What's rules do you follow to keep the discipline in check?

F

ftrexx1

Hello!
I writing here to get some good advices from you guys about how to work on my discipline in trading.
I have been trading mostly NQ/MNQ for almost three years as a part time fun t it is getting serious. After the first 1.5 of constant losses, I would say that I reached the break-even! During the last 6 months, after switching from NQ to MNQ, I am profitable almost every day. I average $450ish, some day up $25, some other like today it was a nice $1100. The problem is that once in a while, i have some really bad day where I loose the control, I do rage trading, chasing the price and basically give away what I have gained in the previous 10/15 days (that's why I reached the break even). It is really annoying!
Do you guys follow some specific rules to be disciplined in your daily routine?
 
If your system can allow it, set an alert at around where you would like to enter the trade. Then, trade based purely on alerts. No alert means no trading. Thus, you'll only be able to trade 'correct' setups.

Another is a mindset trick. Let's say you lost money and want to revenge trade. Rather than trying to make it back the same day, say "I'm trying out a different strategy, which is try again tomorrow rather than today." Shut it off and have a clear head the next day. Expect that you'll miss trades that same day. Indeed, expect to lose money regardless, but because it is expected, it won't hurt. "I make money on a weekly basis, not daily- these losses don't mean anything."

Also, have a daily loss limit. So when you do lose money, it's not "I lost money, gotta get it all back!" but rather "This loss is well within expected range, just as predicted. Because my system makes money, I'll make more later."

Keep in mind, your losses are not just what the system makes, but the 'human error' components as well; seek to reduce that portion by telling yourself you want purely system outcomes, not human outcomes. As you stick to these rules, it becomes almost a Pavlovian response- green days beget more green days, red days beget more red. But you will not be able to get that initial stimulus if you don't change the behavior in the first place.

What I described is my personal change, because I had these same problems. Best of luck.
 
Thanks for your reply! Really appreciated.
My trading is based on price action and levels, I have learned to wait for the right set up but I was never able to define a specific set of rules and alerts. That's the reason why some days I loose control and I try to take every poor set up I see. The daily limit loss is definitely a good idea if the broker allows to set it up, otherwise I know that I will follow the limit rule 9 time out of 10 and then it will be a disaster! IB would never consider that!
Anyway, thanks again for your post!
 
stockpredictor said:
If your system can allow it, set an alert at around where you would like to enter the trade. Then, trade based purely on alerts. No alert means no trading. Thus, you'll only be able to trade 'correct' setups.

Another is a mindset trick. Let's say you lost money and want to revenge trade. Rather than trying to make it back the same day, say "I'm trying out a different strategy, which is try again tomorrow rather than today." Shut it off and have a clear head the next day. Expect that you'll miss trades that same day. Indeed, expect to lose money regardless, but because it is expected, it won't hurt. "I make money on a weekly basis, not daily- these losses don't mean anything."

Also, have a daily loss limit. So when you do lose money, it's not "I lost money, gotta get it all back!" but rather "This loss is well within expected range, just as predicted. Because my system makes money, I'll make more later."

Keep in mind, your losses are not just what the system makes, but the 'human error' components as well; seek to reduce that portion by telling yourself you want purely system outcomes, not human outcomes. As you stick to these rules, it becomes almost a Pavlovian response- green days beget more green days, red days beget more red. But you will not be able to get that initial stimulus if you don't change the behavior in the first place.

What I described is my personal change, because I had these same problems. Best of luck.
More...

Very nice read. Revenge trade is never the answer if you are making the losses but it is always a good reminder that you will try to improve the next time you trade with clear mind, rather than trading again after that losses
 
ftrexx1 said:
Hello!
I writing here to get some good advices from you guys about how to work on my discipline in trading.
I have been trading mostly NQ/MNQ for almost three years as a part time fun t it is getting serious. After the first 1.5 of constant losses, I would say that I reached the break-even! During the last 6 months, after switching from NQ to MNQ, I am profitable almost every day. I average $450ish, some day up $25, some other like today it was a nice $1100. The problem is that once in a while, i have some really bad day where I loose the control, I do rage trading, chasing the price and basically give away what I have gained in the previous 10/15 days (that's why I reached the break even). It is really annoying!
Do you guys follow some specific rules to be disciplined in your daily routine?
More...

That’s why they say trading is like flying an airplane. IMO this is almost everyone’s problem that trades a discretionary style.
 
As said we all have this issue, I find keeping my losses small enough not to care, with profits 3xs average loss, I just don't bet into that gambling it all mindset, where the market turns and runs beyond your entry just after it margin calls you lol.

More scalpy!
 
Stop thinking about dollars per day and start thinking about % profit per month.

On the tactical level, adapt your trading plans so that you are under-exposed or even stay out on unfavourable days and focus your efforts on the most productive days.

Focus on improving your winners rather than eliminating your losers.
 
Get another source of income so that you can view this gig dispassionately. When you encounter losses, zoom out and look at your monthly pnl which hopefully is positive. Then you condition yourself to understand that losses are a part of the game unless you are HFT.
Also never trade too much size when your edge is tiny
 
ftrexx1 said:
Hello!
I writing here to get some good advices from you guys about how to work on my discipline in trading.
I have been trading mostly NQ/MNQ for almost three years as a part time fun t it is getting serious. After the first 1.5 of constant losses, I would say that I reached the break-even! During the last 6 months, after switching from NQ to MNQ, I am profitable almost every day. I average $450ish, some day up $25, some other like today it was a nice $1100. The problem is that once in a while, i have some really bad day where I loose the control, I do rage trading, chasing the price and basically give away what I have gained in the previous 10/15 days (that's why I reached the break even). It is really annoying!
Do you guys follow some specific rules to be disciplined in your daily routine?
More...

as a descretionary trader for the last 20 years, I have come to the conclusion that the best way to succeed isn’t to set up rules. After all it’s easy to break those rules with a flippant “just this once and never again,” but rather to understand your emotional state. Like a human soul floating over its corpse, if you can step outside of yourself and understand that you are feeling angry or scared (such that you are now revenge trading) you can react appropriately. Appropriately might be to shut it down. Appropriately might be to double down and go bigger. Your emotions can become a source of information if you can step back and study them.

it takes practice. I realized this maybe 10 years ago and have been studying it ever since. Every year I get better and better at it - and I fall into fewer and fewer traps.
 
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