Why oh why can't I stick to my plan ?

[coolweb]

Here is the answer to your problems:


1) Why do I get in trade early?

You are thinking more of making money, then how to protect money.

AkA Greed.


2) How do I solve this?

Think about risk before you think about profits.

For example,

Lets say you are going to WAR with an army in a castle with a moat.

A. Storm the castle yourself and reap all the rewards because you didn't pay for any mercenries.

- More profit, More Risk.

B. Pay merceneries to storm the castle,
Then you waltz in after its stormed, but you have to pay 1/2 to your merceneries, but you lose no men.

- Less profit, Less damage to your men.


Which would you choose?


3) Continuing the fight inside the castle is much more successful then fighting outside the castle.

Traders ask me,
Why don't you enter @ $10.00 , you would have profited $5.00
Instead you entered @ $12.50 , you only profited $2.50

The reason is,

Once you have conquered your enemy, its smooth sailing,
So less risk to enter @ $12.50 ,

High % of being correct @ $12.50

If you want to conquer your enemy yourself, its a riskier, but you gain more.

Low % of being correct @ $10.00 But higher profits.


You need to judge if you want to take the heat and take less profit but live another day to make more trades.

Or do you want to take the heat, take MAX profits, but have a chance to die that day.


Note/Learn/Indicate when the castle has been stormed. Then enter.
Never before, If you care about your capital.


Risk before profits.

 

[bitrend]

Why can't I stick to my plan?

Because of two main reasons, the system is not yet validated and normal psychology reaction. First, if a system was not yet validated how could one can trust or stick to it. Second, nobody want to lose and ridiculously the more one hates to lose one will lose more. One will tempt to do everything to avoid lose including not obey the plan.

In order to validate, a system needs to be rigorously tested. A system can be tested using fake money and once it is validated to be profitable in the long run then chances are great to stick to the plan. The rest is the psychology side but this could be automatically improved since having a solid profitable system is already a good start. A system could be tested using realtime data, not past data. You need to get exposure in realtime in order to train your psychology as well and many other reasons for using realtime tick such as to make sure your system is currently working or not working and train your reaction face to realtime environment such as news, etc.

Obviously, there's a net advantage using real money to build and test a system since one can achieve both parts at the same time but it's too expensive. For the cost reason, let start to build the first part (system) and the second part (psychology) will come with time.

A validated system is a system that will work for the long run. It doesn't matter a system lose on a single trade since you know in the long term that system will win. It's about probability the same way as the 6/49 lottery, the owner (government) doesn't care if lose on a single draw, in the long run they will make big money. Nobody can build a system that will win every single trade. If one attempt to do so then one will come back to the initial state which is at the question mentioned above.

 

[murray t turtle]

Quote from cicsman:

I'm sure this is a pretty common thread with beginners.

My problem is that I plan out my trades but sometimes don't follow the plan with the inevitable result i.e big losses.

An example: I spotted a stock (using candlesticks) that was moving up nicely and approaching a previous gap. I determined that if it filled the gap I would buy into it. Yesterday the stock started moving up and I ignored the plan and took the plunge early, before it filled the gap. The result, it immediately turned around and plummeted resulting in a big loss.

So the $64k question, are there any tried and tested methods which I can use to force myself to stick to my plan ?. Or am I screwed ?. By the way I've read Mark Douglas but I guess his advice didn't work too well for me.

Thanks in advance.

==============
Cicsman
Didnt get much out of Mark Douglas either ;
Dr.VanTharp is more helpful.

Sounds like your plan needs some more research;
if you knew the probabilities wre against you ''early'', you wouldnt do it.

Dont have an ''early'' personality either , some do profitably;
personality does factor in for sure, as thunderdog hinted.

Still like to post market probabilities/trend;
even though if had shorted early [with weekly down trend , which was down early today,]
probably would have gotten slaughtered.

Also figured quick polar bears made some money today;
it can be hard ,but fun business, well researched plan helps more.

Even when not executed as well as we would prefer, still ;
The plans of the diligent-,,,,,Solomon, trader king

 

[kiwi_trader]

It seems the possibility that you do not have faith in your plan (so you override it) has been done almost to death.

I think that this could be one reason but it wasn't mine. Mine was poor impulse control and I would take "better" trades than the plan offered - I still do sometimes. You could look at Brett Steenbarger's site and try to use some of the articles to help http://www.brettsteenbarger.com/articles.htm or you may find that a simple tactic like forcing yourself to write out the:

- current context
- trade trigger
- entry point
- exit strategies

before you can enter the trade (and use something like bracket trader to do stoplimit entries if needed so u dont have to watch the gap close or not close) or place that essential stop order after you fill. I mean right before ... not half an hour before

 

[JMowery1987]

Don't know if Mark Douglas' Trading in the Zone has been brought up.

