When you know it will be a bad day...

[wrbtrader]

Quote from LeeD:

...On more than a couple of occasions I was in a situation when I wasn't in the right state of mind to trade. I didn't have enough sleep, I was anxious about private life, I had a hangover, I felt like a looser because I lost a few card games....

Normally, I shouldn't trade in such a state as I know from experience there is 80% chance of having a big loss against 20% chance of having a moderate profit.

What I notice is I often start and continue trading on such days. First I am getting passionate about performance targets I may have... and I feel obliged to trade.... because I don't think straight hope replaces common sense. After I have a first loss, I run into a bigger loss while trying to recover and trading on pure hope.

Are there any thoughts or ideas or repeatable "mantras" that stop you from trading when you know you shouldn't?

This is a discipline problem and you're ignoring your statistics that show there's a 80% chance your trading day will result as a loser if you start to trade on days when you shouldn't be sitting at the computer.

Here's my solution I've been using +20 years although I'm not applying it perfectly myself but I do apply it regularly in special situations where there's outside influences, distractions that's none trading related that have a great negative impact on my trading result if I trade.

Make appointments or commit yourself to someone or personal task that's none trading related for that particular day to prevent from trading when you know you should not be trading because you're mentally not there as a trader. For example, recently one of my kids had a minor surgery early in the morning before the markets open and the doctor (a friend of the family) said to me the following...

"don't worry...you'll be back home before noon to be able to trade the markets after lunch".

Now, that subliminal or subtle message by the doctor would encourage any trader that lacks discipline to trade. However, I know statistically I have a high probability chance of having a losing trading day and/or extremely stressful trading day when something seriously is occurring within my immediate family (e.g. being up all night with a toddler that had gastro or all day at the hospital with the spouse after she broke her leg in a skiing accident along with knowing she has a low pain tolerance).

What did I do after the doctor made that comment?

I committed myself via telling the grandparents I'll go by their house for a few hours in the afternoon to tell them about the surgery and to help fix some problems they've been having with their computer while the spouse stays at the hospital waiting for me to return with the grandparents around the time the markets close.

The solution of making appointments or commit yourself to someone or personal task that's none trading related removes any possibility of trading when you know you shouldn't be trading and it teaches discipline so that you know what to do when something disturbing happens during your trading day that wasn't expected (e.g. trying to continue trading after your computer crashes a few times).

Have a few kids...you'll have a 1-3 days per month when something crazy is happening that you know your head isn't on straight to be trading that day.

Knowing when not to trade via having statistical proof via your trading results of similar like past events is an edge.

Mark

 

[LeeD]

Quote from Handle123:
You can get with your broker and cut you off at a certain money loss for the day, that will make to trade tighter.

That's certainly a good approach. Alternatively, I can configure the maximum daily loss in the software I am using.

What maximum daily loss compared to the daily goal would you recommend?

Quote from Handle123:
I still trade though when something is eating at me and quit faster for the day once I make my goal instead of trading all day.

I still find trading more of competitive sport than routine but I hope some day to be there.

 

[LeeD]

Quote from _PD_:
While this is a good idea, I prefer to annotate my mistakes, analyze them, and then put them away. If I look at anything more than a couple of times, it's my past successes, not failures.

You have a point! Fixation on disastrous mistakes facilitates negative thinking. This way a trader may never risk another trade... ever

I guess different things work for different people.

 

[LeeD]

Quote from Technician:
when I feel bad about my first trade or regret it, it's usually going to be a bad day.

That's a good rule of thumb. Thanks!

 

[LeeD]

Quote from wrbtrader:
The solution of making appointments or commit yourself to someone or personal task that's none trading related removes any possibility of trading when you know you shouldn't be trading and it teaches discipline so that you know what to do when something disturbing happens during your trading day that wasn't expected (e.g. trying to continue trading after your computer crashes a few times).

Thanks Mark! That's an interesting suggestion. In the worst case I can go to the cinema whenver I think I should be done with trading for the day.

 

[LeeD]

Any other suggestions regarding how to refrain from trading when the conditions are clearly counterproductive?

 

[Handle123]

Watch the DOME, normally in ES on both bid/ask volume are over a thousand at least 4 of the 5 price levels, when this volume dries up to much less than a thousand on each side on the price levels, the "big boys" know something and are getting out of the way for retail to get slaughtered. I cancel orders and stay out till bars return to normal ranges, like today mid lunch.

 

[LeeD]

Quote from Handle123:

Watch the DOME, normally in ES on both bid/ask volume are over a thousand at least 4 of the 5 price levels, when this volume dries up to much less than a thousand on each side on the price levels, the "big boys" know something and are getting out of the way for retail to get slaughtered. I cancel orders and stay out till bars return to normal ranges, like today mid lunch.

This is something totally original. Thanks very much!

 

[LeeD]

Quote from Handle123:

like today mid lunch.

Judging from the price chart nothing out of the ordinary happened. Would I expect to see the volume to drop too? The volume today was exceptionally low between 12:05 AND 13:00 EST...

 

[Big Money]

LeeD,

The only problem is you. I would say you have two issues at work here: common sense and stupidity are what cause you to do this. Let me explain. Common sense should tell you that if you are not at your best or ready to perform to your potential you should know you wouldn’t perform as well as you could. This SHOULD tell you that you should trade smaller or more conservatively if things are not firing on all cylinders on this day. This has been proven to be true in athletics, mental performance and physical performance in addition to it being common sense to any normal, sane person (or should be).

Second. Worse is Stupidity. You are smart enough to actually keep track of your states of mind and track your trades to the extent you know that 80% of the time you will hurt your future earnings potential and lose money and eventually, maybe worse. That is a good thing and something most wouldn’t know about themselves. Then instead of using your research and implement what you know about YOU and not trading, you ignore what you have proven to be true for you and still trade. That is worse than the person who wasn’t smart enough to keep detailed records of their trading performance and just don’t know any better. That is pure stupidity in my book.

If you don’t treat this endeavor as a business, those who do will sooner or later separate you from your money. The odds of long-term success in this business are severely against you in the best of circumstances. Why would you engage in self-destructive behaviors (as many do)? The only logical reason is so they can justify things not working out to themselves by NOT taking responsibility for their actions and telling themselves they didn’t try as hard as they could have and if they did, they would have been successful. Hogwash. Take responsibility. Have the discipline to do what is in your best interest. Period.

Your psychological makeup and your own personal demons are very important (and hardly paid attention to by most) to your trading success because if you can’t solve or manage them, even the best trading plan or setups isn’t going to save you over the long term.

The sooner you take responsibility, the sooner you will move toward long term success. Can you handle the truth, which I am willing to bet you already know on some level?

Good trading

BM