Crushed

One of the things I haven't been doing and never really saw the value in was documenting each trade rigorously. No longer.


Beginning immediately I will document each trade either before or immediately afterward. While this won't prevent me from "hanging on to a loser", it will prevent a succession of out of control trading. At least I believe it will help.

Furthermore, to facilitate this, i've decided to only make swing trades when trading discretionary. This should facilitate a lot more forethought into exit points prior to entering the trade, and will pretty much ensure I "adhere to the plan."

I put together my trade log for 2009 so far and some of the stats were shocking. I would have had to make 30% plus on my initial equity just to cover fees and interest.


Uncle Ho i don't know why you were going long bonds the play if any is short bonds for a while...

 

How did you get to such a large account size then?? If you grew it from much lower with this "problem", then you may not have a problem.

Otherwise.... A BIG loss has a similar effect on most people psychologically, which is why it must be avoided.. A fast market against you will happen sooner or later. The fact that it usually happens early on the first trade of the day compounds it as you have all day to dig the hole deeper. If it happened at close at least you can sleep it off.

 

Bridenour,

Thank You kindly

But let’s never forget – I am just a dumbass trader – who knows nothing at all – really




Uncle Ho,

Interesting dilemma you post My losing days have always historically been bigger than my winners ... but no matter as I will post a question to hopefully give you some food for thought


Which takes more discipline?

1.) Managing a loser of $15.00

2.) Managing a loser of $150,000.00


Please stop and think about your answer before proceeding below











The answer – neither – they take the same amount



A trader either has discipline or he/she doesn’t – it’s like being pregnant – a woman is either pregnant or she’s not...

There is no in between, there is no sometimes I am, there is no grey area, there are no maybes – ever…

One either is…, or is not …disciplined – period


And you asked for tips;

You will change when you decide it is time – and not one second before… Or not – as the choice is yours – as it always is

or stated another way

You will become disciplined – when you decide, “at your very core”, that not being disciplined is too painful, too distasteful, too hurtful, too destructive, too whatever…. And you accept and commit to doing whatever it takes to change – then you change

or stated another way

When you completely get feed up at your very core with the results not being disciplined brings you – and you are willing to forgo your ego, your self esteem, your beliefs, your what ever – in order to change and become disciplined.

And you are willing to do what ever it takes to change – then you do it


or stated another way

When you get to the point where being disciplined is more important than everything else trading related – and you will do whatever it takes to change – then you change


Btw - yes I’ve just stated the exact same thing – in four slightly different ways – why – to hopefully strike a chord with you – maybe it has…, maybe it hasn’t



Now when, or will – you get fed up and decide it’s time to become disciplined, or will you ever change.... I have no clue as I am not you…

Only you can answer this question…., only you can decide it’s time…., only you can change you……


Livermore never did learn this – and look how he ended up




In closing

I could have easily suggested reducing your share size to say 200 shares until you got a handle on the losers, then gradually increase your share size back to current levels…

And I would bet money you, along with a lot of others here, would have just laughed at me


Which is a pity really…. You see it takes the same discipline to do this as it does to trade, to manage losers, to manage winners, to make as much money as you want, to be successful at trading – but most don’t, and will never – realize this

One just can’t wake up one day and be disciplined – it does not work that way….

One has to develop the skill of being disciplined by consistently, and without fail, adopting, assimilating, and doing the little things that add up to being disciplined. Then be default you are disciplined


But then again what the hell do I know – I’m just a dumbass redneck



I wish you a successful journey Sir, no matter what you decide

RN

 

RN, your post hits home for me. Over the past few months, following an unacceptably large losing month, I sized down and am trading 100-200 shares most of the time.

When I first sized down I found myself allowing a far larger stop loss level than if I were trading 500-1000 shares. I realized that when I traded very small I was willing to give the trade more room. This made me sloppy and I sometimes overtraded as a result, churning away profits, or incurring losses.

I have to focus on making sure that even if trading only 100 shares, the technical point at which the trade becomes invalidated is the same as if I was trading 100,000 shares.

 

To add to what RN stated above I read this somewhere and it seem appropriate to trading.


"To be what you have never been you must do what you have never done"

"The defininition of insanity is doing the same thing over and over but expecting different results" Albert Einstein

 

Hi Uncle Ho,

You do apply your method in any market on any fractal. That's nice.

I pointed out previously that the left side of the container is important and affects how what is going on it the present (the right side).

Often a trade begins in a very well determined environment. A loss is evidence that someone else made the money you lost. They determined the environment was different. For sure they made their determination AFTER you made yours and you did not change your perception of the environment.

So by stating the above, I am suggesting a few things that I could not get across before.

During any hold period where capital is a stake, it is a good idea to do a repeated routine to assure that the environment is compatible with the hold position.

For people who use setups this is either difficult or not, depending upon what they believe is "discipline". Most often the Beliefs are the kind RN has for his belief system. An alternative is to keep track of what is going on in the market. Nodoji refers to this as considering what is "clear" at any given time. Under these conditions what is "clear" may come after the time to take action has past. This is the "lagging" indicator thing we hear about occasionally or more often.

Sometimes a trder who is neutrally biased posts. This person may be dealing with a difficulty that has to do with exits. If the person exhibits reasoning ability, I suggest that he treat exits as "entries in the opposite direction". Starting to take a loss, often in retrospect, looks like an entry in the opposite direction. I would say usually it doesn't simply because it is not the opposite of a entry setup that was just used. It would be the opposite of another of the group of entires the trader has beliefs about and uses.

To look at the general solution is better to do than run through a few examples.

The first aspect is the mental state.

The second aspect is the trading environment of the market.

The third aspect is "managing trades".

