I'm reading "Trading in the Zone" for the first time, and am amazed at how accurately he describes my struggles as a trader. This is comforting, to know that I'm not the only one who deals with these challenges. It also tells me that if others have been able to overcome their limitations, I can too. I relate to what you said about the many winning days, followed by a loser (trade or day) which wipes out most of the gains you've made. In looking at my account statement for last month, I found that I was profitable overall, except for three trades which were large losers. These three losers took me from plus to minus for the month. This tells me that, as others have posted already, if I can learn to keep the small losses from becoming big ones, I can become consistently profitable. It really comes down to making a decision, and recommitting to it regularly, about how to handle those days when we seem to lose control. The suggestions that have been given are all good, but ultimately, we must choose our own path. It may take seeking a tarding coach or some other type of help to deal with this issue. Whatever you decide, I wish you the best.
These things happen, I know of some systems traders who expect large drawdowns. And most traders are overcome by emotion sometimes. Marty Schwartz , Pit Bull , was on the wrong side of the market and kept averaging down: "Audrey, I blew almost a million dollars in 4 hours" (p.107) He held overnight and got lucky and ended up with only an $800,000 loss for the day - it could have been double. Over the next month he managed to get most of it back.
There is more than enough good advice here that is hitting all around the mark and is very useful for reflection. But, without more information it is hard to really know where you are at. Some have suggested that in fact it may be that the system is in a normal drawdown. It should be easy to find this out by comparing your actual trading results to the trading results called for by your method. If they diverge, then your problem likely is internal. If your results match your system's results, the likely you are feeling anxiety from a normal drawdown. But it sounds like to me that indeed there is a discipline breakdown. If that is the case then rather than reacting to the breakdown, get better at understanding the clues or cues that lead up to the large losses. I know for me when I start pulling my stops (even when it works out), or not exiting when my profit objectives are met, or start taking (or even considering taking) trades that are not signaled by my system, then I start sensing that a discipline breakdown is in the works. Then I either center and refocus on my objective (following my system), go back to paper trading for a while, or I just shut it down for the day if I am too emotionally caught up in proving something or in being right. It is times like these when I switch over to system testing/creation as my head clearly isn't right for trading. Ultimately I have found that discipline comes down to a basic decision. Every minute of every trading day we make this decision. It is true that poker can help put things in perspective. Meditation can do that as well. But the decision has to be made and adhered to tenaciously. Your choices are to either follow the system regardless of the outcome, or to prove something - be right - make something happen, etc. If you choose to follow the system (method), then you are in the right frame of mind. But as soon as you start wanting to prove something, or to make something happen, or you are certain such and such will happen if you just hold on to this unprofitable position a little longer... as soon as one of these things takes over you are bound for a losing ego roller coaster ride. This a good suggestion but really to have the discipline to adhere to this you have to be in the right frame of mind - the one that is willing to follow your money management "system". For me the turning point was just getting sick and tired of losing. I couldn't take it any more. I finally decided that I was willing to do whatever it took to stop losing even if it meant I would have to let go of my ego and follow my rules. Until you reach rock bottom and get so tired of losing, and become willing to do whatever it takes to overcome this problem, all the good advice in this thread will really not amount to anything. In the end it comes down to introspection and determining what you really want out of trading. Right now it might not be what you *think* you want. Your results are just an outward manifestation of your inner desires. There is one other thing that I started doing that has helped me stay more emotionally level from day to day. Instead of mentally labeling winning days "good" and losing days "bad", I started labeling all trading days "good". Every day is now either a "good earning" day or a "good learning" day for me. This means I have a homework assignment on "good learning" days to see what lessons I can learn from what has transpired on this day. I also got better at disassociating myself from my trade to trade and daily results, because they are less a function of me than a function of the positive expectancy of my system, and how well I followed my system, so it really is silly to feel either elated or upset when my system either makes money or is unprofitable since I am merely the one putting it in motion. My profit goals have moved from day to day to weekly goals - my goal is to be profitable every week. This takes a lot of the pressure off on unprofitable days when I realize that this is just one of many days this week. Even one unprofitable week now is just one week among many weeks.
