Hi Folks, I am looking to hear and learn more about your mental preparation portion when it comes to trading. - How to stay focus with all the noise and ideas out there for a beginner? - Ways of keeping emotions in check and balance regardless of winning or losing. - What to do when you feel lost in a strategy or setup is not coming up in a market? - Handling mention portion (doubts and possibilities) when entering a trade, monitoring a trade, and exiting a trade? Thanks so much.
1: try finding a method that kinda makes sense to you 2: trade small untill you are very confident 3: sit on your hands 4: papertrade a lot ...
==- How to stay focus with all the noise and ideas out there for a beginner?== as a beginner one have to admit he knows nothing, and what he is doing - learning on his own mistakes or mistakes of others if one can apply them to his own situation so all the trades on paper (since u know nothing), not the real money so what to focus on? u have to focus on how your ideas are playing out there is no noise in the market, market telling something maybe what seems irrelevant to you another ideas cumming to mind while you in the trade? remember them analyze them, etc etc ===Ways of keeping emotions in check and balance regardless of winning or losing.== if you trade on paper you have nothing to loose (just time)... analyze your emotions , see whats bothering u, ask yourself why you do not have to keep them in check for now , u have to let them payout emotionless trader (u r not trader, just wannabe) is the result of knowledge and experience, u do not have neither so do not kill yourself: be emotional for now ==What to do when you feel lost in a strategy or setup is not coming up in a market?== keep working on it at the same time one has to be realistic in his expectations how is that? its like old Russian proverb: one can not f@ck all women, one can not make all money, but one has to strive for that === Handling mention portion (doubts and possibilities) when entering a trade, monitoring a trade, and exiting a trade?=== u not monitoring your trade, you monitoring your method and yourself u will see the areas where method does not work, or not working as expected, or the periods of time for which u have no method at all - you have to develop it u will see where and when u pee in the pants, where u run from your own rules, where fear masked as intuition (u do not have intuition, since it comes only with knowledge and experience) takes over... it a long road (not 2 years like someone advise in another thread), without shortcuts unfortunately be prepared to put your life on the line not jut two years, be prepared to be called an idiot, be prepared that no one will understand why u doing this all our life is gambling and this is one of its purest form
All of that insecurity stems from your trading game plan or strategy. If you don't have one, or a shitty one,...then naturally you will experience those feelings Experience comes to naturally intuition and confidence. -- there are generally no shortcuts. Trading (successfully) is kind of like obtaining a black belt in karate, to make an analogy. ...and even then, that's still no guarantee.
Much of the "mental" preparation, emotional / behavioral biases can be alleviated by using evidence based processes (preferably low turnover), with high historical confidence of successful outcomes. Add to this, low turnover, pre-defined transaction dates throughout the year ( versus randomly generated - although SOME randomly generated signals are acceptable as long as they don't enslave you to the business of trading / investing ) on which one can build their "lifestyle" around. Not using leverage also improves the quality of the experience. James Director, Quantitative research XXX Boulder, CO
Hand written (no computer generated nonsense) trading plan on a board you can easily see. Before every trade make sure you check off each criteria you've set for yourself. Every time you want to make a change, yes, rewrite. In time it will become second nature, and you'll thank yourself down the road.
This is not a technical analysis discussion. It's a psychology discussion involving the mental aspects of trading. You can ask the moderator to move your discussion from the TA section to the Psychology section @ http://www.elitetrader.com/et/index.php?forums/psychology.35/ There's a few decent books out there on these topics by Dr. Ruth Roosevelt...she's a trader psychologist. You should also read the book by Mark Douglas called The Disciplined Trader. I also recommend you read as much as possible about "Behavior Finance" involving how the mind behaves in situations involving "money". Also, I highly recommend you trade in person with another trader in your local area and you'll see the difference in the impact and merits of these types of "mental aspects" of trading has between talking to someone online that's anonymous versus talking to someone about the exact same thing in person. Here's a big hint...backtest your trading plan and then simulate your trading plan prior to any real money trading. It will help a lot with your emotions in certain real money trading situations. The advice about backtesting has already been given to you by other members. Therefore, use the remainder of this week to do such and do not take a single trade until you do your backtesting because your questions so far at this forum...you're not ready for any real money trading.
