Fear

maybe daytrading is not for you. i know alot of marketmarkers that failed at it. my tip to you is sell your home and get your cost of living down. you should get a parttime job and your wife should work too. i have seen many people with your plan before and most of them have failed. it looks like your living on a hope and a pray. there is no magic pill so you need to learn how to money manage your life better. you need to screw your pride and do whats best. 6k a month is alot if you can't earn 6k a month. i think once you do that your trading will stand a better chance. i want to tell you one day you will learn how to trade but most of the people i met in this business have failed.

goodluck

 

jztrading,

Ok, I'm a lurker trying to get further along and not expert like so many who have responded to your question, but I am in a very similar position.

When I had a lot, I treated investing money like plastic poker chips. When I had a loss I was confident it would even out in a few trades and it always did. I was ruled by greed and fear wasn't even in the building. I was making over $1K by 11AM every day and would quit and gloat "there's nothing to this stuff!".

However the old adage about being ruined by having a few bad minutes applies to me. One day I kept adding to a single winning position until I had the whole pot in there when an external event absolutely killed that stock. I lost 30% of my portfolio in less than 20 minutes. I know, I know... money management, etc., but remember up to then I couldn't loose.

I didn't bounce back from that one and, after almost 2 years, I still struggle with fear every day. Because of that, I tend to exit with small losses and small gains when had I stayed the course would have had very nice profits.

Those in a different position might advise to stop trading and do something else with what I have left. However, like you, this is my only source of income and doing the math shows I will outlive it. So I'm approaching the situation from a stone cold logical perspective, with my best Mr. Spock imitation.

I'm working on a mechanical strategy that will remove most of the emotion. It is not easy as I learned just how much my trading was instinctive and based on knowledge of a few particular stocks. It's a real struggle but, although I'm not there, I have gained so much knowledge that I'm more confident it can be done and I can do it.

Also, like the advice of others on the board, my wife and I have cut our living expenses about in half and I'm looking for a job. Thankfully the interest rate drop allowed us to refinance and pay off a bunch of stuff while reducing the house payment a couple hundred per month. Once I get a job we will live strictly on what I can earn until I have my system proven and trading profitably.

Ok, hopefully at least part of this mess has a familiar ring to it. The key points for me are:

1. Somehow cut living expenses. I had to stop most of the bleeding in order to make it this far. The solution most likely is not in the next trade. I held out hope way too long and wish I took this action at least a year ago. I recognize looking back there was a definite time when I transitioned from optimism to hope. That's a milestone event you need to recognize and respond to.

2. Get some income coming in. I like to say I started looking for a job over a year ago, but it's only the last 3 months I really got after it. I just lost out on an excellent job that would have covered all our monthly expenses and have an interview with Orchard Supply for a part time job next week. Some income is better than none.

3. You really can have both a job and develop a trading plan. Initially you can look at charts and apply your strategies in the past tense. Just make sure you are honest about it. I had to cover the right side of the chart and write down each trade before exposing the next bar. Don't forget that your entry will lag your decision by 1 bar, so decide & log it then expose the next bar.

4. When you are ready, arrange a day off when the market seems to be trending your direction. Assuming you are trading your IRA, that means only long. Trade no more than 25-100 shares depending on price. Journal each and every trade and include your emotions. Believe it or not, writing this stuff down helps get a grip on it even if you never go back and read it - but I advise that you do.

5. Go back to work the next day even if you were successful. 1 day does not make a trend. You need to absorb your key learnings from your trading day. Fine turn your plan to handle all market conditions. Hint: I almost always regret trading on a down day even if the market looks like it is ready to party. If down from the open and it doesn't reverse by 10:15 and prove itself by 11:00, I'm better off in the long run to sit on my hands. I pretty much know to stay out of those days, but the sideways days are killers. Remember, cash is a position too.

