Home > Technical Topics > Psychology > Feeling a Little Down

Feeling a Little Down

  1. This is really frustrating. Just got out of a painful trade. I thought I was starting to make sense of this and then, bam, there goes $15,000 right before Christmas. I haven't made a penny this year and I've been much more disciplined. Really wish I didn't have to keep paying market tuition. How does one handle this kind of disappointment?
     
  2. Every time you are about hit the "BUY" button, first identify where you will place your stop. Then assume the trade will be a loser and ask yourself "am I comfortable with the amount of money I am about to lose on this trade?" If you answer is "no" then you must reduce your position size until the potential loss is small enough where your answer is "yes, I am comfortable with losing this amount of money." Besides that, make sure you go home flat every single day, that way you will be protected from losing more than you intended during overnight/weekend gaps.
     
  3. Consider whether you're cut out for it, and perhaps move on. "Definition of insanity..." You're a bright, thoughtful guy who will succeed in another line of work.
     
  4. its not just about discipline

    its about the working method too

    one can be extremely disciplined, but without the working method or with the one that works badly discipline will not make a difference

    do not want to pay tuition to the market - stop trading real money, until you have the method on hand (or at least you think you have)

    everybody went through that
     
  5. I thought I did have a method that made money. It worked last year... then I started reading. I can't even figure out if I should regret reading. Somewhere along the way, my trading changed. And I can't figure out where, when, and how. I can't figure out what I was doing differently last year even with all my notes. :banghead:
     
  6. what did u start reading: motley fool , seeking alpha? :)
     
  7. I wish I were reading those two lol That would be an easy fix haha

    No, I read stuff on "Price Action" (all the flags, patterns, triangles, etc.). I read up on candlesticks. I read a ton on how institutional traders trade - hundreds of forum posts (I concluded that they didn't do anything different than the rest of us). I read up on how to use market profile. I read both Livermore's & Lefevre's books (both were saying to take longer-term trades so I started doing that). Mark Douglas' Trading in the Zone. I also experimented with various indicators and basically tossed them all out (my chart only uses a volatility indicator and volume). I used Emmett Moore's blog to figure out which "courses" were fraudulent and what they taught (and summarily threw all that out of my mind and treated as "wrong"). Recently, I've been reading on price behaviour. So this thread: https://www.elitetrader.com/et/threads/tutorials-on-reading-pure-price-volume.315973/#post-4567199 . I also read this: http://www.streamhedge.com/ . And I read http://www.jltrader.com/strategy/ and tons of stuff from Vlad's blog. I watched a bunch of YouTube videos on trading, psychology, etc.

    The thing is, last year, I was bringing in $3,500 - $4,000 a month until I made a wrong move in one trade. It was a losing trade in Nike and I averaged down twice. I think that's when I started reading everything I could get my hands on. Prior to that, I was actually doing what SteveM was describing above. Except instead of 1 day, it was 1-3 days. The thing is, I don't remember how I decided when to enter and exit. But whatever I did, it worked! And I had to go ruin it all.
     
  8. I think such is the case with all "trading" methodologies - they work, until they don't.
     
  9. Ok, the questions have spurred me to once again try to piece together what I did prior to my reading spree.

    I know for a fact:
    - I used MACD with the histogram. When it was green, I held onto the trade. When the bars looked like there were not getting "longer" and the two lines appeared to converge, I got out and started looking for opportunities to take the opposite trade.
    - I used Marker Indicator from ThinkorSwim as a momentum indicator alongside with MACD.
    - I would always have a directional bias on the stock I was trading. It didn't matter if it was down or up. If after reading up on the company, financials, etc. I would decide "this one looks like it is profitable for the next 6-12 months". I would keep this directional bias in the back of my mind and have a tendency to take more trades in that direction. It didn't matter even if the general trend of the stock was moving in the opposite direction of my directional bias.
    - I would never trade anything less than 2M in volume. This hasn't changed.
    - I had no other indicators other than volume and volatility indicator. I did not use SMA lines, Bollingers, etc.

    What I don't know for fact:
    - I can't remember if I drew S/R lines. I don't think I did because S/R lines are part of all those price action courses/free articles. And I didn't start reading those until much later.
    - I didn't care about the candlesticks and what they meant. All I looked at was the big bull candles or the big bear candles. When I saw it, I *think* I interpreted it as validation for my current trade or something - I can't remember this part.

