Working on Consistent Profitability

NoDoji · Feb 21, 2011

Quote from tlow:

What happens when one trusts him/herself and their own actions, but then does completely the opposite?

This sentence defines your disconnect.

You DO trust yourself and your own actions. You're not doing the opposite of what you trust; you're doing exactly what you trust yourself to do, over and over again.

What you do NOT trust is your ability to recognize a valid setup, put on the trade when signaled, and hold the position until a pre-planned stop or target is price is reached, and repeat this process throughout each trading day.

Once you define your edge, and the rules for entering trades and managing them, and then find yourself unable to act appropriately despite your best efforts, you can either automate your trading or hire someone to trade according to your rules and pay him/her an hourly wage.

oraclewizard77 · Feb 21, 2011

I agree with this. I still will sometimes do the wrong thing. For example, I realized that the market would be closed today, so decided to trade Euro last night even though I already said I was not going to take another trade.

I shorted EURO on indicator pointing down with red candles, but did not take into account green bullish signal on special EMA 20 line indicator. Also, remember Al's price theory on a red bar with a tail indicated buying pressure. So I should have just set the trade to get me out at BE. Also, although I had a small stop, I also moved the stop back 1 tick as price approached rather than just leaving it alone. Of course I got stopped out.

However, at this time CL did not move, I looked at Euro stopping me out as bullish for CL, and although without charts, I bought CL $ 1 higher than I previously went long it. This may have been over trading, but at least I took a bigger scalp profit on it than my loss on Euro.

So yes, we all make mistakes, but at least I did not average into the losing Euro trade as it went against me. Also, I am starting to agree with NoDoji that trying for a higher win amount for most of my trades would be a better idea especially considering when I talked to her, we both got in at some of the same entries, but she is able to make more profit off of them then me.

Quote from NoDoji:

This sentence defines your disconnect.

You DO trust yourself and your own actions. You're not doing the opposite of what you trust; you're doing exactly what you trust yourself to do, over and over again.

What you do NOT trust is your ability to recognize a valid setup, put on the trade when signaled, and hold the position until a pre-planned stop or target is price is reached, and repeat this process throughout each trading day.

Once you define your edge, and the rules for entering trades and managing them, and then find yourself unable to act appropriately despite your best efforts, you can either automate your trading or hire someone to trade according to your rules and pay him/her an hourly wage.

tlow · Feb 21, 2011

Quote from NoDoji:

You DO trust yourself and your own actions. You're not doing the opposite of what you trust; you're doing exactly what you trust yourself to do, over and over again.

I don't want to go to in depth here b/c Im not a psychiatrist/psychologist nor have any schooling of the sort.

I completely understand what you are saying, but I feel you are looking at it from a rational point of view. From what I understand, one's "level" of trust, decision making whatever, can't be defined as black and white during irrational periods. Your brain blocks the ability to make a rational "trusted" decision because it is acting on impulse, anxiety, fear, whatever. In other words, one can't follow their "trust" b/c at that moment the brain isn't allowing it to happen.

Anyway, like I said, I don't want to go to far into this because I dont have the education to really discuss this any further. My point is more to figure out how to break out of an irrational line of thinking and I don't believe it has to do with the overall edge of my system or trust in myself...I believe this discussion is why so many traders struggle with the emotions...its not easy to truly identify a root cause and it probably varies for almost every trader.

EDIT: I just read oracle's post...everything you talk about is completely rational...mistakes are rational, seeing something wrong is rational, missing out on a trade because you didn't quite see the full picture is rational...what if you did all the things you just spoke of not doing and didn't even realized it had happened until after the fact? That's irrational.

oraclewizard77 · Feb 21, 2011

You need to identify the emotions you are feeling before and during a trade.

For example, are you stressed, excited, fearful, greedy, impatient, angry. All of these can lead to making emotional or irrational bases decisions rather than rational ones.

You need to think and or write down how am I feeling before I place the trade. If you are feeling emotional, even though you believe you have a good setup, don't place the trade till you are calm.

I have suggested ways to decrease emotions during a trade, which is not watch the trade once you put it on until after its done.

Other ways to help is to decrease the number of times you trade. Maybe, you only trade real money 2 days per week to start and trade sim the rest of the time. See what the difference is in your results. Also, maybe you trade real money only 1 time during the day, then switch back to sim. Or take the 1st trade of the day as a sim to see if you are making rational trading decisions before taking the next and final trade with real money.

