Thou Shall Not Lose

P

prince-in-jail

I'm writing this because I have a problem with my emotions. I am honest, and there might be a few of you who have a similar issue. Over several months of screen time and close examination of intraday charts I have been able to construct my own simple strategy which has yielded great consistency. I was able to accumulate several thousand dollars per month ($200-300 a day on average) by trading one ES contract.

But I only need one or two days to wipe out everything. The problem is me. I am not able to control my emotions well which is primarily caused by fear of losing and hatred of being wrong. If a trade worked out I am content and move on to the next by applying objective analysis and thorough understanding of the market's direction. All strictly based on my strategy which suggests stoploss areas and targets. The irrational aggression begins once I took a loss (or worse, if the day begins with a loss). Something inside my head commands me to gain it back to end the day positive by all means. This results in reversing my position constantly at swing highs/lows or staying in the position attempting to make up for the previous mistake, only to see it turn to a loss also because I refused to close it at the target. What's worse is, I completely lose my bias and ability to do objective analysis. Suddenly I'm the newbie that takes one beating after another. I don't allow myself to accept a loss.

Now the weekend is at my disposal to think about this terrible issue. I know the problem now but I am not sure if I can correct it. The initial consequence I have taken is to completely hide my trading results (realized or unrealized P&L, trade history, account balance) so I am unable to glance at the previous loss. Obviously I am emotionally frail and this personality trait has to be fixed somehow. Once I can control these mental explosions the strategy will serve me well without any further emotionally caused drawdowns. At least not big ones.

Conclusion: Accept losses from time to time but move on.
 
when that PnL turns red and you're second guessing your trade... just press the button!!! get out, smack yourself around a little bit and move on. i find the key is getting out as quick as possible, screw it... sometimes i look back on the stock and it ends up skyrocketing but more times than not it tanked and im glad i got out.
 
Quote from prince-in-jail:

I'm writing this because I have a problem with my emotions. I am honest, and there might be a few of you who have a similar issue. Over several months of screen time and close examination of intraday charts I have been able to construct my own simple strategy which has yielded great consistency. I was able to accumulate several thousand dollars per month ($200-300 a day on average) by trading one ES contract.

But I only need one or two days to wipe out everything. The problem is me. I am not able to control my emotions well which is primarily caused by fear of losing and hatred of being wrong. If a trade worked out I am content and move on to the next by applying objective analysis and thorough understanding of the market's direction. All strictly based on my strategy which suggests stoploss areas and targets. The irrational aggression begins once I took a loss (or worse, if the day begins with a loss). Something inside my head commands me to gain it back to end the day positive by all means. This results in reversing my position constantly at swing highs/lows or staying in the position attempting to make up for the previous mistake, only to see it turn to a loss also because I refused to close it at the target. What's worse is, I completely lose my bias and ability to do objective analysis. Suddenly I'm the newbie that takes one beating after another. I don't allow myself to accept a loss.

Now the weekend is at my disposal to think about this terrible issue. I know the problem now but I am not sure if I can correct it. The initial consequence I have taken is to completely hide my trading results (realized or unrealized P&L, trade history, account balance) so I am unable to glance at the previous loss. Obviously I am emotionally frail and this personality trait has to be fixed somehow. Once I can control these mental explosions the strategy will serve me well without any further emotionally caused drawdowns. At least not big ones.

Conclusion: Accept losses from time to time but move on.
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Conclusion - you overtrading / overleveraged. You need to learn to control small amounts comfortably. Try trading SPYdrs or DIAmonds (ETFs), in much smaller amounts than an ES contract.
 
Quote from prince-in-jail:

I'm writing this because I have a problem with my emotions. I am honest, and there might be a few of you who have a similar issue. Over several months of screen time and close examination of intraday charts I have been able to construct my own simple strategy which has yielded great consistency. I was able to accumulate several thousand dollars per month ($200-300 a day on average) by trading one ES contract.

But I only need one or two days to wipe out everything. The problem is me. I am not able to control my emotions well which is primarily caused by fear of losing and hatred of being wrong. If a trade worked out I am content and move on to the next by applying objective analysis and thorough understanding of the market's direction. All strictly based on my strategy which suggests stoploss areas and targets. The irrational aggression begins once I took a loss (or worse, if the day begins with a loss). Something inside my head commands me to gain it back to end the day positive by all means. This results in reversing my position constantly at swing highs/lows or staying in the position attempting to make up for the previous mistake, only to see it turn to a loss also because I refused to close it at the target. What's worse is, I completely lose my bias and ability to do objective analysis. Suddenly I'm the newbie that takes one beating after another. I don't allow myself to accept a loss.
More...

There is nothing new under the sun. There are universal virtues which lead to success in any endeavor.

Clearly you lack the virtue of patience .

You want to get rich quick and so you view any losing day as 'setting you back.' In your attempt to avoid a losing day, you end up too aggressive, revenge trading, refusing to take a loss, averaging down in poor circumstances, and a host of other problems.

Cultivate the cardinal virtue of patience. Think of wealth accumulation as a gradual process ($200 - $300 per day)

Best of luck.
 
i have similar issues, due to the ways of the first firm i worked for, and due to a recent life change , luckily i have a shutout set now that i wont have pulled through the llc i work for , i may suggest you try this if you want to stay alive till you learn your emotions better, that is what i am doing. no different than stops, just one on your whole day. and forced.
 
Quote from prince-in-jail:

I'm writing this because I have a problem with my emotions. I am honest, and there might be a few of you who have a similar issue. Over several months of screen time and close examination of intraday charts I have been able to construct my own simple strategy which has yielded great consistency. I was able to accumulate several thousand dollars per month ($200-300 a day on average) by trading one ES contract.