    The trading itself:
    This part is difficult. If we use VLO as the example, I would have taken a short near the top of today. Then waited for a day or two. If the next day showed a continued move upwards, I *think* I would've gotten out and waited for the next "high". Then I would use the MACD and the Marker Indicator alongside with volatility indicator and decide when to exit my trade profitably. I would then somehow, magically decide to take the opposite trade at the "bottom" of the down move. How I defined "bottom" is lost on me today. If I were to apply what I know today, I *think* what I was doing was going long when price moved back to the original breakout point (from consolidation). And then I would go short when price appeared to reach beyond fair value. If it broke out of that top, I would go long on what would be the "new" breakout point. This way, I only held for a day or two. Repeat and rinse. But this is hindsight... which is always 20/20.

    See, none of the above makes any technical sense. "Directional bias", all those indicators, no S/R lines drawn, no pivots marked... yet, I was making money. Pure luck? I know for sure I'm not making money now!
     
  10. The thing is, I changed my methodology somewhere along the way. I'm no longer doing what I was originally doing. But what I was originally doing doesn't make any technical sense. :confused:
     
  11. I call bullshit on you and on this entire thread.

    Your explanation above of what you can't remember is no different than a politician or banker being put on the witness stand with the "I can't remember" line as their only defense. Nobody goes through trading like you do without saving any charts over the years to refer back to. Its interesting how you remember some things so clearly, and yet don't remember what lines you drew on your chart.

    The reason why you say none of the above makes sense is because its all one big made up lie. So go get a life troll.
     
  12. Wow... I did not expect this response. No wonder most people lurk and don't participate.
     
  13. Yup.. its obvious, you know your way around here already from lurking and your multiple aliases I'm sure.
     
  14. No, there are no other aliases. But you do remind me of the folks from places like StackOverflow. If you don't want to help, you can stay away. Don't have to put down everyone you meet like this.
     
  15. It's a natural thing to go through in-coherence on your way to greater coherence as your unconscious processes new material. You did, after all made the attempt to get to another level in your trading. That's a lot of new information to process, even harder when you attempt to trade and add a whole other layer of emotional stress atop of it.

    If you consider how programmers work, they rarely make more than one change at a time before verifying and looking for unintended consequences.

    Taking time away from the markets to engage in de-patterning will support you more than you think.

    There's one sign that is pretty consistent when learning and building new inference. When you wake in the morning, new questions would be served up by your unconscious. If that's not happening then your prolly just reading to get through the material as opposed to 'working' with the material and connecting it to what you already know and testing that which you do not know.
     
  16. %%
    I hate losses also, but something that helped me-no such thing as a business that has no expenses. I tend to go smaller after a loss:cool: Hope this helps; it helped me
     
  17. It sounds like you lack a tested and definitive trade plan. To trade for a living, you need to know that you have a methodology which produces a profit and that methodology has to have defined signals and trade management rules. You can't improvise as you are going along. You say you blew up equity be averaging down on NIKE. That has nothing do do with methodology, that's behavior and you will do that until you don't. And you won't be successful until you don't. As far as methodologies not working anymore, markets can only go up down or range sideways during which they are going up or down on some other time frames.

    I've been doing pretty much the same thing for 15 years with occasional adjustments as to time frame or exit strategy. If you understand the nature of price discovery and behavior, you can develop a strategy that works...IF you do.
     
  18. I had not thought of it like this before. It makes perfect sense though I don't know why it never occurred to me. I made tons of changes to everything this year but never spent any solid amount of time to let it "run" or "test out". I guess that is what happened from last year to this year. I changed so many parts of it too fast, too often that I couldn't even keep track of what I changed and what worked or didn't work.

    This scares me, actually. But being in it hasn't been helping either. Maybe a short break since it is end of the year and holiday season.

    Yes, this is definitely what I've experienced. I read something then I have new questions or I question what I read and needed to verify something else. Every day was a new learning opportunity! But at the same time, it is what brought me to this point.

