struggling trader needs help

Hi Everyone. I'm still following the thread and I appreciate all the comments.

Several people have mentioned knowing your edge, backtesting, etc. I have done extensive backtesting, have several workable strategies and believe that I do have an edge. Otherwise I would not be trading. All the books say that. :)

Saliva, I don't know any gamblers and I have never been to a casino or made bets. I'm sorry if I gave offense by equating gamblers with habitual losers. I realize it's a common misconception and I no longer share it.

Sounds like you're right on the money though when you compare me to loser who keeps doubling down or won't quit with a small loss. Ouch. That's hard cold does of reality right there. :)

Redneck Trader, DROP AND GIVE ME 20!!! Or stop calling me sir. Your choice. :) I appreciate your candor and your ideas. Thanks.

Rtrader2525, That's one thing that I hadn't considered doing. But it can't hurt, so I'll give it a try.

dvshucks, your story really hit home, it sounds so similar to my own experience. Particularly the part about how losing discipline for only 10 minutes can ruin a week of good behavior. That is so maddening.

I'm just your opposite with regards to the journal. I find that reviewing the journal frequently is the key. Otherwise I tend to forget the lessons and epiphanies of prior sessions. I also find it very useful for tracking strategy ideas for later testing. I do tell my wife whenever I lose; she is a saint to continue to believe in me after all this time.

hangsengtrader, it happens that I have recently analyzed of the 2-1 approach and set it aside as not helpful.

However, there may be some subtleties that I missed. Since you brought it up I will take another look. I was using fixed profit targets for my two exits, which could be part of the problem. Also it may work better with some types of entries than others.

Thanks again to everyone who responded. I've gotten a bunch of really helpful advice and I have a lot of leads to pursue now.
 
Quote from rnaugin:

Redneck Trader, DROP AND GIVE ME 20!!! Or stop calling me sir. Your choice. :) I appreciate your candor and your ideas. Thanks.
More...

Uhhh Yes Sir ... I mean 1......2.....3......4...

:)

Take Care
Redneck
 
If you haven't already, read Mark Douglas' 2 books ...the disciplined trader and trading in the zone.

Define your edge, quantify it, and trade it, accepting that there will be losers, and this is no reflection on you.

Consider paper trading for a while. I have traded for years and when a difficult spell comes.....I will paper trade for a while.

Make rules and force yourself to follow them: for example, limit yourself to ONLY 2 trades a day; this won't allow room for revenge trades. At the end of the day ALWAYS review your trades and judge yourself on how you managed the trade;
trade selection, pre-defined stop, trade size, management of trade, ...etc.
Do not judge only on wins and losses

Good luck.
 
None of us when we take our first trade are aware that we are not wired correctly in our brains to trade markets. We discover this the hard way. Mine came from a number of sources. Fascinating articles in magazines (TASC, Active trader,…) and the trade shows in the last 15 years have given me a peek at what the psychological characteristics of trader are all about (still trying to get there..). I learned from these sources that there are many traps beginning traders fail into.

At the top of these psychological traps is a traders need to be right about our trades and the markets. For example a trader sees the current trade is going to be a loss. But, the trader has seen this before and knows the trade will come back. So, rather than take the loss the trader decides to let the trade go because they know the trade will come back. Unfortunately the loss keeps getting bigger. When the trader recovers their composure the loss is 5 times larger and grudgingly they take the loss.

In order to be right we seek out confirmation. Traders seek out information that supports their existing belief while avoiding information that contradicts their opinion. The trader may use a buy recommendation from a brokerage house to corroborate the trader’s opinion to buy the stock – even though the stock appears to be in a downtrend. The most difficult decision in trading is to let go of your opinions when you trade.

In considering a decision, we often give disproportionate weight to the first information we receive in trading, therefore anchoring our resulting thoughts. You can mitigate this risk by seeking information from a wide variety of sources and viewing trading scenarios from various perspectives. For example if a stock is trading in a sell pattern and the trader recognizes this, the trader may give this too high a weight and ignore reasons that say the stock is a buy.

Beginning traders often make choices that justify past decisions, even when circumstances change. To avoid this trap, Traders must only consider future costs and benefits. For example when a trader losses most of their account on a long stock position this is wired into their brain. When the same stock is again a buy, the previous loss will play a key role in the trader’s decision to trade the stock.

Intelligence plays an interesting role in decision making. One set of researchers surveying traders discovered intelligent traders performed on average worse than unintelligent traders. They made this statement because they found that intelligent traders had a tendency to try to use the traps of trading to override their methods.

We all fight these battles, myself included. Instead we learn to make rules and build edges that become our trading mantra we repeat each day. Gradually we are rewired and become some what automatronic in our trading practices only making slight adjustments over time.
 
Wow, guys, this thread is really good. Finally I found my brothers-in-arms. Not just believing that they are out there somewhere.

Hey, maugin, how about shifting the meaning of "loss" in your mind?

Think of trading as a game "follow-the-leader." If you follow your edge---the leader---you win, and vice versa. Pips, dollars, and everything else...well, they're just put there by the house to complicate the game further. Irrelevant since you just "follow your leader or not."

Pat yourself on the back if you follow your edge to the letter---you win, buddy. Smack your head real good if you not, cos you loose.
 
Aside from impeccable money management and discipline which is not easy to achieve and should never be taken for granted, you need an edge.

The edge can be obtained from someone that is willing to teach it or sell it, you are better off obtaining it for free as this is an extremely corrupted business. However, chances are this will not happen.

To make it even harder, takes a touch of genius to develop an edge on your own.

Susana
 
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.
More...

since you mentioned you are an emotional person (i am as well) my suggestion is to engage in some type of activity that will help you will get to know and be able to quickly recognize your internal emotional states quickly and easily. i believe that knowing my internal state is as important (maybe more so) then knowing my set-up.

there are lots of techinques out there...to help with this meditation, NLP, hypnosis, counseling, etc. personally, i meditate and use visualization (as a former competitive athlete i learned how valuable visualization really is).

here's something that i got from somewhere (can't remember), but it helped me a great deal:

know my internal state before pulling the trigger:
elated leads to impulsive trades
sadness leads to stupid trades
anger leads to over trading
fear prevents or causes an early exit.

you mentioned you now have difficulty taking a loss and in the past you didn't. what has changed in your life situation during this time?

for me, i had inital difficulty taking a loss due to my ego's need to prove that i'm right. after a lot of meditation (and a blow-up) i finally came to the realization that a "trade is just a trade", it doesn't take on any additional significance for me.

i've read lots of breat books, but what really worked for me was the mediation and getting in touch with my internal state and using that information to guide my actions, or non-action.

pm me if you want more...
 
Sounds like you need to set goals and limits for yourself. EG make 2% a day on your port and set stop losses of 1% on all your trades and really don't rush yourself into trades. Not trading for a day b/c of no entry points = a day of trading, but deciding not to.
 
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