How I elimated fear abd greed from my trading

Discussion in 'Psychology' started by IN2WIN, Oct 6, 2003.

  1. IN2WIN


    I believe that most if not all human's have to varying degrees a of fear(s), and greed that impede their success as traders (and probably elsewhere in life). The degree and kind of emotions certainly vary within different arenas within each of our lives.

    When it came to trading, it took me some time to realize that fear was indeed a huge impediment to my become one who would consistently follow any method, as long as the fear passed my "tolerance" level.

    So I set out to find that level. As it turned out I got anxious at -2.00 - and really stressed above -3.50 sp pts.

    So I began working to see if I could create the a method that "eliminated the "fear factor".

    So the method developed had part (1) in every trade I enter I immediately set a stop at -3.25, and as early in the trade that I feel appropriate I would reduce the stop to -2.00.

    As time passed and success and statistic continued to mount, I found that especially in narrow range areas I needed to use a -2.50 stop to keep in the trades, then I found that using a reversal at brkeven stop would rotate me around a price until I caught the move that would ultimately unfold after the congestion end.

    I keep adjust my indicators, and finally found a pair with "my own" specific setting that helped a long way in giving the "edge" I really needed to help out in these narrow range periods.

    I find after using this method now for over 4 years the results are superior to anything else I'm aware of
    and "fear" never enters my trading.

    While here, I feel it is appropriate to mention the "greed" factor as well. As I found that also played a large roll in my trading.

    I found that seeing the market move quickly in my direction elicited both excitement, and great expectations. Too many times I let a nice profit vanish into a breakeven, or worse, stop loss.

    So I set out to find a "magic" number that within my method yielded the highest return over time. I'm not good at "testing" as I know very little about to use the software I have correctly, so it literally took hundreds of hours reviewing past charts and trades to come up with a range that seemed to work. Then I began tracking it as I traded live. The range was 2.50 to 4.50 points.

    After keeping careful records for another 6 months it narrowed to 2.50 to 3.50. So most of my initial target exits became 3.00. Over time, and as confidence grew I began to add a little more "objectiveness" into my method which to allows for stops from -3.25 to +150 as the trade progresses, and allows me to take when I believe I strong enough evidence to do so.

    But should I allow for a profit exit greater than 3.00, it also requires that I set my stop at a least +0.25 to -1.50 - I will never again let a +3.00 turn into a net loss over greed!

    I hope the above proves helpful to others. I"m sure there are many ways too "manage" our fears, greed, and every other aspect of our likes. I merely present what worked for me.

    Live, learn, grow, prosper!

    God wants his children to be happy!

    Please feel free to PM me, I'm happy to try to be of help if I can. Or email mail me as I may not be on ET very frequently.
  2. Thank-you for your honest thoughts and your direction. Through much pain and expensive 'tuition', I've developed a similar system for certain equities that I trade. I am just beginning to work with the E-Mini and your guidelines, and their basis, are outstanding.

    Thanks again.

    Jim H.
  3. IN2WIN


    [EDIT: RLB]

    There are only two kinds of events in your life:

    Positive ones and those you don't truly understand.

    Ask yourself this:

    Would I rather enjoy every experience, even the "unpleasant ones" and find out on my death bed that I was wrong about having had a joyous life; or would you rather live a life of ups and down, trials, tribulations and at time joy and find out on your death bed you we're right.

    For me Life is no longer about being right or wrong, better or lesser. It's about making each moment, for me and those around me, as pleasurable as possible - and sometime I forget to do that.

    In ancient times there was a small village wherein lived a wise old man who always appeared to have the "answer" to everyone's questions.

    A youth, believing this impossible, decided to prove the old man wrong.

    Clutching a tiny bird between his closed hands he spoke to the wise old man:

    "Master I hold a bird between my hands. Tell me sir, is this bird living or dead. Knowing full well he would crush and kill it if the man said "alive" or release it to fly away if the man said "dead".

    The old man looked peacefully into his eyes and spoke:

    "As in All things, the answer lies in your hands."

    God bless
  4. Greed and Fear are easily the 2 worst enemies of traders. If you start thinking about your trading as making or losing you money during a trade, you are bound to get screwed by greed or fear.

    I think you have to trade a strategy and base your trades off that system. The strategy says buy you buy, it says sell you sell, etc... Regardless of whether you are up, down or flat at the time. Everyone has their own strategy, and there is certainly more than one that will work. The oimportant thing is to give it a chance to work and not let your emotions make your decisons for you.
  5. [EDIT: RLB]

    Greed and fear can be an enemy, or they can be your best friend; if you know how to use them. If you are unusefully effected by these two emotions, try this: instead of avoiding them or trying to change them, just notice them. Change can be easy and automatic (inspite of what you presently believe, but beliefs change sometimes, don't they?) but force of will is not the path.
  6. the way I see it, you only have two choices, love or fear. Greed and fear are the same thing. Now how this applies to trading I haven't yet figured out. I guess if I love my profits I will let them ride, and if they disappear, what is it they say? "Better to have loved and lost....."
  7. Siwash


    Agree,I believe greed is a fear of not having enough,for me I have faith that I will always have enough. Whether that is alot compared to other people remains to be seen,although by virtue of where I live I already have more than almost 90% of the rest of the people in the world,not just materially but freedom etc..


    Bravo IN2WIN. That's awesome news!!! GO GET EM!
  9. Fear is only artefact of uncertainty. Anyone who won't fear uncertainty would be just foolish: nature has "invented" fear to protect us don't forget. So when fear is here it means you DIDN'T WORK ENOUGH AND/OR ACQUIRE ENOUGH KNOWLEDGE. This is evident in Deming's philosophy in quality management domain : look at the process, study the statistics that is the only CONCRETE way to improve. Once again bla bla bla on just psychology is not enough. I have posted PDCA cycle of Deming in anoother thread with concrete tools to use but many people have gamblers mentality and don't want to commit themselves to study seriously.

  10. Huge post. I had troubles with a related type of greed: I'd snatch profits too early so I could have a higher win %. Then afterwards I could applaud myself for my high # of winners. Of course after awhile I realized I was sabotaging my P/L and turning some good systems into mediocre ones.

    I'm a swinger and shortened my time frame and now I don't have any issues. I don't feel compelled to grab profits. My stress level is way down as well cuzz I don't get the drops or draw downs.
    #10     Oct 7, 2003