    Ok, I am thinking to stick with the current way (not described in previous posts), reduce my position size, reduce the "diversity", and just focus on testing it for a few more months. Based on the results, I will slowly change one thing at a time, test the changes first before adding another change. Maybe that will work...
     
  19. Thanks, I am going to do that tomorrow. Just make everything smaller. I don't want to take big hits like this... way too painful.

    Yes, I was definitely doing a more "improvising" way - changing as I read. Lesson learned - don't change that much and have a better plan.
     
  20. Paper trade.
    Write down your trading protocol as if you were going to program it.
    Program it.
     
  21. If you dropped 15K, then I would hope your account is well into 6 figures. If not, then you're trading way too large, especially for someone who hasn't got it figured out yet.
     
  22. @lindq,
    Good point. E.g. drop 15K on a 30K account would send the stress level through the roof.

    @ts,
    Trading methodology must be established over a period of time. If you are tinkering with your method then you must cut down your position size.
     
  23. Now gotcha its near Christmas. Have a heart. Empathize a little tiny bit.......
     
  24. Oh, it was because I had attempted to pyramid down. But I was trading on the wrong thing. I had another thread in the futures forum about it. So basically, I scrambled as soon as I found out. But yes, to answer the question. But it wasn't a loss that I didn't feel either.
     
  25. LOL.. I did have second thoughts after posting because it really is just a waste of time on my part.

    But seriously, can this really be true? I mean if this one trade is a loss of 15k, and sure, he says he averaged into it twice. But even if we assume a typical trade would net him 5k, how does this compare to the fact that he said he made about 4k a month? How is this one trade so much bigger, worth an entire month, even before it was averaged into? And even if this one trade is just massively different than all the others, still, at the numbers he is throwing around, you would assume he is at the level where he is keeping charts. You don't get to the level of supposedly making 4k a month without keeping charts that you go over.

    He says he is keeping notes, but then he says he doesn't know how he draws his lines? What kinds of notes is he keeping? If he was to say he randomly clicks and it works out, I would almost believe that more than to say he is actually keeping notes, but miraculously, no charts.

    We have too many of these brand new posters with these outrageous stories and then everyone wastes their time, and then the poster is gone.
     
  26. Gotcha is the Amazing Randi of ET.
     

  27. There's something distinctly wrong when your last remaining trade in week 50 represents the difference between a profitable year and a flat year. Without knowing more its impossible to be more specific.
     
  28. Eh? I'm not sure how you got the idea that this trade made the difference between a profitable year and flat... I have been unprofitable all year if that makes a difference...

    Not to single you out but having started browsing different threads, I'm getting the feeling that a lot of people here are so used to dealing with bad members that automatically, everyone new is suspect and needs to spill their life story and all to validate themselves to a bunch of random strangers. It's really discouraging to see.

    But to those who helped me in the last few days, I appreciate it. I have taken your advice and will be applying it.
     
  29. OP, if you're looking for trade ideas, check out TastyTrade and if you're interested in chart patterns, Tim Knight goes over charting based trade ideas everyday on a show called Trading the Close or www.slopeofhope.com. It won't make you rich overnight, but I think it's a good place to start. Bottom line regardless of your method, trade small until you are consistently profitable over months, not days. Nail the mechanics before you increase trade size. That's why I prefer algorithmic trading over discretionary. It's so much more objective.
     
  30. I love the TastyTrade team! Tom and Tony are so approachable and if you email them, they respond even on weekends - even if it's stupid questions. They were the ones that got me interested in trading. Actually, thanks for reminding me, prior to doing all this, I did follow the way Tom taught Case in selling premium. Small profits as you pointed out but it was a lot steadier. I definitely need to revisit that. I'll go through Tim's stuff as well (I did not know about that website you linked). It has been a while... don't know why I stopped following them... o_O Thanks for the reminder and the link!
     
  31. I have the impression that you did not read up on money management, risk profiling and position sizing. Which is, in my opinion, at least as important as the things that you did read about.
     
  32. Of course. They are so helped by the wizards of ET, that they soon make enough to stop trading and live out their miserable lives drinking Dos Eqqius on the beach
     

  33. To have $15k at risk on a single trade, I'd want an account that's well into 7 figures, myself ... ("just saying") ...

