Confessions of a revenge trader

My story: I've been trading futures for about a year with mixed results ar best. Recently, I've been practicing a trading system for a good 4 months and let me tell you, I ROCK the sim account. Ok great, so finally I go live and what happens? I have 2 winning days and 5 losing ones. Bad!!! Where do I go wrong? It's not the system's fault (nothing to do with slippage and whatnot), it's mine. My problem is that I can't take a loss. I basically go to pieces mentally and suddenly I am taking ridiculous trades that lose, compounding my loss. I can hardly even believe how fast I leap into a bad trade after having taken a loss. I feel particularly frustrated as I KNOW I can do better. I need to find a way to maintain a good mental state in the face of thr inevitable trades which don't work out. In fact, here are the pressures which give me difficulty:

-taking a loss
-thinking about taking a trade, hesitating, watching price move as anticipated and feeling like I'm "missing the move"
-trying to anticipate a turning point, jumping in too early
-taking a loss and still feeling like I need to "make it up" the next time I trade. In other words, it's still on my mind.

Amazing how much of a mental game this is!

I would greatly appreciate any insight or suggestions from others who have gone through this. I must conquer this problem otherwise I will never be a successful trader. Thanks in advance.

 

"The greatest and most important problems of life are all fundamentally insoluble. They can never be solved but only outgrown."

 

The bar is very very low for anyone considering trading.

You became a potential trader.

You set up an account.

For a set of reasons, you have gotten to needing emotional help.

Your mind has a heritage which it uses. It wants you out of danger and it wants you to survive. Your ancestors were lizard like so you now have acquired the Lizard Syndrome.

Item by item you must do the following.

If coming to having a loss, just do a wash trade first. All you lose is time and you remember you acted unlike a Lizard. You did not freeze on a rock.

For item 2. Take the trade on paper and when you get to item 1, do item 1.

Item 3 is the early exit. All this tells you is that your approach does not use trend monitoring and analysis. Too bad. Your approach is not sufficient to be trading it. Trends begin with a dominant move followed by a non dominant move (retrace), followed by the last dominant move. The trend ends and a reversal begins. You may not know this. Learn to monitor and analyze so you can know that you know these things WHEN THEY ARE OCCURRING. You focus, instead on "ROCKING". In trading rocking is not usually done.

item 4 is a money concern. Behind that you are being told you are not tinking about trading and instead you are thinking about just money. Money is not a big deal. Making money takes care of itself.

You are in the usual company of the majority. Only the minority makes money. Drive around rich neighborhoods. Talk to the gardiners. Ask what the homeowner does. You will not see any homes of traders.

A trend grows. They are only several bars long.

At the beginning write point 1. Later see the end of the first move; mark it point 2. Then look at the price move again as a retrace. At its end mark point 3.

connect points 1 and 3. right click with your pointer on the line.

click on clone or duplicate.

See another line appear. Drag this new line to the point 2 and put the left end of the line at point 2.

Make sure the lines extend 3 or four bars into the future.

Draw an small ellipse between the extentions of the two sloping lines. Watch the interior of the ellipse. This is where the next beginning point 1 of the next trend is found. It will slope the other way.

So in the future hold through the retrace after you enter with the sentiment just after point 1.

If you have a little sister, teach her to do this annotating for you. Also ask her to tell you the point 1 and ask her to tell you which way what she is doing is going to be going. Since she likes to draw and tell you what to do, she will be teaching you that the money takes care of its self.

Next month, your parents will start getting invites to cocktail parties. Your sister's friends will be doing what you taught your sister and those friends of hers will be asking their parents for subscriptions to the WSJ. Watch out for MILF's.

 

i had the same problem. I stopped caring when i had a working edge.

 

You know what you need to do so...as Nike says...just do it.

If you can't, then fold up shop and get out of the business...pure and simple....this is not rocket science

some people are simply not cut out for trading

 

I have had some bad days where I have revenge traded as well. The majority of the times I do it are after have several good executions and then I will make a screw up like forget to cancel an old stop or limit order, I will screw up and then be like "oh well I will just triple my size and recover it instead of sticking to the plan. This kind of looks like a setup....yea works for me I am taking it" And then my entire gain for the day is gone plus a whole lot more.

Needless to say I am working on NOT doing this anymore as well. Just stick to the plan, pound it in your head

 

DON'T ARGUE WITH THE MARKET, YOU FOOL !

print the above in bold type and tape it to your monitor...


the memory of painful losses will help you stop doing bad things..it takes time... and money

how long and how costly depend on how smart and disciplined you are in the first place..

 

I presume you have a system.

A system includes signals for entries and exits, otherwise known as signals.

I presume you trust your signals, right?

The above question is the real question. Do you trust your signals?

 

Mark Douglas: “There’s no way to know the sequence of wins and losses. If we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. Our mind has to be free to be able to execute these trades without making trading errors and the trading errors come from believing that because the pattern is present, that it’s going to give me a winning trade on THIS one; THIS trade is going to be a winner. You can’t think that way. That’s the way the typical trader thinks. The typical trader thinks ‘I’m not gonna put on this trade on unless I think it’s gonna be a winner or why would I do it?’”

“Trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. It’s just an odds game. You’ve got to be able to take every single trade because you don’t know the sequence of wins and losses. You’ve got to be able to identify what your risk is and that’s simply ‘How much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer lower than my price if I sold?’”

The solution is to change your mind, to change the way you think. “[You’ve] got to eliminate the potential to think that the market’s going to disappoint you. And the way [you] eliminate the potential is by understanding that trading is not about being right or wrong. It’s a probability game.”

There are stages of development such as learning how to think in probabilities so the market doesn’t have the potential to cause us to feel emotional pain.

“When you put on a trade and it doesn’t work, all it really means is that some of the traders didn’t come into the market that had the same belief that you had, or the same conviction about this market doing whatever it is you thought it was going to do. You have to learn to walk away.”

We can’t predict collective human behavior. “The methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there’s no possible way that these mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as ‘How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.’”

Traders look at their sim trading results and think, “This is where I’d be if I could trade from a carefree state of mind.”

Once you shift perspective, everything changes. “Don’t think, there’s nothing to think about. When the pattern presents itself, there’s nothing to think about.”

 

I know these problems ! And i think i'm finally beginning to move past them.

1. on taking losses. Use a stop. IMO, this should not even be an issue. That's me though.

2. Get use to missing moves. It happens, it's part of trading. Having said that after you miss alot of trades you get motivated to find out how to get past hesitating. For me what helped the most is to completely understand what triggers your entry. Is it a break of a level, a prior bar break, a price level entry ? Know it then replay market data and get it in your head. Understand in replay the context if that's part of your system. Switching to entering on stops instead of market orders helped me a lot. I know in advance where i should be getting in, put the order in then cancel if something changes.

3. I still hold winners too long trying to make up a losses. I'm improving. Trade smart then you'll find you get the big wins that recoup several losses when you don't expect it. You don't need to make back losses 'right now", it'll happen.

It's not going to happen overnight. Have your mini goals focus list that you review each day. When you make mistakes, don't beat yourself up but forgive yourself and strive to improve.

good luck !