One of the most common characteristics of the beginner is that all he can think about in this situation is that he's going to be stopped out. He fails to understand or even be cognizant of what that stopout means, of what the market is trying to tell him. Thus he fails to take advantage of the trade the market is telling him he ought to take. All he can think about is that the trade he wanted to take didn't work out. By following whitster's advice, placing the stop, then letting it do its job, the trader can observe the action emotionlessly and take advantage of the opportunities being provided rather than sit there and feel frustrated over being stopped out. LC
Besides sex, men like planes and boats. All threee end up being very expensive... unless rented. Thunderdog... well said. The only emotionless person is dead. One might be able to control his emotions, but no one is emotionless.
It's not so much that I'm changing my stops. I have never ever had that problem, since everything I've ever read emphasized on cutting losses. The issue I have has to do with taking profit too early, even before hitting my targets. It's partly due to impatience, and partly due to the tension felt while in an open trade, and I feel relieved when I close and take the profit, only to see the market move further in that direction. Now, because of this, what could've been a phenomenal month turned out to be barely better than break even...
Have you ever tried to become emotionless in anything in life while in a stressful like environment??? My point, most people in stressful careers or stressful personal situations deal better with the situation not by becoming emotionless... Instead, they've learned how to better manage their emotions. Thus, for me, the way I deal with my emotions while trading is the exact same way I deal with my emotions in any other situation in life. Another way to look at it, if your not good in managing your emotions in areas outside of trading... Your probably aren't good at managing your emotions while trading. Therefore, I would first begin by trying to learn how to manage my emotions outside of trading and then when I develop the confidence in my ability to do such... (It's easier to begin with little projects before taking on something big like trading) I would then try to duplicate that management of emotions while trading. To prevent any misunderstandings... Are you saying that you had a specific profit target prior to entry into the trade or during the trade and you exited prior to that profit target being reached??? Regardless, when we as traders recognize that emotions are having an impact on our trading results... We need to document everything about our trading day especially the stuff in our personal lives that's outside of our trading. Documenting: Writing, audio, video and including that with our profit/loss statements. A profit/loss statement without that critical information that tells us about our emotional state is a profit/loss statement that's lost its edge. Mark
Hi Mark, I respectfully disagree, but thank you for the comment. I used to run an export business, and negotiations with vendors/buyers always failed for the party who gets emotional. It was all about staying emotionless and logical to win. That took a lot of experience and time to manage. I guess it'll just take experience with trading too; figured there might of been something to speed up the process, but looks like that's just wishful thinking now. And yeah, I always have a target before taking positions, and I still take profit before targets are hit about half the time.
Before entering every trade, you need an entry, exit and uncle point aka stop loss. It took me a long time to realize this and I got my ass whipped constantly without having the 3 set in mind before the trade was on. As you enter the trade, ENTER THE STOP LOSS RIGHT THEN ! Then just sit back and let the trade work or fail. If you have to, unhook the mouse so you can't jack with the stop. By always having these 3 key points, you take all of the emotion out of trading. The trade can only make indefinite money or lose a FIXED AMOUNT.
Money and one's financial well being is one of the most emotional things in life, so there is no way to be "emotionless" about it. But, you can minimize the stress with logic and discipline. A. Analyze your play and take a position. B. If you're disciplined, you can watch with a mental stop. If not, place a hard stop. Then, either your stop gets hit, you trail the stop to a new price, or find some other reason to close the position. Wherever your stop, IT'S ARBITRARY. So, you can use very tight stops so you never lose but a small amount (but get stopped out on noise, often), or place your stop in a logical chart place. Here's a thought.... "If they get my money, it's going to be like being nibbled to death by ducks." If you're being disciplined and still losing consistently, then your plays need some rethinking.
Your getting emotionless confused with managing your emotions. To be emotionless in stressful situations I do not believe is possible based upon my personal experience as a former army ranger, former top athlete and many other areas of my personal life. In fact, those that tried hard to be emotionless... I saw consistent failures to complete tasks. In comparison, those that learn to understand and manage those emotions... They increased their odds of surviving and that includes trading. As a reminder: Document your entire trading day including things in your personal life that you think about while trading (your going to need to dig very deep here). You'll begin to see a pattern and that will empower you via knowing how to manage those emotions while trading. Don't forget the little stuff because the little stuff can cost you more than you possibly can imagine. Mark
"Wherever your stop, IT'S ARBITRARY. " false. maybe for YOU, they are (and there is not necessarily anything wrong with that), but don't assume for others. my stops are based on study of my setups so as to have the best balance of 1) positive expectancy 2) percentage winning trades 3) smooth equity curve etc. Most of my setups have smaller initial targets than my stop, but not all i don't set arbitrary stops. nor do i set "money stops". my stops are set based on the structure of the market, and the corresponding setup. that is why, even though i am trading the same instrument, i have different stops for different setups. the stops are based on data - not arbitrary at all as are the targets, for that matter and i realize it is a mantra for many, to "let the winners run but cut your losses short". that is a good general principal. but when you are trading horizontally developing intraday futures market (which describes many days in the dow), targets that are relatively small, in MOST setups gives much higher positive expectancy, as well as %age winning trades. and a much smoother equity curve. all of which i prefer.