Repeat 4 & 5 until you have proven you can handle it. By then you probably have earned some vacation, so take a week and make trading your job. Turn your wife into a cheerleader before you do because you will need positive reenforcement.

If you are really making the bucks, then give notice asking to come back if it doesn't work out. I believe most bosses wish they could do the same and would understand if it doesn't work out.

Finally, if it is working, learn and apply money management. I'm not talking about just how many shares to buy but mathematically apply risk/reward to set trading parameters.

==============================

I apologize for the length of this post. I started out to write a couple paragraphs, but along the way realized that I need to hear this stuff. Seems my typing fingers know what to do even if I seem not to. I hope this helps and best of luck to you.

 

I am going to throw my hat in to the ring on the subject of fear in trading.

It really has its roots in the fear of losing money and how that effects your status in life. Many say its the "fear" of being wrong. When your paper trading you don't fear being wrong because you don't have money on the line. It truly is the fear of losing money that stops all of us dead in our tracks. I have been trading a long time and don't kid yourself for one second, that fear of losing money is a demon that you have to contend with every single day. The way to control it is to do your homework at night and know what your choice plays are without the emotion of the market moving around during the day.
How many times have you been confused all day long and when the market closes you go back over your charts and smack yourself in the head as you look at what were obvious high reward trades that you just let pass by because your were emotionally clouded up? It happens to everybody on this message board and don't let them kid you for a second.

Fear of losing money will cause you to lose money as you will be paralyzed each day and never make rational decisions. However we all know that, and thats the choice we all make when we decide to trade our money in the markets each day. You either live with that fact or you get another profession there is no shame in it at all.

Now the question that really matters to you is how do you get beyond this fear? Thats all that really matters because if I talk about fear any longer is just lip service so let me give you years of advice that I follow and has helped me out many times over.

To begin with you have to tourniquet your account immediately. What I mean by that is you have to mentally say to yourself your account size is where it is at this moment and you should never waste your mental energy trying to get back to what you had before. Consider that one of the worst cardinal sins of traders. Next look at your current account size and say to yourself how much money are you willing to risk per trade. Lets say your trading with 100K, you should not be willing to risk more than 1000 dollars per trade if your swing trading 1-10 trading days out or 400 per trade if your intraday trading for 30 mins to 4 hours. These amounts will force you into finding the best entries where you only have to have a small amount of price action to prove your wrong.

Now look at your game plan. What are the types of trading setups do you find work best for you? You have to write them down on a piece of paper. It may be buying pullbacks in uptrends. It may be shorting retracements back to H&S neckline breaks. There are so many different types of trades but you have to be a specialist in only so many of them or your head will explode each trading day.

Next spend each night after the market closes and look over your charts. Begin to follow 200 core stocks and get to know them well. Also scan for stocks that you don't currently follow but meet your trading scenario requirements that you have written down on paper.

Next make sure you spend 30 mins each night looking over all of the major indices and the major stocks in all of those indices. Look at each sector index and identify where the money is flowing. I cant stress this point enough as this is the single thing that will give you the intelligence during the day so your not a deer in the headlights wondering why the market is heading down or up. Think about it if I am doing this each night and you are not how the hell are you going to be able to take money from me? I will know more than you because of my homework and will not lose my focus wasting time during the day wondering why the S&P just bounced from a spot on the daily when I knew on the weekly it was major support. See what I mean? Very important stuff here to remember.

Now take that all into account and say to yourself how much money do I need to make a month? In your case you have to make 10 grand per month because you need 6k after taxes to support yourself. Well treat this as a corporation and break that down in to goals. It breaks down in to 2,500 per week gross. Now that you know that number approach the markets calmly and put together everything I have said here and get to work.

For example lets say your swing trading with a little day trading as well. Have 2 accounts. Your goal on the swing trading side may be to make 6k per month and 4k daytrading. Break down the risk you should be able to find 10-15 perfect swing trades per month to make that 6 grand. You should also find plenty of opportunities to make 4 grand per month daytrading. Now if you reach your goals for the month early you begin the budget for the next month earlier and do it again.

