I have noticed that very often just when a good trade settup emerges - I usually feel uncomfortable, I usually experience a kind of "minor freeze" almost as if I have to force myself to put on the trade. I am looking for every excuse not to put on the trade, when I am about to go for it, and many times I manage to talk myself out of it (especially the really good trades). What pisses me off is that I feel this more regularly than I logically should, the chart is telling me in black and white what to do - but yet I freeze up all too often. Off course I have my good days when this dynamic is not there, but invariably it comes back as strong as ever, as if it that part of me is taking a short rest before coming back at me. Some reasons why I perhaps feel so: Self Sabotage? Too much risk (I risk 2-3% on a trade)? Perfectionist mentality? Control - Bringing my pre-conceived notions of what the settup "should" look like as oppossed to letting it unfold naturally? Performance anxiety (why should I feel so - I know my settups so very very well and I know that they work given the law of large numbers) Unwillingness to feel dissappointment or "rejection" Deep subconcious programming to feel that easy money is bad, I am not worthy yadda, yadda.. I have tried everything: meditation, therapy, self help exercises, read all the major books on this subject (Douglas, Kiev), but still this dynamic comes and goes as if I am still new to this. I'll think positively for a few days, and then a settup comes that I don't take (that works out very well), and I'm back in the old dynamic again. Been trading full time for a year now and perhaps it will never go away and I have to learn to live with it, just having to keep chipping away at it. I think it was Johnny T-Bond that mentioned in a post recently that the descrepancy of my subconcious self image of who I think I am versus who I actually am causes TENSION and perhaps I am going through a clash and cohesion kind of layered psychological re construction. Any ideas on what has worked from traders who have been there?
What is your focus when you are about to enter a trade? I read this rule on the following website http://www.trading-naked.com/library/Phantom_of_the _Pits.pdf IN A LOSING GAME SUCH AS TRADING, WE SHALL START AGAINST THE MAJORITY AND ASSUME WE ARE WRONG UNTIL PROVEN CORRECT!(We do not assume we are correct until proven wrong.) POSITIONS ESTABLISHED MUST BE REDUCED AND REMOVED UNTIL OR UNLESS THE MARKET PROVES THE POSITION CORRECT!(we allow the market to verify correct positions.) This statement should become the focus for all of your future trades. If you assume every trade is a loser and prepare for possible exit then hopefully your anxiety will be relieved and you will be able to pull the trigger. Also I have a couple of questions for you. What do you trade? How many trades do you make each day? What is your trading style? Do you pay retail commissions or do you own or lease a seat at an exchange? I am a scalper/day trader. I trade the ER2 contract at the CME. I own a GEM membership thus my commissions are very cheap. I make between 50-150 trades a day. My winning % is between 50-75% on normal days. Because I am an active trader I take loses quickly. I read a lot of posts on this board about people who make only a couple of trades a day. I could never trade this way. I would have a tough time pulling the trigger if I only made a couple of trades a day. I would also have a tough time exiting trades because I would be worried that I was exiting to soon/etc. My strategy for success is simple. I MUST exit losers quickly. If I do this then my average winner will be greater than my average loser. Because on normal day my winning % is greater than 50% I am usually profitable. What is your game plan? Is it simple? Can your game plan produce consistent profits?
Trading in the Zone by Mark Douglas That is a suggested reading that changed the way I traded. I too was afraid to pull the trigger.... That book changed me, it doesn't matter how it did it, but whatever it did, or whatever it made me realize, it did it. So there ya go.
Also I have a couple of questions for you. What do you trade? Currencies How many trades do you make each day? 1-4 trades a day What is your trading style? Look for pullbacks in a trend or reversals. I trade of the one hour charts - 5 minute and second charts to fine tune. Indicator and price action based. Do you pay retail commissions or do you own or lease a seat at an exchange? Retail. What is your game plan? Risk return average to be in excess of 5:1. Win/loss/BE - 65-20-15 Is it simple? Very, I have seen alot of stuff but what I look at these days is nice and simple and it works for me. Can your game plan produce consistent profits? Yes. Usually one good trade in the asian session and then 1 or two good trades in the european/us session.
Now that I think about it - I am usually overly worried that this trade is going to be a loss maker. Even though I should be feeling positive because all the waiting I have been doing has come to a textbook settup - yet I still feel difficulty in pulling the trigger - because i think about the loss potential too much. Rent, living expences etc. are not a problem either - so I don't have external pressures to force a trade. That is the problem though - I DO assume that it will be a loser and that is what stops me from putting on the trade. I guess if I looked at it another way - ie I am throwing away this money - then that may work...but is that mindest constructive? i dont want to be overtrading either.
Sounds like you got it made my man, check out the Mark Douglas book, study up on trader psychology. You already know your system works, you have to find a way to make yourself confident in your system. For example.... I have rules set, and I remember when I fail to take a trade, I write that trade down, and for every trade I fail to take, I do have a "punishment" that I do have on myself. For example, I determine what I pay myself by my performance. If I fail to take profitable trades, I chop out money I pay myself as punishment. I also write down every day how many shares I will not exceed, so you should write down your max size, and you should reduce your size until you take all your trades. You have to discipline yourself, to stay disciplined. It's just a few things I do to keep me on track. Open up MS Word, and write down your rules, write down what will happen if you take every trade you know you are supposed to take (reward yourself) and write down what will happen for every trade you fail to take (consequence). Sounds crazy, but trust me, If I say that every trade I fail to take, I say I will take out 25 dollars less (rough equivalent to 1 to 2 trades on my scalps), then you better believe I'm going to try and take them all
Exactly, embrace loosing trades, punishment for trades you fail to take that you know you should/would/could have.
Well said. My dilemma is that I beat myself up for not taking a winning trade although the losses take longer to kick in â usually I donât feel so bad at the time â but I feel shitty the next hour/day
But, your system works, so, just accept the fact that losers are a part of this game, and that your winners will beat your losers. Are you undercapitalized? Trade the smallest size possible until this is not an issue, take every trade no matter what, and follow the rules. Prove to yourself with objectivity that your system will work even with trades that go against you. Just a few more suggestions. You have to show yourself that loosers are okay, and that it's a part of the game. Fear will mess you up. Just think of it this way...... your fear right now, could be causing you to lose a lot more money, if you take all the trades, you get more money. You learn discipline, or if need be, don't think about the money, just challenge yourself to take all the trades, and not worry about the outcome. The Trading in the Zone book will help you with this.