    Something's radically wrong with the position-sizing, when someone trading regularly talks in the same post about making $3,500/$4,000 per month and about having $15k at risk on an individual trade.

    It makes me suspect that Gotcha may be correct, because people who can make $3,500/$4,000 per month for a year have to know better than that. :wtf:
     
  34. Sprouts ( maybe from Brussels ?) made a very valid point that took me a long time to take action on.
    The point is one feels in a desperate hurry as situations come and go.
    1. Curb that feeling and don't rush it.
    2. Importantly never change more than ONE thing at a time and then test it. A lot slower but a lot surer and you know exactly what the change does. Write the result somewhere so it's not forgotten. Use 1M to speed it up real time.
     
  35. I see.

    Many years ago I wrote an article called "The power of the dilettante" on some Russian forum (if u know Russian i can give you a link).

    My argument was and still is that some dilettantes have the prolonged beginners luck, but behind this luck is an instinctive (do not confuse it with intuitive) trading.

    Instinctive trader may know nothing of the trading theory, but he has an innate sense of where the market goes, how to run with the crowd, and not against it. This kind of trader can take huge risk (often without realizing it), and stick successfully to the positions which would long before be abandoned by any seasoned trader.

    But here is the problem: the day comes and the accumulated experience and wisdom of the instinctive trader overtake his instincts, fear enters the equation, especially after some big losses. He suddenly realizes that he knows nothing, that he walks on the tightrope, that he needs knowledge, education and experience. He starts reading books, taking courses, attends forums, blogs, etc etc.. and really becomes more knowledgeable than he was before.

    The problem is with the reorientation on knowledge and experience he lost his instincts (that's why you can not remember what and how you did last year)...forever...

    Another problem is that the knowledge he attained is theoretical.

    He never actually had a working method before (even though he thinks he had). Now he has the method, but his method is a hodge-podge of ideas mixed with some feelings. One can not trade ideas and feelings successfully, regardless of how good they are.

    And as the result instead of running with the crowd he now runs against it, while doing almost everything what books and courses dictate.

    Now he faces a monumental task - becoming a truly methodical trader.
     
  36. If it makes you feel any better, I also made a $15K blunder in one day 2 summers ago in a similar fashion. I went long in TF, live, right when China devalued the yuan (on the same bloody day and didn't hear the news yet and didn't know how that might affect the markets), and I averaged down (pyramid down as you say). That averaging technique had been working for me very well in sim for the previous year up until that point, but the ol' black swan bit me with hissy, sharp pointy teeth when I went live. VERY BAD TIMING and VERY DUMB OVERSIZING!!

    I too was numb to the loss, and the next couple of days made about 2 grand back, floating along and trading while shell-shocked. But the next week I took a serious pause and contemplated that bad day, and to deal with it I went back to sim and spent over a year restructuring how I trade, exploring other markets, and finding what fit for me.

    I went live again this year, the progress of which you can see in my journal I have in that section. Rebuilding confidence...slowly building up my tolerance for taking losses...These are the things I needed to work on, and still do, but it is getting easier.

    You're never going to forget the big one. Nobody ever does, and that is a good thing I suppose. It help keep you in check, or should. But If you can build back up your discipline and risk management, you can recover and become better and better at it to the point where your confidence will carry you through bad times. It may not take you over a year of sitting on the sim sidelines like it did me, for some folks bounce back faster. Some slower.

    It is not an easy road, but it can be done. At least take comfort in knowing you are not alone.
     
  37. I'm not sure exactly how you trade but anytime indicators are involved, it's important to realize that indicators need to be interpreted in context. That is why there is no perfect indicator and all these folks will reference studies that show that indicators don't work (see link below). This concept took me a long time to figure out -- context requires fully understanding the market environment, the risks given the environment and viewing the market in multiple time frames.

     
  38. If you are using MACD from IB, something you need to know that I discovered about MACD histogram from IB, it repaints. I have checked it again and again and again, its difference between the MACD and the Signal line changes from its initial value the next day.

    Anyway since you stated that you don't use technical analysis that much, looks like what's killing you is just your risk management. You need to implement an effective stop-loss in place to get out of a losing trade and have the discipline to do so when the price is not going your way especially with your breakout strategy. There are a LOT of false breakouts and bull traps so it's important that as soon as you see the breakout is not happening, you need to get out and then get back into the market when you see a good opening.