You need to work back to a position where you are feeling calm and in control from being stressed and irrational.

You have correctly identified that you are stressed and irrational right now and therefore can't think clearly enough to follow your trading plan which may include a max $ loss for the day.

You don't understand statistics in that lets assume you have a 50% chance of being right on a coin flip, there is still a chance of tails happening 7 times in a row.

Quote from tlow:

I don't want to go to in depth here b/c Im not a psychiatrist/psychologist nor have any schooling of the sort.

I completely understand what you are saying, but I feel you are looking at it from a rational point of view. From what I understand, one's "level" of trust, decision making whatever, can't be defined as black and white during irrational periods. Your brain blocks the ability to make a rational "trusted" decision because it is acting on impulse, anxiety, fear, whatever. In other words, one can't follow their "trust" b/c at that moment the brain isn't allowing it to happen.

Anyway, like I said, I don't want to go to far into this because I dont have the education to really discuss this any further. My point is more to figure out how to break out of an irrational line of thinking and I don't believe it has to do with the overall edge of my system or trust in myself...I believe this discussion is why so many traders struggle with the emotions...its not easy to truly identify a root cause and it probably varies for almost every trader.

EDIT: I just read oracle's post...everything you talk about is completely rational...mistakes are rational, seeing something wrong is rational, missing out on a trade because you didn't quite see the full picture is rational...what if you did all the things you just spoke of not doing and didn't even realized it had happened until after the fact? That's irrational.

volente_00 · Feb 21, 2011

Tlow,

Everything you need to battle the demons can be found here

http://prismintraday.com/readings/Disciplined_Trader.pdf

The other part has to come from within.

This game is about taking your shot with a predefined risk with probabilities on your side.

How you find the higher probabilites is a journey you will have to figure out through trial and error.

The hardest part in trading to me is finding the balance between taking profit and letting a winner run.

What helped me greatly was semi automating trades via bracket orders and then walking away if I need be and letting the trade run its course.

bigsnack · Feb 21, 2011

Tlow,

Again I think NoD hit it on the mark. It really sounds like you are suffering from a battle of your ego within.

It is easier to not follow your plan and be wrong, allowing your ego to say "well I would have been fine had I just followed my plan". As opposed to following a plan you have so meticulously plotted, and then potentially being wrong, that will lead to true damage of the ego.

It is what I find so amazing about trading. So far in my life, trading is the ultimate battle of self. It is this that keeps me going day after day, not the money.

ammo · Feb 21, 2011

you can't think about personal stuff,it's like driving, if you take your eyes off the road........bam......if you think you can ,you can, if you think you can't you can't..Henry Ford....why do you think you can't...what lie are you telling yourself...toss it out...focus ... i can and i will and now i am .... write it on the blackboard a 1000 times, make it a chant,make it a lifestyle...it' really that simple...over thinking it or constantly thinking it over is just hanging on to that lie

tlow · Feb 22, 2011

So Im back trading live...short break I know

I really debated last night on how I wanted to handle the next couple days/weeks if Im really going to give day trading one last shot, so to speak. Didn't know if I should SIM, trade live, not do anything for a bit, read some books...

Anyway, I decided kinda late last night that I would trade live b/c I wanted to deal with the residual anxiety and emotions that Im carrying over from last week. I figured they may lay dormant for awhile if I SIM but they will reappear so Im trying to take the challenge of battling my emotions head on.

As I said earlier, I've changed up my routine a bit and have a bit more work to do and stuff to write down both before, during, and after the day so that is going to take some getting used. It actually caused me to miss a couple trades in the morning, which got me a bit frustrated, but Im chalking all this up as to time when i need to control my emotions.

I went into the day rather casually...I wasn't worried about being up right when the market opened, took a leisurely breakfast, and then took my time planning out the day. I wanted to carry that attitude thru the day since I had such a terrible end of the week last week. And then also, takes trades that were really safe, not really be too cute or fancy.

