struggling trader needs help

[Banff01]

I know completely what you're going through. I still haven't found a way to beat this demon and I tell you it's an expensive one!
Once it occurred to me that this could basically be a tantrum that a child throws when it gets frustrated with something. It could also be an inability to be compassionate towards self. I believe it also has something to do with self-punishment for bad performance.
Let me guess - you never got any praise for great performance and only punishment for bad performance from your parents.
My guess is that you are also very competitive and you totally despise losing.

There were some very appealing responses. Please, keep the ideas coming.

 

[Banff01]

Quote from oraclewizard77:

Good idea. I also would set a daily stop loss, and maybe take a day off if you hit that loss instead of getting into the frame of mind that you will make it all back the next day.

Also, a good expression is if you are digging yourself into a hole stop digging. In that I would suggest if you are starting to lose, decrease the amount of contacts or shares that you are trading, and once you get back into the mind set where you are making money, increase the contact size.

I think a daily loss limit should work. You need a point where you walk away from the computer and don't come back until you're calm.

One thing that I am experimenting with is taking a 20 to 60 minutes break to clear my head when I start feeling the urge.

 

[NoDoji]

Quote from Banff01:

My guess is that you are also very competitive and you totally despise losing.

If there is one large defect I carried with me into this career, it's the statement above. I've always been a perfectionist (another trader's defect, though not as bad) and very competitive.

As soon as I eliminated this personality defect as a trader, I welcomed a loss as a gain: I'm out of this trade before it becomes a big loss, and I have the money to trade another day. Once I was able to do that, suddenly I didn't have many losses any more.

 

[ivanbaj]

2 things that can help, not in order.

1. Discipline. Set a rule to NOT trade after a loss for 1 month. If you can't follow this rule you are not serious about trading. You are using trading to satisfy some other ego needs that you might have.

2. Play with some math about expectation. You should probably use about 60 trades to evaluate yourself. Few trades do not matter at all. Loosing few trades and getting upset about it means that you have no idea about the expectation of your trading system.

 

[Banff01]

Quote from NoDoji:

I welcomed a loss as a gain: I'm out of this trade before it becomes a big loss, and I have the money to trade another day. Once I was able to do that, suddenly I didn't have many losses any more.

NoDoji, you made a great point here. You have completely turned around the perception of losses as something bad that one subconsciously needs punishment for. Once you do that then several losses in a row should no longer produce such a huge amount of frustration to cause this revenge trading onslaught.

Another thing that's worth examining is how do you feel when you miss a large move after a few losses? (I believe someone already mentioned something similar in one of the previous posts).

 

[hangsengtrader]

Most traders do not have the patience to trade and really think that scalping for a few ticks or even a point will do the trick. On the contrary, you will be more successful if you have a longer time frame. And yes it will require more than a $5k account.

The vast majority of day traders lose, while the vast majority of long-term traders win. Why? They don't let "noise" dictated their trading

I would suggest if you are capable of doing it to open two accounts of the same size. One for day trading and one for holding positions over night. You will be surprised at the end of the 12 month that your ROI on the long term will do much better than the day trading account.

Of course, you will get a "million" traders telling you the opposite.

But if you must day trade, because you have fire ants in your testicles, I would suggest that you do the 2-1 contract. Enter 2 and liquidate one when you see profits and bring the other one at entry point (break even) if you get stopped out. Most of the time you will, like 8-10 times, HOWEVER the other two you will see that you can easily hang on for a good $$ amount day trading. How much, that all depends on the instrument you are trading.

Again there will be another "gazillion" "traders" that will tell you the 2-1 approach sucks...and that is because they enter on the wrong time. When I enter my initial objective (covering cost) is 8-10 times. I get stopped out a lot, but do well on the other one or two. It is that 1-2 trade that does not look back and I am on it.

If you are having difficulties in finding a method to trade, PM

 

[Redneck]

Quote from rnaugin:

Hello everyone,

I have been reading this board for quite some time, but this is my first post.

I am a struggling trader, and I hope that by posting here I can pick up some advice and encouragement to keep going. I also hope that by airing this publicly I might be able to narrow my focus and solve it.

It is a firm goal of mine to make a living trading. I am very committed to it. I have been trading on and off for the past 14 years, between job contracts. Total calendar time spent on trading related activities is probably 1.5 years.

I "know" enough now to be successful. In fact I "know" enough about trading to write a very credible response to this post, should I choose to masquerade as an expert.

Over the last calendar year, I've kept detailed notes on my trading and have addressed several important issues. However there is one thing that I just can't seem to overcome:

Revenge trading. I hate losing.

This is a tough one for me. My first loss of the day is pretty easy, I take it mostly in stride. However, it upsets me somewhat and I start to rush a bit. The second loss is usually due to obvious stupidity on my part, and that makes me really mad at myself. Then I start looking for anything that looks remotely like a setup or just take impulsive scalps.

I only quit when I reach my "point of unbearable pain" which is sometimes more than 10% of my account. After than I am defeated and depressed and ready to give up.

It sounds easy to say "just don't do that". But I can't describe how powerful the impulse is to "fight back". My hands shake and my heart rate goes up. I can't think clearly. I know in that moment that I MUST stop trading. Only rarely can I actually walk away when that happens.

I am a very emotional, impulsive person by nature. Not to give the wrong idea, I am also responsible, stable and intelligent. But trusting my gut, making snap decisions with limited data and taking risks are strengths that have set me apart from the crowd and have lead to success in other areas of my life.

I feel like I should be able to overcome those traits to trade. I don't overtrade for the excitement, as gambler would. I don't enjoy overtrading at all. It's just REALLY hard to stop myself when I am facing a loss for the day.

