So how did the day go. Well, I was seeing the market excellent. I was closing losing trades quickly, but still struggled with my winners. I did do better with managing my winners, as I actually added to a winning trade which was the right thing to do even though I got stopped out at breakeven. However, I did at least three trades that were excellent trades but I either got out too early or reduced my risk to breakeven +1 (Yea, that makes you feel good but always the incorrect thing to do) Any of those trades would have hit my default profit target and then some. All I had to do was believe in it...
Analyzing the winner trades more, I realize I get too attached to the outcome. I want to be right. I want to be a winner. So it is like a part of my self worth is tied into whether this trade is successful or not, and if I just close it now... I am successful! Rather than asking myself what is the correct thing to do here, I get all fired up to just close it out.
Summary : All of this, the last 13 days, are excellent road signs directing me where I need to go. Thanks to everyone who is following this, and for your support!
You quoted Rande Howell earlier in this journal and I have some of his stuff in my trading journal that might be helpful for you (underlining is mine):
Trading “Not to Lose”, Rather Than Trading With an Edge
When Steve began to examine beliefs that he brought into trading, he discovered he carried more emotional baggage than he initially thought. And, in his mindlessness, these deeply held beliefs directed what his rational mind saw. His hard-nosed approach to price and avoidance of loss, under close scrutiny, was not the product of rational, impartial problem solving. It was fear masquerading as reason.
What Steve discovered was that he had been using “rationally thinking” as a way of avoiding his discomfort that trading forced into the conscious mind.
Uncertainty and loss had become associated with one another in Steve’s brain/mind – his perceptual map. He carried this fear of loss in the face of uncertainty as self limiting belief now. But it was beneath the surface. It was like a submarine, beneath the surface, torpedoing a ship on the surface. Fear was the submarine. Rational was the ship on the surface. His trading was the casualty.
When he traded, he triggered to this perceptual map that had become a self-fulfilling prophesy.
The truth, beneath his rational exterior, was that he believed that the uncertainty of the markets would lead to loss if he were not very careful. Out of this deeply held and unconscious, fear-based belief, he created a rational cover up to avoid the potential for loss. By never getting the price he wanted, he avoided the fear of uncertainty that kept blowing up this trading plan.
With his rational mind doing the bidding of his fear-based beliefs, he avoided the potential for loss in his trading.
There was nothing wrong with his trading plan, he discovered. The limitation to his trading was based on the rules of uncertainty and loss he had learned as he grew up in a family that experienced terrible financial losses in his formative years. These years had been tough on the family. In the face of survival, they had learned the hard way to avoid uncertainty and to only risk when you could not lose.
This way of seeing the world (that the world is a dangerous place and you’d better be careful) became the hidden assumption that guided Steve’s development of risk management. And in his profession prior to trading, as a corporate comptroller, this perceptual map worked well. Steve did not see his perspective as a personal bias though; he saw it “as the way it is”. This is because it had become a familiar pattern and was pushed into the background of his awareness.
The very skill set that gave Steve an “edge” in corporate finance had become a liability in trading. He had developed a habit of trading “not to lose”, rather than a mindset of accepting and managing the risk of probabilities that trading demands
Steve came to recognize that it was not his trading plan that needed to change – it was him. This is not to say that his trading plan does not need to evolve, along with him, as he moves deeper into his journey of trading. What Steve came to understand was that he is an inseparable element from his trading. Each element – from platform to methodology to personal psychology – has to be woven together with care to create successful trading.
And without a close examination of the beliefs in which his psychology is rooted, he was missing the access to a key element to successful trading. He fell into the deception that he was rational and that “rational” was normal – even superior. It felt emotionless, which he had been taught was how a trader needed to trade. This was also a stumbling block to his growth as a trader. What he discovered was that “rational” is an emotional state among other emotional states. And that he could hide his discomfort behind the façade of “being emotionless” that a rational emotional state provides.
Rational became a defense that allowed him to avoid looking deeper into himself. After closer inspection he discovered that a deeply rooted fear of loss had caused him to stay out of trades. Demanding a price that the market was not willing to give became a way for him to avoid his fear that he might lose. And with his logic and rational thinking captured by this fear, he produced a trading plan of elaborate criterion that looked good and keep him out of trades. And because it was so familiar to him, he never saw the self limiting beliefs operating within him.
Mindfulness as Part of a Psychological Trading Plan
You have just read about a trader wakening up from his mindlessness. He was so absorbed by his logic that he could not see that it was blinding him to the core problem. It kept him focused on the surface of the problem. He saw symptoms of the deeper problem, but the symptoms so pre-occupied him that he thought the symptoms were the problem. He was lost in his direction, but making good time.
Questions for Developing Your Mindfulness:
(1) If you take a look at the symptoms of your trading, what do you discover?
(2) What is the consistent behavioral performance that keeps repeating itself?
Then let’s go a little deeper.
(3) What kind of game plan seems to be in place?
For the trader in the example above, for instance, the game plan was “not to lose”. His game plan did not include managing the risk of uncertainty so that probability was on his side. He kept telling himself that in his self deception he was trading to win, but his behavioral performances over time told a different story. His logic actually covered up the deeper self-limiting belief that was at the core of his lackluster trading performance. The second part of his game plan was to hide from his fear, and he accomplished that by staying stuck in a kind of “logical thinking” that produces merely surface evaluation – projecting the problem outside of the self – rather than a mindful attitude that looks for the beliefs beneath the performance.
(4) Based on your trading performances, not on your rhetoric, what beliefs actually drive your trading?
No one is going to be looking at your answers to these questions. The questions are designed to help you discover the current psychological organization of self that trades your platform and methodology. Becoming mindful of them is a major step in changing them into more effective beliefs that open up the possibility of peak performance trading.
As long as hidden beliefs stay out of sight, they are out of mind. But, they still influence your trading performance. You are simply mindless of (i.e. blind to) their influence much like a horse with blinders on never sees the green grass on each side of the path. The blinders become the “tunnel vision” that limits what the horse (or the trader) sees and can act upon. Developing this kind of mindfulness is a major element in the evolution of a trader. Without its development, you stay stuck in the pattern of seeking answers “out there”. With it, the trader becomes aware of the tunnel vision that has blinded his development. Blinders off, a new vision of trading emerges where platform, methodology, and personal psychology coalesce into a dynamic new possibility of peak performance trading.
That was a joke! Seriously, people from rigid families (like myself) tend to demand perfection from themselves and that is a big problem in trading. Your problem is very common, you refuse to loose and you confuse losing a trade as being a loser, believe it or not!