Mark Douglas is the basic reference for your questions. His last book and some of his videos (on YouTube) are available. Your specific questions here remind me of his exercise – one version of it is in chapter 16 of his last book. He asks you to choose a market, pick an edge with precise entries and exits. Sim trade it 25 times. When you get the results you want, switch to live. He describes how to do this in detail. The thing is, I did this several times over the years but the results were not that helpful. Because I didn’t really have crystal clear precise entries and exits – even though I thought I did at the time. Your questions remind me of those times. One exercise to clarify is to make a flow chart of the decisions. Aim for: “If… Then…” as much as possible. The basic levels of your flow chart could be: Prep for entry Wait for entry If XYZ signal then an aggressive entry is… a conservative entry is… You now have an entry It works, GoTo Trade management It fails, GoTo a series of choices about re-entering, reversing, or stop trading. If at no point you get a win, then go back to “wait for an entry” —or on to ‘trade management’ if you get a win. If it is working: Trade Management strategy. There are several choices here: scalping, “always in” (perhaps following the swings), setting a target and leaving it, and/or adding on or taking off lots. Whichever choice you make at the trade management strategy level, there is a corresponding choice to make about managing your stop in a winning (so far) trade. Do you leave it, move it to break even, trail it, set it at 50% of a run, or whatever? And at any point in there your stop could be hit, and then the flow chart takes you back to “wait for entry”. IF your trade continues to whatever target or signal would cause you to get out with profits or take profits and reverse… there are choices of what that signal is. And do you go the full distance or consider taking profits at 90%? If it almost hits your target but retraces and actually changes direction, at what point do you take profits or do you let it go back to break even or your original stop loss? At what point do you say that you are done for the day, and at what point after a win do you chose to go back and wait for another entry? ………….To say the above another way: ………..Prep for Entry (list steps) ………………Wait for Entry (list concepts “Let it come to you” etc) ……….ENTRY SIGNALS: Trend signals; Support/Resistance signals, Volatility signals, etc. Be specific. …and an aggressive and conservative entry for each signal with it written WHY to take which “if… then…” ….Initial stop management (describe in detail for each type of signal) The entry works Goto trade management The entry fails Goto Re-entry (perhaps you take 2 entries in one direction, if the 2nd fails… you might have a rule to reverse directions). IF the reversal fails, THEN stop trading. GoTo wait… If you have a win, GoTo trade management. Whatever your rules, describe what you will do. ………..Trade management. For example: IF volatility is low and it is making a “type of trading day” you recognize (perhaps making a stair-step pattern or some pattern of legs or swings), or the DOM is doing something, THEN you use XYZ strategy. IF instead it is a volatile time (like the open or an econ report) THEN you might… set a stop and target and leave it (or whatever rule makes sense to you) – or even exit any positions you have. IF ABC conditions occur (like your aggressive entry worked), THEN you will add-on and average up -- otherwise, forget it. What conditions alert you to manage your positions in what ways? ……….and with each of these strategies there is a corresponding way of managing your stop while in a winning trade. And a reason why. ….And then we get to the level of taking profits, and why, and the choices, and so on. @@@@@@@@@ A flow chart like this has the potential to clarify your thinking. It might also reveal what you are actually doing or not doing while you trade. If you use it while trading you might discover you are not taking the steps you thought you were. There may be a point where your thoughts become confused or you just stop trading. Once you see these things, you can do something about it. You might look at all the decisions you are dealing with and realize it is too much, or needs some filters. You might find ways to simplify what you are doing and thinking. Mark D said: “Precise entries and exits” – “If… Then…” A FLOW CHART IS ONE WAY TO DEAL with the psychological part of trading. The MENTAL PREPARATION. It is one way to be able to paper trade and live trade pretty much the same way – another thing Mark Douglas talks about. If as you go along you find a difference in the results of your live trading and sim trading… you need to figure out why, because that difference is all between your ears. For some people, a flow chart might help. Won’t work for everyone. Depends on how you learn, as well as how much work you are willing to do.
I have often thought about mental preparedness especially for young trader. Growing up in private grade school, they believed in Capital Punishment, you do anything wrong, you get switched on your rear end, you better believe you learned not to do whatever again. So after you have spend months back testing, have your Trading Plan as best you can make it, the hardest part is yet to come, trading the Trading Plan exactly as you written it. I think I have developed a very good way of a trader to do that exactly, have your wife or GF sit next to you, have two wires attached to your upper thighs and attached to huge button in front of wife or GF and any time you mess up.................won't be long till you are taking the right trades, especially if the wife been going to work each day for past year you been back testing, I guarantee you, she going to be checking the wires on the family petssss each day to make sure that works. Gerbals ten for $5 bucks, how can anyone pass that up.