You said a mouthful, I see the light. This is all you really need to look at if you want to create change. Accept the above quote and go from there. Excellent TriPack!
I was having a similar problem to the one u mentioned A few things have been helping me #1 Being aware of the problem. Now that i know what my problem is I am always looking out for it to come creeping up on me and when i feel it coming upon me i take a time out and a walk. #2 When u feel a break down in discipline even if your trades are still turning out to be profitable you should take a break. after the break down the spiraling begins, #3 don't get to excited when you make money bcs once u allow your emotions to get involved u will suffer emotional when you lose and it makes it harder to take that loss. #4 Every one has an amount that they can be down and still feel like they can make it back that day, once i would get beyond that I would lose all control (taking bigger size, bad trades etc.) saying this day is screwed anyway so what the hell. I now consider how much i can be down for the week instead of the day so just bcs my day is screwed i don't want to screw my week or month and definitely not my acct bcs of one bad day Good Luck Btw maybe u can help me profitable 98% of the time and i can help you with this spiral disaster, r u in NYC????????
brkout: "Btw maybe u can help me profitable 98% of the time and i can help you with this spiral disaster, r u in NYC????????" NOBODY is profitable 98% of the time and makes any real money. 80% is about the upper limit consistantly over long time frame. That's why I don't think Samson is leveling with us here. Not much you can do unless he cooperates by telling all of the truth with nothing left out. As I stated are you going to get some help?
Thanks again everyone I do feel allot better about the situation today and I guess having the weekend to reflect on it and get all this excellent feedback and advise is a blessing. Thank You all. Just a few things I wanted to clear up ... I am not profitable 98 days out of 100 ... LOL (In my dreams maybe). What I meant is that I do what I'm supposed to 98 days out of 100. I have trade and dollar limits that I FOLLOW with excellent discipline. I take walks when I fell those bad days. I do ALL the right things 98 out of 100 days is what I meant in my earlier post. This is why I am so upset. I will soon (within the next year) be in the position where I will need to make consistent profits from trading alone to continue with my living expenses so this is a big deal for me right now. Some have suggested that "they just reached rock bottom and could not take the pain any longer". Perhaps that is my problem, I have been lucky enough to have a large cushion to fall back on? I need to figure out if... I have what it takes or not for real NOW ... there is no more time for careless mistakes. I guess that is the scary part!!! It's time to remove the safety net and make this real. Once again Thank You all for your contributions and posts sorry for bringing my personal circumstances to a public forum but I hope that this can also help other traders in some way as much as it helps me. Bless you all and peace be with you.....
This is very good. Most people who play poker or trade are not professional and their(our?) normal behaviour is to get reckless when things go wrong. I see it all the time playing poker- a guy starts losing a few hands and the next thing he is all in - and goes down. What the true professionals do is to is only consider the odds - and that type of unemotional play is special, not normal. This thread has helped me reflect on why I pace forward five steps and then leap back six, in my own trading.
For me I find that after x days of trading I have a mini burn out. When this creeps up on me I HAVE to step away. I personally use a 3 strikes and your out rule for myself. My initial goal is get behind a run which yields a specific number of points. This means that I have to sit on sidelines perched for my entry. My perfect day is to get there in one trade - rare. However by having the 3 strikes rule it keeps me in check and from over trading ( been there done that ) I have learnt that for me overtrading = blindness, which in turn = LOSS and usually big. But I digress, the burn out issue seems to be the issue for me. It is not that my tools and systems do not work that day - its ME! I am not reading my instruments properly because I'm burnt out. Once I have a loser I reduce my lot size by 50% on the next trade, once I lose again I reduce by another 50%. If I lose again - for whatever reason I shut it all off and take the day off. It is far cheaper for me to do that then stay and 'fight' - costs me too much money and emotional capital. Time to go and enjoy some of my past gains and remind myself why I have been doing this for a living for the past 10 years. Just some thoughts for you to consider. Zep