I am driving myself absolutely insane... I continually pick good trades, but have trouble getting the nads to put them on. Yesterday I picked a GREAT trade that would've doubled my money overnight, but lacked the confidence to put it on. I've heard it all about cutting down size to build confidence, but then I think to myself "why bother having the stress of a trade if I'm not going to make some decent money on it?" Any suggestions?
Put a trade on where you can sleep at night. Singles and doubles pay the rent. Homerun hitters strike out a lot.
Unless you plan on significantly changing your nature in the near future, it would appear that you have 2 choices: you could trade very small and incrementally increase size in proportion to your (growing) confidence; or, you could continue complaining about not taking trades. In my own experience, I was not able to overcome acute risk aversion overnight or with some profound new insight. Assuming that you have developed a method that makes money in real time, I think that your confidence will have to gradually grow into that method as it continues to prove itself. Personally, and in retrospect, I think that's a good thing. If there are alternatives, please advise.
The thing is, when trading options the swings are huge. Are you guys trading options? I like the leverage on the upside, obviously, but the downside is scary to me. Next week I start a "real job" so the pressure of having to make money will be off so I can cut my size...
I do not trade options and, therefore, cannot offer any insight in this regard. However, I would think that the same general principle of cutting size would apply in connection with the risk aversion issue.
Let me guess, you're trading with a small account and have trouble keeping stops? Doing the following helped me improve my trading: 1)Learn to think in % return terms, not $ return terms 2)Backtest the system, if the results are reasonably good the next time you'll feel more confident in taking the trades. 3)Trade smaller
Then you have the wrong mindset and need to change it. When you're just starting out you need to concentrate on trading well, not making money, or you will indeed go nuts. If you set as your goal to trade well w/real money, even small amounts, you will put your focus where it belongs - on the trading, not the profit. Prove to yourself that you have the chops and discipline to stick to your plan, this will give you confidence when you increase your size. If you trade well, profits will come. Refine your plan while trading small and it'll payoff later. If you believed you had talent to be a great chef and had studied the culinary arts, would you start off by preparing a banquet for 200 guests at the Hilton? Or would you prepare small, simple meals for friends and family and work your way up to a Great Feast? Great baseball players start in high school, college, the minor leagues, before they play for the majors. Give yourself time to learn in an environment where you're not worried about blowing out your account, where you have the room, both financially and psychologically, to make mistakes and learn from them. Again, I repeat, don't put your focus on profits, but on trading well. H
Thanks for all of your advice, guys... I'm starting again smaller and will focus on entry and exit points rather than p/l. I've yet to trade without thinking about p/l, and as I said it will probably be easier when I'm not counting on it to make a living. I don't know how you guys do it - it's so difficult when it's your livelihood!
======= Yes; however you cant force market to make utility bill; or force singles. doubles or home runs; and like all three myself . Frankly you are trading too big or simply not enough years of experience if ''downside scares''; not to be confused with a healthy respect for market. And when its plain the options arent going outside the fences; single =better than strike out. Also if you have to go to end of day swingtrade options; may want to go further in money, deeper ITM=less downside. Wisdom is profitable to direct. And one other thing Chicagoshorty; bought some turtle wax last 12 months , made in Chicago.