be cumbersome when adjusting on the fly.

The Chop: I wasn’t enjoying it. A monster order came through around 11:00. I know this happens and should be expected, but it was the first time it happened while I was entirely focused on the market.

I’m curious about how others handle the ES chop (or don’t) emotionally. Sitting through it can be tough with the 12.5 tick, but a review of the tape shows it’s necessary.

Time to relax a bit. I’ll review the tape and strategy on Sunday with a fresh eye. Have a great weekend, all.