Fear, anxiety and anger tend to dominate the types of trading that are being discussed in this thread. Losses tend to indicate that the trader did something wrong and he may be able to realize the person(s) facing him are doing differently. This is a reality in trading; the market is always right. The mental state of any traders varies greatly and the test of this great variation is a self test. How do you feel when you are in the market compared to how you feel when you are out of the market? This may be like a "falling off the horse" problem for some potential traders. It isn't, however.

The trading environment of the market is knowable at all times. The proof of this is that the market is a zero sum game mostly and it is not necessary to lose money ever. Further proof is examinable by looking at the ratio of losers to winners. Losers vastly outnumber winners and that suggests most people do not know what they are doing and a few really know that they know. To be a winner a person has to know what is going on all the time and it is simply to know this. Simple means very uncomplicated.

Managing trades is done on a trading platform by using orders that are well known and inaccordance with the market's operating rules. If a trader cannot function and use orders at any time, he is incapable of trading. I believe this situation is recognizable for all traders.

Above I have scoped and bounded the matter. So lastly, I will suggest how to put in place what is required to deal with the matter.

Fear, anxiety and anger arise because you do not know what is going on in the market. This is true whether you are in or out. The solution is to know at all times what is going on. Log what is going on on paper at all times. There is a way to check out if you are logging satisfactorily. On the right side of your log for every entry you will find the word HOLD is written if you are in the market. If you are in the market and you are fearful , anxious or angry, write down EXIT and leave the market. If you are not in the market, the thing written will either be WAIT or Enter. ENTER is used when a trade can be taken.

The second aspect to handle is the market environment. Price and volume boundaries settle all aspects of the market environment. For price, to hold you must observe that the price is moving away(from right to left) from the Right Trend Line of the fractal you are trading upon. This is called "being on the right side of the market". Most people cannot do this task of monitoring. The second confirmation of being on the right side of the market is that the market is "continuing". If volume, relatively speaking during you hold, is increasing, you are in a continuation of the price moving from the right to the left. So HOLD.

This monitoring over and over will engender feelings of support, comfort and confidence. This emotional set simply comes from knowing that you know. On your platform you observe money accumulating as well.

What about when the environment is otherwise. There are two general cases: change and lateral. Most displays are automated for lateral and so you hold. The other condition is trend overlap. This is "clear" from the instant of its onset. There is a first chance and a last chance to see this (See my responses to SKO). You have figured out the visual to observe automatically as well just from your experience, logs and past profit taking. Or maybe not. The observable answer is that the price has stopped moving from right to left in the fractal you are trading. viola. People who jump fractals get screwed up.

So add a lateral annotating script. Start logging that you know the environment and your trading situation. This will eliminate the kind of feelings you have sometimes while in a trade. It will also get you to the sidelines before losses begin.

Trade management primarily involves your mental state. If you ever perceive you are fearful, or anxious or angry, EXIT if you are in the market. If you are out, then do not ENTER under any circumstances. Use an emvave pc on a laptop to monitor as well. For 300 bucks you can know your mental and emotional state at all times. If you come to the overlap period of trends, you EXIT if you edge trade because you do not know what the new trend is all about. If you are a person who knows markets, you reverse into the retrace or reversal since you know which is which and how to handle the upcoming volume trough for each (Then at the trough, for retraces you reverse; for reversals you hold through the trough into the beginning of the new dominant trend movement).

If you are a setup type trader and you are out of the market and not emotionally crippled, then you enter a set up and go into the gambling mode (See RN, big hog, nodoji, FB123, et al)

Synopsis:

1. Learn to deal with emotions and how to sideline. Freeze means EXIT.

2. Annotate the volume and price so you know what the market environment is at all times. Log the environment AND your mental decisions in real time. After the fact is corny and juvenile.

3. Manage trades by exiting at 1 and 2 dictated times. Learn to go to an emotional trading level that will allow you to stay in the market on the right side all of the time (reversal trading).

 

Thanks for the advice RN and Jack. It is appretiated.

I think you really hit it RN, I always thought I would wake up someday and that part of me would leave. I thought I would wake up and never be able to hold a loser that long. I would go on hot streaks and say to myself how good of a trader I am because my risk will always be less than my reward.

I now know that I won't be able to escape this. I can become undisciplined at anytime. I accept it and I will do whatever it takes to not allow myself to fall into that type of situation again. This thread really hit home with me, maybe because I have suffered these crushes two times in the past week. I seem to have what all traders have just on a day to day basis instead of weekly or monthly. I grind it out everyday, making dozens of hard winners here and there, only to lose it on one trade.

I understand that whenever I sit infront of the computer I am holding a ticking time-bomb. My goal from now on is to make sure I never implode, and I will do whatever it takes to make sure that happens. The winners will come just like they always do, but managing my losses is what I need to improve my game.

 

Been doing a bit better lately, I've been trading a bit smaller, and taking losses a lot faster. I am trying to be much more patient as well, and that is hard for me as I am impulsive. Its tough to stare at the screen for 6 hrs only making a couple trades, but I'm getting used to it. On monday I dropped another 51k or so, and I was so down on myself that night. Tues-today I've been trading for 5k-15k and been doing much better.

How are the rest of you crushed traders?

 

I'm an idiot. I will pretty much just leave it at that.

This 20% move in oil has more or less killed me.

 

I am not sure if it is a good idea to stick to a system without knowing it thoroughly.

Like driving a car, we need to know some basic things about it while driving it. I remember the story about Paris Hilton: the Bentley she was driving stopped in the middle of the road, she didn't know what was wrong with it. A photographer came over and said the car had run out of gas.

Of course, her car is a good one.

What if your car (trading system) is leaking oil and you don't know it? And you are still driving it.