Through the Looking Glass

[Redneck]

Quote from illiquid:

A relatively quiet week, yet a poor performance considering a position held from last week (and still holding) netted me nearly 10k for the period. I raised my max shares per position in order to trade a few single digit stocks (not my usual play), and it started getting very tempting to raise my position size for other trades as well. Again, a weakness to try to change things when consistency has yet to be shown. For me when discipline begins to unravel, it usually starts one strand at a time: an extra off-the-cuff overnight here, a double-sized entry for no real good reason over there, etc. Before I know it I'm holding 7 overnight positions with a variety of justifications and scalping ipo's 4k shares at a clip. Fortunately I came to my senses friday morning and did some damage control before things got out of hand.

Then STOP


Recognize when that first strand has broken, acknowledge it, accept it, and then place a hard stop on taking any further action…

Back away from the computer, possibly shut it off, (of course exit the position if necessary) – but stop…..


I told NOD (NoDoji) one time to nut up…. It’s something we all must do periodically throughout our career

No amount of talking, thinking, persuading, coaxing, whatever will work… It is at those times we must decide it is in our absolute best interest to nut up – and do exactly what we must – no matter what we think, want or hope…


Illiquid with all due respect – It’s your turn Sir


RN

eta – Also sounds like you may need to get back to trading 101 – identify your stops, honor your stops, take the damn things

 

[illiquid]

Quote from Redneck trader:

Then STOP


Recognize when that first strand has broken, acknowledge it, accept it, and then place a hard stop on taking any further action…

Back away from the computer, possibly shut it off, (of course exit the position if necessary) – but stop…..


I told NOD (NoDoji) one time to nut up…. It’s something we all must do periodically throughout our career

No amount of talking, thinking, persuading, coaxing, whatever will work… It is at those times we must decide it is in our absolute best interest to nut up – and do exactly what we must – no matter what we think, want or hope…


Illiquid with all due respect – It’s your turn Sir


RN

eta – Also sounds like you may need to get back to trading 101 – identify your stops, honor your stops, take the damn things

That's the hardest part, to walk away. It needs to be instinctual, an understanding that a discretionary trader cannot function with a frustration-warped perception. It may take me longer than most to step away from the screen, but I definitely have a better grasp of when I'm off and adapting myself to myself, compared to a year ago. The problem is, usually when that first strand starts to go, I'm still trading well otherwise and the P/L may mask that for a time before things go downhill.

re: stops -- the overnights usually arent losing daytrades turned into position trades, I have specific criteria for holding overnights (open profit being one of them) but I may get loose or overestimate expectations. On a side note, I very rarely use hard stops unless I'm away from the screen or handling alot of positions simultaneously.

 

[Redneck]

Quote from illiquid:

That's the hardest part, to walk away.

Yes Sir it is – it is also why 90 whatever percent fail – they can’t do what they must – they know what to do – but they can’t….

So my friend – you are at a cross roads – which path will you chose?



Discipline is a pure bitch, but in this business - it is necessary - sans instinct


Feel free to call me an ass... I know what I’m saying… More importantly – I know how it feels


RN

 

[illiquid]

Quote from Redneck trader:

Feel free to call me an ass... I know what I’m saying… More importantly – I know how it feels


RN

That would never occur to me, your advice is always spot on. Discipline is a muscle that needs to be exercised daily -- it is definitely not my strong suit.

I'm imagining myself walking away from the screen frustrated and deep in the red -- and breaking into a bit of a sweat already. It reminds me that this is a business of getting rewarded for always making the harder choice.

 

[Redneck]

Quote from illiquid:

That would never occur to me, your advice is always spot on. Discipline is a muscle that needs to be exercised daily -- it is definitely not my strong suit.

I'm imagining myself walking away from the screen frustrated and deep in the red -- and breaking into a bit of a sweat already. It reminds me that this is a business of getting rewarded for always making the harder choice.

Then come Monday - Nut up

RN

 

[Xspurt]

Quote from illiquid:


...the point of it all for me is to get back to how a trader eventually increases not only his risk tolerance, but also reward tolerance. It's all a big jumble in my head atm so feel free chip into the discussion there.

I will comment on the above here as your other thread is about position sizing. What if the answer is in another direction: r e d u c e your risk tolerance to increase your reward tolerance? More control means less reliance on targets and greater flexibility to adapt to prevailing market conditions where your old exit target would have been.

A good checklist is already posted in this thread so if for example xyz kicks off "without warning", you have a methodical series of investigations to go through to discover the reason why.

That in turn will tighten your trading plan once you prove the idea and result in more control. Discipline becomes more natural and doesn't involve roller coaster emotions from increased tolerances.

 

[illiquid]

Quote from Xspurt:

I will comment on the above here as your other thread is about position sizing. What if the answer is in another direction: r e d u c e your risk tolerance to increase your reward tolerance? More control means less reliance on targets and greater flexibility to adapt to prevailing market conditions where your old exit target would have been.