    With your strategy overall though, you have to be prepared for a LOT of losses even with stop-loss simply because there are more false than true breakouts out there so your chance of being profitable on a breakout is lower.
     

  39. Hi JSOP - you arte right about indicators re-drawing. e.g. my Sharescope programme prints (EOD, not real-time) forex charts at 1730 UK time (based on 1630, London market close), then 2200 (based on NY close), then appr. 0600/0700 (I assume this is based on midnight price data).

    Obviously charts and indicators will be in one of the three daily editions depending on when you take a view.
     
  40. Never, ever, EVER put yourself through the wouldda/shouldda/couldda's in this game. That negative stuff will, at best, just eat you up.

    You really MUST learn from your mistakes and not fall prey to them again. You get up, you get it back on the rails.

    Always remember that your best trades are ahead of you.
     
  41. @oopsies
    Firstly, I'm really sorry to hear this. I'm not surprised though.

    If you could entertain me for a moment. What exactly does a MACD have to do with the market or why price moves?
    And a line on a chart, what does that have to do with the market?
    See, you think you're trading the market, but actually you are not. You are going to tell me you are, because you have a broker statement with a list of all your trades.
    I know why you use a MACD. It is because it helps you make a trading decision. You use things like lines and MACD (indicators) because from your perspective there isn't anything else!
    But imagine for a moment that there are no indicators. I know, what an uncomfortable feeling! But you are now closer to long-term profitability than you have ever been!
    How would you now trade?

    You have to learn to trade on a 'forward basis'.
    Most retail traders do not trade on a 'forward basis' and this in my humble opinion is why so many fail.
    The order of things:
    INFORMATION>>MARKET PARTICIPANT>>ORDER FLOW>>PRICE>>MACD (INDICATORS/LINES)
    Can you see where you are in relation to where you should be? Can you see why you are struggling?
    Larger market participants are pushing billions around daily. They do not care about MACD!
    T h e y d o n o t c a r e a b o u t M A C D !
    Indicators are a result of price movement and price movement is result of order flow and order flow is a result of market participants clicking buttons and market participants are driven to clicking buttons because they receive information that forces them to. The market participant is a slave to information.
    And please, do not tell me that a MACD is INFORMATION! Price and MACD is OUTPUT, not INPUT.
    Indicators do not drive prices.

    Find another way to trade.
     
  42. Good Morning oopsies
    My questions to you all were intentionally trying to shaking up your psychological inner...
    Trying to make you, to get to know, what you know that you know...many times we don't realise how much we know. If you could make 3/4K consistent, you know something...
    To me... To my ignorance...As a looser trader, which I am... I do think that you are completely in the right path with your methodology... Yes, you did have one relapse. Though, don't let it go against you! Please move on obeying all your previous rules. Those that brought you in 3/4K consistently. Think about them... Think how good u felt when u had it... Try to feel those feeling everytime you will sit on your trading desk, keeping those feelings!It is very important to feel good about yourself when you going to trade.
    Everyone had what you just had... at least one time everyone was a bad Boy/gril as you were.. Those who used those bad behaviours as an example of what u r not allowed to do , succeeded...So copy them!
    I don't speak good English, sorry if I am not making myself understood well.
    Many answers in here are good, but there is one on the very beginning of this thread, posted by steeveM that I have considered as a very real help.I already added on my Daily "reading card" in order to make it one my rules... It is about what "I think" you and I are in needing. "Psychological stable rules for money management....Oh How I need that! Seems that it is the only thing you did not have at the moment of risking 15K
    I would love to hold hands with someone,exchanging inf. during mkt hours through a voice communication such as Skype, Paltalk, etc, but seems that in our case it is not going to work because i am a "day" trader. Or better, I wannabe day trader. LOL. Also I just trade ES.
    Using P.A. confirming with volume and MACD,"most of the time", I can see mkt directions but I have no discipline to take or follow what I see, which I think if I had another serious trader to talk about it, possible it would improve my confidence if we both would be in the same path, taking us out of a situation of sabotagem ourselves. Which is what U did. Agree?
    I hope it can be any help to you.
    I wish you luck, feel free to contact me any time.