But this book helped me change my thinking about trading and really did help me, might be an option if not already explored.

 

[FaderTrader]

Just wondering why everyone keeps mentioning Douglas' Trading in the Zone. I found it EXTREMELY trite, repetitive, and basically, a total bore and of very little value if one is looking for a concrete perspective on anything.

His book, The Disciplined Trader, on the other hand is what got me passionate about trading.

 

[Lamont_C]

Quote from FaderTrader:

Just wondering why everyone keeps mentioning Douglas' Trading in the Zone. I found it EXTREMELY trite, repetitive, and basically, a total bore and of very little value if one is looking for a concrete perspective on anything.

Depends on what you need. I also found it excellent.

 

[Grob109]

I parsed my comments in color below.

Quote from Trader666:

LOL! Let me give you my personal opinion about Grob109 and then a concrete suggestion.

LOL..........and I'm not baffled either

Grob109 and his posts epitomize the old saying, "if you can't dazzle them with brilliance, baffle them with B.S." Don't be fooled by his obfuscations. I believe he does it because being opaque and speaking in riddles hides his ignorance and keeps his Grobians (those who don't know better) hungry for more.

Trader666 is reading my stuff as he says and it is opaque and in riddles as he perceive it and he sees the purpose of these black outs and riddles as a way for me to cover my ass because I am an ignorant person among other things. So it turns out he is mistaken and that is part of the learning process he is going through. He has many predecessors and they stretch all the way back into the 50's. His problems are not my problems, however. I do not have any judgments regarding his contributions except to say that they make a nice counterpoint with regard to learning to make money. FYI, that, I have done in spades and now I contribute as a consequence.

Notice he gives no useful suggestions. To say you need to review 15 or so plans and, BTW, don't consider any of less than 100 pages is asinine. Einstein's Annus Mirabilis Papers totaled less than 100 pages!

I stand by my recommendations. I have many reasons for the facets of what I suggest. My preferred dining place in Princeton is the Princeton Inn. I played cops and robbers in the Firestone Library when it was being build (as a guest of the contractors twin children).

Trading isn't rocket science. Here's a simple, concrete suggestion: get a copy of The Original Turtle Trading Rules by Curtis Faith and use it as a shell for your plan. It's about 30 pages long and regardless of what some might say, is a complete methodology that was actually used to successfully pull billions of $ out of the markets. I'm not advocating that you use the Turtle System BTW... just that you use it as a checklist to make sure your plan contains what's essential.

Reviewing an imcomplete plan that does not apply to an individual is is a good collarteral example of what not to do. An individual needs to not squander time and money. cicsman is unemployed and twiddling his fingers as he screws up as a consequence of being way below par in mostly everything. I am in a place where I am in constant contact with people who, to a man, are all making money on a level you haven't conceived of apparently (Turtle talk included) for real people in your world. All of them have the attachment in full and in an edition that is not draft like the attachment (I just pulled it up on this machine instead of going elsewhere).

For those who already have it, look around page 86 of the 128 page handout in which it is contained. The 8 doublings referred to in Part VI and elsewhere begin around page 100 or so.

The turtle's content is eqivalently contained in what would be part VII that I describe with two sentences:

"Products and services is a misnomer for the trading business plan. This section is used to detail out both of the trading paradigms. Think of it as a way of servicing the investment capital. Much of the detailed content (services done by the trader) of this paper may be placed in this section of the business plan."

What you can make of these two sentences is this. I hand out support materials to those with whom I now participate. appendix B is simply an attachment to one of these. this handout was well over 100 pages long. In the two sentences above, I am suggesting that the person using the handout, rewrite and stuff the content into Part VII of the plan.

Trader666, you will place all of the above in this post and attachment into the same place you have put a lot of stuff from a lot of people. Feel free to continue along your path. Obviously what I post is not for you in any way.

You are doing drills are being who you are. You will succeeed in your goals.

I am a different kind of person than you are and you have as a primary effort, and first of all, to salm my comments, so your thing. My primary goal is to pass on to others what was given to me and to do it in a manner that was impressed upon me as I accepted what was given to me.

Don't worry about not understanding anything I post.

I retreived this to get the attachment to stick but it is apparently not possible. See next post.

 

[Grob109]

see attached

 

[NihabaAshi]

Quote from cicsman:

I...My problem is that I plan out my trades but sometimes don't follow the plan with the inevitable result i.e big losses...

So the $64k question, are there any tried and tested methods which I can use to force myself to stick to my plan ?

More often than not...

Discipline problems are related to something occurring in our personal lives and has nothing to do with trading itself.

If you try all the trading related suggestions and the problem still persist...

You may want to spend more time analyzing to determine what in your personal life is causing you trading problems (self sabotage) and then resolve it or start fixing the problem prior to putting on the next trade.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term