Have I passed the Emotional stage ?

Discussion in 'Psychology' started by savagemp5, May 22, 2011.

  1. I have so far nett positively, and similar took losses, but Profits > Losses very month running for 1 year

    Problem is 3 years back when i was started trading, whenever i take a loss or $200-$300, I wld feel bad, damn bad. My day sucks bad. There was once I took a $2000 loss on LVS and I felt like dying + suiciding.

    Just yesterday CAGC, a China stock resume trading after halting, delisted out of NASDAQ, and becos I had took up quite bit of derivatives positions prior halting, ended losing big around $2k+.

    Though 2k is a only small percentage to my portfolio, its the same amount of loss back then, but I no longer feel the pain as I did 3 years back. Is this normal ?

    Because I have some degree of comfort, taking $100-300 losses no longer feels bad, but rather I am happy becos it simply means I cut the bad bleeding fast and let winners continue run.

    Does any successful traders share the same feeling and is this normal ? Soon I will touch the 50k mark and eventually 100k, and thus my losses will start to mount up, just want to get some validation and confession !
  2. You need to stop thinking in terms of absolute dollars, this can only harm your trading by increasing psychological pressure. It is hard enough holding on to a sound position during a typical market pullback or test, the last thing you need is to be stressing over "shit, I just lost X dollars, that could have bought a new car".

    Simple advice:

    1. Stop focusing on absolute dollar amounts. Any time you think in terms of dollars, you have made a trading mistake, regardless of what you do after. Think in terms of % of account equity only.

    2. Stop looking at anything with dollars (or euros, francs, pounds etc) in it. Delete your P&L columns, stop looking at account equity each day, and so on. The only time to look at dollar amounts is to check your position sizes when you enter or exit a trade. Personally I check my account equity once a week, on Saturday/Sunday only. Checking it during the week, and especially intraday, serves no purpose at all and can only stress me out.

    3. Ignore your open P&L on any open positions. Just look at price, not how much you have made. The ideal trade is one where you have no clue what you made or lost on it until you check your account statement the day after exiting.

    Basically it can all be boiled down to this - focus only on things that affect the validity and soundness of your trades. That might mean just look at price action, or checking the news, or checking the fundamentals and valuation. But your personal $ P&L on a trade has NOTHING to do with whether it's a buy, a sell, or whatever. No market is a buy because of how much you made or lost on it. So stop thinking about $ and start focusing on what matters, making good trades and avoiding mistakes.
  3. jokepie


    This is normal....
  4. If you are trading $ 50 K equity and experiencing a $ 2000 loss ( 4 % risk? ) on an individual trade then your risk might be too big.
  5. I didn't Long the Equity. I didn't want to, instead I sold naked puts and I didn't expect the stock to halt trading all of a sudden. Its probably not part of the expected behavior else I would have sold it or remain my shorts opened.
  6. Well, if I run a $100,000 AUM with about 30 equities and 15 derivatives, and about $50,000 is OPM, I doubt I can check it on a sat/sun basic, can you ?

    I do agree its the % since this wld fall under MPT and portfolio mgmt.
  7. =============

    Percentage measure is quite helpful;
    probably why so many pros or even average money managers use it.

    Hey, i mislaid a small box with several steel pennies in it;
    I hate any kind of loss even temporary.

    BUT no such thing as any business with no exspences[losses]

    So sounds like you[o-poster ] are doing better emotionaly;
    no such thing as any business with no business losses/exspences.
  8. limau2


    You just numbed the pain,and its confirmed when you ask for confirmation.

    You are still early in your trading stage - that is normal, but If you feel you are no longer newbie, then something was wrong. You need to know your market, and you need to know yourself. It will take about 3-5 years for 'normal people'. You need an edge, then you need to feel comfortable to trade this edge. If you dont feel comfortable, it means your emotion telling you something was wrong. You need to find that 'wrong'and eliminate or modified it till you feel comfortable again. Only then you'll feel confidence and you'll reap your profit in due time. Hope u understand my shortnote and good luck.
  9. when you feel numb about loss, that is a bad thing.
    emotion is good. when my stop loss get hit, I feel very painful since I know I lost money.this pain drives me more objective observation toward the market, or wake me up, put me into a full attention mode, I know if I do not do that, Iwill get hurt again.

    reflect in those bad trades, think them over: where you are wrong or how makes you wrong.
  10. I second the above poster. Remember, people like Hitler and Pol Pot murdered millions because they were numb. Killing was the only thing left that allowed them to feel pain...

    On the other hand, not feeling a few K's worth of loss could be due to confidence in your system and your ability to make it all back, and then some...
    #10     Jul 8, 2011