A good checklist is already posted in this thread so if for example xyz kicks off "without warning", you have a methodical series of investigations to go through to discover the reason why.

That in turn will tighten your trading plan once you prove the idea and result in more control. Discipline becomes more natural and doesn't involve roller coaster emotions from increased tolerances.

Therein lies the challenge. You're absolutely right that cutting one's position size is the best way to deal with discipline issues and redirect one's mentality back on course. But currently I'm on a path that's pushing in the other direction, for better or worse.

Reducing size is the panacea for most trading ills. In fact -- I hope what I am about to type will be the most arrogant and boastful sentence you will ever read on this thread -- I think I would be one of the best 100 share traders out there. Honestly, given the stocks and situations I trade. I think I could get a really good gig being one of those guest "live" traders at some trading boot camp -- "this is what you can do with just 100 shares, easy"; " 200 shares? 6-figures a year, no problem."

But seriously, ultimately, all the sturm and drang on this journal is really about my attempts to grow my business and finding my personal line before the precipice. It's about not only discovering how to be one's best, but also what exactly one's best may be. Perhaps I'm finding the hard way that it's just all moot and pointless, like sisyphus and his rock and hill: that there will always be a line out there to find and cross in this game, if you keep looking for it like an idiot. Yes I hear it . . . hey dude, "best" doesn't necessarily equal "most" . . . learn to walk before you run . . . that line you speak of -- it can't help but be fatal . . .

 

[ammo]

all the self searching you' re doing might be more about a change in stage of life,there are 7,don't remember em but everyone is bound to go thru them in a lifetime,i still think you are personalizing your trading with your life,you and mr. market will never meet, trading needs to be seperate, impersonal,without emotion,just trade setups

 

[Xspurt]

Quote from illiquid:

Therein lies the challenge. You're absolutely right that cutting one's position size is the best way to deal with discipline issues and redirect one's mentality back on course. But currently I'm on a path that's pushing in the other direction, for better or worse.

Reducing size is the panacea for most trading ills. In fact -- I hope what I am about to type will be the most arrogant and boastful sentence you will ever read on this thread -- I think I would be one of the best 100 share traders out there. Honestly, given the stocks and situations I trade. I think I could get a really good gig being one of those guest "live" traders at some trading boot camp -- "this is what you can do with just 100 shares, easy"; " 200 shares? 6-figures a year, no problem."

But seriously, ultimately, all the sturm and drang on this journal is really about my attempts to grow my business and finding my personal line before the precipice. It's about not only discovering how to be one's best, but also what exactly one's best may be. Perhaps I'm finding the hard way that it's just all moot and pointless, like sisyphus and his rock and hill: that there will always be a line out there to find and cross in this game, if you keep looking for it like an idiot. Yes I hear it . . . hey dude, "best" doesn't necessarily equal "most" . . . learn to walk before you run . . . that line you speak of -- it can't help but be fatal . . .

Sorry, I didn't make myself clear. I was not referring to position size and hence I posted here. However as a rule if you are experimenting then reduce size and the bigger the experiment the bigger the reduction in size.

The point I was trying to make is that wider stops may be a sloppy way to try to take more out of the market and the result is less control. So adding something into the mix can allow greater control and reduced tolerance. The question is, add what?

Without knowing your trading plan no one can say, but there's enough here to stimulate new thinking. A thorough investigation into why a fast move occurred will help produce good fruit and also help to answer where profits should be taken.

If you had a good profit during the week and turned that into a loss, there again is opportunity to discover why. There isn't one answer, there's a myriad of answers and you only need one or two to impact your bottom line in a major way.

That's why Redneck's list is very important. Every area you lack understanding in is bristling with tools to aid you develop a more penetrating approach. If you get stuck discuss a topic to stimulate your thinking.

 

[illiquid]

Quote from ammo:

all the self searching you' re doing might be more about a change in stage of life,there are 7,don't remember em but everyone is bound to go thru them in a lifetime,i still think you are personalizing your trading with your life,you and mr. market will never meet, trading needs to be seperate, impersonal,without emotion,just trade setups

I never thought things would get this "personal", the intention from the start was just the setups but I have so much history of boom/bust that I figured it must be something else. I will keep focusing on that separation because it just feels like the right direction; I think taking on too many longer term positions just makes it that much more difficult.

But if we can mention a completely different world for a second, say that of a macro fund manager -- how does he really keep his life separated from the markets? These are guys that have quote screens over their toilets and sideways monitors at their bedsides. There's really no way they can fully disentangle themselves, they are completely engulfed in the game. And to be honest, when I first started out, those guys were my heroes: the likes of Kovner, Lipschutz, McKay, these were my favorite interviews in MW. I wanted to be able to see the markets like they did. It wasn't until later that I realized I could never play in their world, but that romanticized view of the markets still hasn't fully disspated I suppose. In any case I'll still be first to tell anyone that what they do and what we do here are two completely different games.