But I only need one or two days to wipe out everything. The problem is me. I am not able to control my emotions well which is primarily caused by fear of losing and hatred of being wrong. If a trade worked out I am content and move on to the next by applying objective analysis and thorough understanding of the market's direction. All strictly based on my strategy which suggests stoploss areas and targets. The irrational aggression begins once I took a loss (or worse, if the day begins with a loss). Something inside my head commands me to gain it back to end the day positive by all means. This results in reversing my position constantly at swing highs/lows or staying in the position attempting to make up for the previous mistake, only to see it turn to a loss also because I refused to close it at the target. What's worse is, I completely lose my bias and ability to do objective analysis. Suddenly I'm the newbie that takes one beating after another. I don't allow myself to accept a loss.

Now the weekend is at my disposal to think about this terrible issue. I know the problem now but I am not sure if I can correct it. The initial consequence I have taken is to completely hide my trading results (realized or unrealized P&L, trade history, account balance) so I am unable to glance at the previous loss. Obviously I am emotionally frail and this personality trait has to be fixed somehow. Once I can control these mental explosions the strategy will serve me well without any further emotionally caused drawdowns. At least not big ones.

Conclusion: Accept losses from time to time but move on.
More...

You realize your weakness. That's key and it's a critical starting point. No how are you going to change these negative behaviors? It concerns me as it should you that your not sure you can correct them. How can effect positive change without confidence? You aren't alone most of us struggle with this issue from time to time, some more than other, including me.

Have you tried different things to build your confidence? Some ppl. like meditation, some hypnosis, some NLP. I was listening to Robin Dayne yesterday, big on NLP, and she said when you realize you are making errors stop until you figure out solutions so you don't ingrain them and make them habits. A friend of mine spent over 1 year doing hypnosis to re-program his negative thinking.


Some benefit from addressing their fears and overcoming them. Maybe you could do something you fear, other than trading and overcome that which will most likely create more confidence that will permeate your entire life. Maybe skydiving.

I asked a similar question to a well respected trader on ET in private, that shall name nameless, and he suggested that you do something death defying. If you succeed your fear of losing money will seem small if you accomplish the first. No this isn't an endorsement but it does make logical sense to me.

Every day that goes by I realize that trading is mostly about psychology and money management, specifically risk management. A mediocre method used consistently with good money management will make money.

Lastly, keep in journal of your thoughts it works. You will find most likely that on days you do poorly you are emotionally weak and unfocused.

Post Edit: On a different but related note I have heard recently that some prop guys get turned on real $$ without notice after being successful on sim for awhile. Why is it that so many can make funny money but falter on the real thing? A mind game trading.
 
OP Hang in there, I too have had a tendency to have the occassional big drawdown after a long period of slow growth.

I'm slowly getting better and the big drawdowns have been getting smaller.

It's easy with hindsight to be hard on yourself and over analyse your behaviour. Doing that will drive you mad and probably won't change your personality type anyway. I try to work around this.

What I do is have a maximum daily drawdown limit where I will close out all my positions when I hit it. I set it at 3% of capital and give myself permission to "play" if I stay within this limits.

This works I think becasue when you shoft a stop you suddenly start the journey down the slippery slope and point limits get hard to manage. The $ limit is simple and I set it at an amount that is big enough to give me some slack and small enough not to cause me too much pain the next day.

I normally stick to my trading plan stops targts etc but on those infrequent occassions of madness it does help and to be honest I have had some of my biggest wins following my instincts.

Cheers
 
Thank you all for your replies and suggestions.

They have helped me to shed more light on this psychological issue and come up with ideas. As some of you have suggested, it is really important to stop for the day if things just do not work out instead of digging the hole deeper. I also wanted to say that I can handle the $ amounts well and have trained excessively with smaller sizes before while developing my tactics. It is more the feeling of having failed on a particular day that haunts me. So I will work on it and also patience is what I will train more.
 
Quote from prince-in-jail:

...It is more the feeling of having failed on a particular day that haunts me. So I will work on it and also patience is what I will train more.
More...

I believe your going in the wrong direction with this.

First of all, review your thread title because it gives the impression you are a perfectionist...

Thou Shall Not Lose

I'm sure you didn't imply that a trader should enter his/her trading day with the thinking that a losing trade is not acceptable.

Thus, I'm going to assume you meant that when a trader has identify bad trading habits that take away prior profits...

It's best to stop trading and keep what's remaining of those profits prior to going negative for the trading day.

With that said, you need to determine and resolve why you allow a losing trade or a prior losing trading day to have impact on your next trade...

An impact that sabotages your next trade prior to entry.

Here are some questions you should ask yourself out of many others I don't have time to mention:

* Are you a perfectionist that easily unravels when things suddenly become unexpected ???

* Are you properly capitalized in that a losing trade or losing trading day doesn't produce FEARS ???

* Do financial crisis in your backyard or far away easily takes you off track from your trading plan ???

* Do you have a well-written trading plan that you review every trading day instead of keeping it in your head for whatever reasons ???

* Are there personal issues in your life that needs to be resolved ???

This is the culprit for most traders with discipline problems.

* Do you continue trading after you've accomplish your pre-set goals for the trading day ???

* Do you continue trading after you become fearful that you will not satisfy those pre-set goals for the trading day ???

* Are your pre-set goals based upon profits instead of being based upon your ability to follow your trading plan ???

* Is your trading environment at home or office (away from home) suitable for trading ???

Some of the above can be better answered by someone in person only that's neutral (unbias) taking a closer look at what you do...

Such becomes very important if your problems continue.

Thus, find a trading buddy within driving distance that can sit and monitor what your doing for several consecutive trading days.

You'll be surprise at how many traders ignore (underestimate) the above last suggestion prior to calling it quits.

Mark
 
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