Oddly, this has only been a problem for the past year or two. Before that losses didn't bother me as much, I thought of them as tuition. But I think it's starting to sink in that I might not actually be able to do this.

I would really appreciate serious suggestions by people who have have overcome tough, personality based trading obstacles like this. As I said, I am very committed to making this work, but I'm at the point where I need some outside perspective.

I'd also really like to hear from people who have fought their own demons and won.

I am in an unusually direct mood this evening Sir so what I am about to say is not meant to be mean – but it will sound that way


So with all due respect to you Sir

1.) You don’t know anything – if you did - you would do it – you would live it – it would be the very essence of who you are as a trader

2.)You lack clear / concise vision with respect to your trading Sir – Trading is only about making money – period… Everything else we do, think, or know – should support that – period

3.) You are also conflicted – on one hand you say you’re looking for "encouragement" (1st sentenance) but in the next sentence you say you are “very committed”


FWIW Sir – My advice –

Step back and reassess everything (reaffirm you are committed)

Write a trading plan (to give you clear direction)

Use a journal and figure out what you really know - and to help you conquer your demons

I have fought a butt load of my own demons and won – so now

I am who I am,
I know what I know
I trade the way I trade
I trade to make money

Figure out the differences between your stance and mine Sir – only then you will have figured out your hurtles and conquered your demons


Good Luck
Redneck

 

[samueldoernte]

If you cannot clearly define your edge, you don't have one. Don't trade if you don't have an edge. As a previous post stated, write a business plan and find a system, backtest it, try it out small, after a large enough sample of small trades slowly size up. Your whole problem is solved with a trading system. You should read up on probability and randomness.

 

[saliva]

Quote from rnaugin:

I feel like I should be able to overcome those traits to trade. I don't overtrade for the excitement, as gambler would. I don't enjoy overtrading at all. It's just REALLY hard to stop myself when I am facing a loss for the day.

Have you actually had a serious conversation with a gambler who ends up losing his entire fortune and then some? He (or she) usually starts out small. But as the losses start to amount, his frustration urges him to make stupid choices. Instead of simply walking away from the table, his already screwed up head tells him to bet all-in. His rationale is that if he wins, he will get his money back. Of course, he never thinks about the other outcome and he walks out of the casino a poorer man. But don't worry, it's never long before he shows up again, usually the following week, to seek his revenge only to lose it all yet again.

Now, here's a trait of a professional big-time gambler. He is one who is constantly evolving, adapting, and changing as circumstances dictate. Even while evaluating opportunities, he also weighs risks and rewards because he knows that even the best gambler will have a losing day. Sometimes a string of losing days. Although he's self-confident, he's disciplined enough to know when to quit. He allows the environment control him and not vice versa.

Winning is not always a score. Likewise, losing is not always a defeat. It's HOW you win or lose that matters. You might have scored a few bucks. But is that attributed to true skill or a mere dumb luck? If you made a horrible entry but somehow made a small fortune, there's nothing to be proud about. Well, unless you're a noob who can't differentiate between the two. Even if you end up losing money, had you lost properly in a controlled manner it should be seen in a positive light.

Remember, just as not all gamblers were created equal not all traders are the same. In whose shoe would you like to mold your own image? You obviously lack discipline (as well some basic premises of trading such as money and risk management). Until these issue are resolved, success will be hard to come by.

 

[dvshucks]

I'll share my story since I'm finally feeling better about my trading. I've been trading for over 5 and a half years now. I was always consistent, no big drawdowns. No stress. But then at the beginning of last year, I started making great money, taking more risk. Generally entering with 5k positions. Then I did horribly from May til January of this year. I had two months where I lost $20k. I trade with emotions, I revenge trade, I hold trades because of denial that I was wrong, I trade twice as big today to make up for the loss of yesterday. I tried everything-taking breaks, writing trading plans, exercising, anything I thought would get my focus back. Yet, I'd be good for 2 hours and the 10 minutes ruins my whole day/week/month.

About a month ago, my account was low from me taking money out and I had a bad day. Bad enough that I broke my keyboard over my knee (which feels great by the way). I called my mentor, told him I quit and I couldn't do it anymore and started applying for jobs (which I'm not qualified for anything because I've been daytrading for 5 and a half years). I was pretty broken. Trading can do that and at any stage of the game.

The next day, my mentor called me and we talked through a plan. Just saying, I'm going to try harder this time isn't going to break bad habits. You have to make real, tangible changes. For me, it was putting in a daily stop out, which I put really tight at first. I also looked at my trading and saw that most of my biggest losers were in the earnings stocks of the day (so where my biggest winners which is while it took me so long to give them up). Assent has a feature where you can put in a not tradable list, so I took away that temptation of quick riches and excitement every day. I also cut out making basket trades across an entire sector. I put my shares way down. I've been trading 500 share lot max per position for the past month and am just about to raise it up slowly, but if I have a losing day where I lose my head, I will lower my shares because you need AT LEAST one day to get your head right.

You also have to be accountable. Writing a journal did nothing for me personally, if I trade poorly, I need to feel that shame by telling someone else about it. I think it really helps to have someone to talk things through, whether it be another trader, a wife, or posting on this message board.

In the end, I'm back on track. If you know trading like you say, you should always be able to make money. I've had 17 out of 18 green days since I made the change and am back to paying my portion of the bills. They say it takes a month to create new habits. If you know what kind of trades you lose big money in, just get them off your screen. Its not worth the stress even if you make money in them a good percent of the time. I can say that once you start good trading habits, they are just as addictive as bad trading can be. Right now I'd rather make just $300 trading well with no stress than making $500 and going through the wringer every day. I sleep a lot better

Stick with it, trading isn't that hard, you just have to find what makes you money and just stick to that for a while. Get it under control now, you can conquer the world later.