There are so many people who trade that don't even do their homework and they are just sitting out there begging for you to take money from them each day. Stop being one of them and change your situation around now. If this does not work for you within 3 months then I just don't know how else to help you out. Best of luck.

 

Time : Last night, 8:46pm Pacific Time

Market : Globex ES.

Backdrop : Asian and European markets still spooked from Madrid bombings. ES starting to look attractive at 1102-ish for a 3 to 4 point bounce. Who am I kidding, I'll be happy with 2 points.

Action Taken : Bought 5 ES at 1102.50. Immediately placed limit sell at 1104.50.

_____________________________________________________________________________________

Time : Last night, 9:09pm Pacific Time

Market : Globex ES.

Backdrop : ES is slowly inching up. CNN is continuing with its reports about Madrid, imminent threats to USA and Japan. I get spooked.

Action Taken : Sold 5 ES at 1103.00. Cancelled closeout order at 1104.50.

_____________________________________________________________________________________

At 10:49pm (1 hr 40 min later), ES trades through 1104.50. It hits 1106.00 at 11:36pm and opens this morning's session at 1110-ish.

 

Jack,

I appreciate your post and your generous comments. After your reply to my post i really was beginning to think that my grob109 comprehension was becoming top shelf. But then i open your attached document. WOW

I've got a sheet of butcher paper on my desk today with almost the exact same rows and columns! My weekend project was to fill in the blanks. I'm still going to fill in blanks you have so neatly outlined so it sinks in. I'll also ponder why on my butcher paper your rows equal my columns and my colums equal your rows.

I've still got some work to do on the decision piece but i'm beginnig to really recognize the parts that need work.

I think i'll go out to the shop for some sand paper to attach to my butcher paper for added emphasis.

 

I was thinking of same thing, you can always buy it back latter, may be.

 

One probably does not know fear until you have a 7 digit loss. Or perhaps it is more a question of percentages.. IF you lose 90% then you should be fearing

Cheers

 

I think Forex is a great market to trade - also for new traders.

Why? Because you can start trading real-time on a demo.

All Forex brokers has a free demo (trading station with charts, news etc.), where you can test yourself and your strategy, before you starts trading with your own money. And only do that when demo-trading has made you a winner, and when you can control your fear.

Good luck.

 

I attached an update of the SCT Trading Synopsis. I screwed it up slightly in the transfer from task notes.

In the cell intersection of "Medium" and "Sequence Considerations", I transposed the A's and B's. A is resume and B is reverse.

Under "Peaking", for resuming longs (A) (peaking channels) the resume goes from squeese to neutral and back to squeese. Conversely the reversal (B) is Squeese to neutral and reverses into a stretch (short).

An identical screwup occurred for troughs.

The corrected version is attached. I apologize for the temporary inconvenience anyone may have had.

I thought about posting the coordination column as 50, 80 and 120. Zorro thanks for the "picture". There is so much in our lives that relates to "association".

If you use butcher paper for the sequences and have made about a years progress of refining and deepening them, you get to a place where having 3 levels of streams (coarse, medium and fine) is fairly complete. Within each stream you can do "generation breakdowns" of the elemental factors or descriptors of each successive node as in military parts lists. Three levels of each (C. M, F) will allow you to be at a phenomena(l) level of fractions of seconds. Here you get to see all the software programming pertibations and loops.

There are two overlays (think clear plastic layers). Alexander's Method and the "Matrix".

For Alexander's Method your goal is to discover "least connected" parts of the approach. So just make "zones or regions" that operate independantly. You use these to do "independant" analysis as a way to rapidly be clear on this concern. Some concerns are more prevalent and some are more dynamic others are nuance things. Having SCT is the methodology of processing information to make money. Zones of market operation give you focus of "knowing where you are".

More in next post.......