The day was actually rather slow trading for me since I was being so conservative. My 1 really good trade I just exited way to early and didn't let it run so I missed out on 50-60 ticks b/c it headed straight down after that. I can't fault myself too much however, right around the 30 tick area where I exited there was some minor support so I had planned out to exit if it didn't blast thru that area with momentum...instead it wiggled a bit and then dropped. On top of that it was my first trade since last week and it was a bit nerve racking just trading in general. I guess this is where my "trust" comes into play

Anyway, even though I came out positive on the day, the trading day wasn't great. it was more a day of being aware of how I was feeling and my emotions through out the day. Im still feeling a bit anxious both about trading in general and my long term outlooks. i don't mind the work at all, but I know if I get complacent at all with anything it will start to show up rather quickly in my emotional state.

Stats on the day:

Total Trades: 4
Winners: 1
Losers: 1
B/E: 2
Avg. Win: 30
Avg. Loss: -8
Total Ticks: 24
Total Win Rate: 25%

NoD, you mentioned the B/E stuff a couple posts ago. I can't really say I did or did not do them b/c pretty much after it was discussed is when I went off my rocker. I really wanted to leave the stops today and not move to B/E (which would've been the right move) however, it is what I have grown accustomed and comfortable to. I feel like its not going to take much to drive me away from trading right now and I've realized I dont get nearly upset at a B/E as i do 2-3 stop outs in a row...even if those B/E would've turned out profitable. I think if I get back into the swing of things and doing ok, Im going to mess around and be consistent about that on the SIM. But I feel like that is a ways away right now.

Redneck · Feb 22, 2011

Quote from Redneck:

That to me says stress

There was a time whenâ¦

I knew what to do, but couldnât do it..., or I would do the exact opposite

But always after the fact it was all so crystal clear

Drove me nuts... and I lost faith in my ability to always do the right thing...

I, to this day, donât know how stress affects our thinking / actionsâ¦ But I know it does in a very adverse way

RN

Tlow

I will say this once more â it is stress that is affecting your actions/ judgment

Market rewards that which is hard

Does it bother you to sit and watch price jiggle back and forth, near where you enteredâ¦

Does it bother you to see price come with a cent or two of your stopâ¦

Does it bother you to sit and watch price go in your favor (meaning you want so badly to take profit, instead of allowing it to hit your target)

It is like lactose building in muscles as we exercise, then effects our physical performanceâ¦ except this builds up and impairs our judgment / actions

It is why all these goobers surf porn while they tradeâ¦ so they can diddle themselves and release the tension (and I am not suggesting you take up diddlingâ¦ I am suggesting you find a way to release the tension build up)

:eek:

Something to ponder Sir - seriously

RN

BCE · Feb 22, 2011

Quote from tlow:

So Im back trading live...short break I know I really debated last night on how I wanted to handle the next couple days/weeks if Im really going to give day trading one last shot, so to speak. Didn't know if I should SIM, trade live, not do anything for a bit, read some books...

NoD, you mentioned the B/E stuff a couple posts ago. I can't really say I did or did not do them b/c pretty much after it was discussed is when I went off my rocker. I really wanted to leave the stops today and not move to B/E (which would've been the right move) however, it is what I have grown accustomed and comfortable to. I feel like its not going to take much to drive me away from trading right now and I've realized I dont get nearly upset at a B/E as i do 2-3 stop outs in a row...even if those B/E would've turned out profitable. I think if I get back into the swing of things and doing ok, Im going to mess around and be consistent about that on the SIM. But I feel like that is a ways away right now.

Hi

I mentioned this in my PM to you as a possibility. If you're really worried so much about taking losses and are stuck on trading crude oil, maybe you could trade QM instead. Moves just the same pretty much. QM is the smaller contract. 1 point = $500 instead of CL's 1 point = $1000. QM ticks are each 2.5 cents and $12.50 each. So if you catch a 10 cent move that would equal $50 minus your commission. If you're wrong 10 cents you lose $50 plus the commission instead of $100. To be honest you seem excessively worried about small loses. That's a really difficult and unproductive way to trade. I'm not saying you should ignore losses. Not at all. But you have to give things a little room to move around.

Another thing is CL to my mind is a difficult contract to trade until you know it well like someone like NoDoji does. Maybe you should consider trading something else, like YM maybe, until you're a more experienced trader. Just some thoughts. Only you can determine what's right after weighing our advice and attempts to help you. We wish you well obviously or we wouldn't post in this thread.

One last thing is I still could use some help setting up my ports in NT 7 if you have some time. Thanks.