Correct. It's all about knowing. When you have viable trading strategies your emotions will play a very small role in your trading. Why? Because you trade the strategy and nothing else, and you know what the results will be. Some days the stop loss will get hit more than on other days, but the winners are always in there. Develop and prove your trading strategy before you go live.
Before start i apologie for my english, hope u can get the idea any way. The problem that every body who start trading have, is the approach, some how the people get a little success for a little while and then the reality crash them down. The question here is how you decide what to do, when to do and how much you will put on a given trade. (Because, there is no point stick a trade plan with out a good plan ;-) ). There is my approach I really hope it will work for u, as good as have worked for me. First, What to do, and here is where the approach of a weather man have all to do!! Have u ever think about how the weather people do to say hmmmm I think today going to rain?, well they use the convergence of signals, for instance, if there are, clouds, strong wind, and thunders, the most probably thing is that it's going to rain, right?. Well that's all, when we said that the most probably thing it's that's going to rain, means that we are allowing that even when the sky get clouds and wind and there are thunders, perhaps at the end don't drop a rain, because we are trying to predict some that in fact have not happened yet. So for that reason there is the second thing: When you are going to trade? when the convergence of signals be so clear that trying all this occasions, the result be more at your favor that against you, even in a choppy market!!! For this there is a simple rule, you will buy when the price in fact is going up (waving with high more high and low more high each time) and you'll sell when is going down (waving whit lows more low and high more low each time) and with this i mean, don't buy if the last low was almost as low as the previous or if in the last high the price almost was incapable to get really over the previous high. And lastly on the when matter, only get in to a trade when you will be confident patient and mentally clear to stand until the price that you spectate to reach before quit the trade be profitable enough to reach a risk reward ratio of 1 to 1.5 at least and 1 to 2 if you are trading against the over all trend. About how much are you going to put in a given trade, the best solution is always try to keep a percentage ratio in every trade, for example if you are trading a 10k account and you feel that you will have the guts to experience jumps of a 5% of your actual account if you lose, then 5% is good for u, if you feel that this is too much (for example if you do scalping or things in very short term) perhaps then you need a 1% trades to give you the chance , and here is the important, that you get a trade with your head cool, every thing with the hart bumping a lot (because after all what's the advantage of win money if you will give it back to your cardiologist, right?). When you have decided the percent that suit to you, then use this simple formula amount of lots or contracts = percent decided for your trade style divided by the cost of your trade for example again, if you trade the 10k account, and you find a trade that have a cost of 250 dollars per lot, from the price where you are going to enter into the market until the price where you know that the trend that you were following are vended (almost all use for this the previous support if you are going to buy or the previous resistance if you are going to sell), then as you can see you will have a lose of 250 dollars if the market turn against you, so you will put only 2 contracts in this trade in order to get at this time your risk at top at the 5% of your account. If you do this you will have only two possible endings for this chance, or you get your account whit a $9500 if you lose, or you will get a $10,750 dollars if you win (lol). Of course for your healthy you must use a stop loss and a take profit orders to get out of the market, this will help you especially if you are new to trade with real money because you won't feel attempted to quit the market before the time. remember eye on the screen only to find a trade. What? are you asking me what's if the price where you need to exit give you a risk reward smaller than the 1 to 1.5 or 2?, well here is a possible solution, you can program a limit order, to get in to the market only in the case that the price meet your criteria to be in there. Hope you can find some useful at this words. From mexico city, have a very profitable trades ¡¡¡y arriba esas cuentas jejeje!!!
Well, the title of this thread caught my eye, and I thought to myself, "Jeez, at least I'm not the only one not getting it". Very interesting discussion going on, and I am pleased that this group here are so supportive of each other. A rare pleasure to find. Anyway, why the thread title caught my eye was regarding some of the market reactions to some of the earnings releases being made lately .... I have seen prices drop on above-expected reports, I've seen them rise on below-par results, I've seen them bounce around to and fro with seemingly reckless abandon .... how the heck do you rationalize some of these reactions? Yes, my wife and I are total newbies, but for god's sake, some reactions are totally unfathomable. What gives? Is this life as you know it? Is the only thing we can count on is to expect the unexpected? Guidance and hand-holding appreciated....... Cheers, Mike
Flash, sorry to hear, but we all go through it at some pt. On a brighter note there is some very good advice in this thread, the best of which is to STOP trading. Take a break, regroup. If you can't take a break b/c your under pressure to make money every day then I think you might be in the wrong profession. Though this is such a simple concept (buying and selling), it takes time to master (some longer then others). I don't know how you trade, but if it's just scalping, starting looking for higher timeframe setups. So true re the brute force comment. This thread made me think some about the whole trading psychology thing. When you have a solid trading plan, trading psychology isn't really much of a factor imho. You're job is to watch for setups that happen on a regular basis, day in and day out. They work more often then they don't. That's it. Take a break, start back slowly with small goals, enjoy yourself. Even when you are successful you need to incorp small breaks into your trading on a regular basis. The market will always be here.
take a break. come back & pick yr spots more carefully, trade less, reduce your timeframes (time-box yr trades), scale in & out more (never average down), tighten yr stops, move them up faster (break even is always better than loss, always good to reassess where the market is, there's always a next trade)... as your getting more confident / secure abt yr trading, increase leverage ... good luck to you ;-)
I thought 7_pasos post was VERY informative, Very good information in that post. Two empanadas on me! Mike, Almost all price can forecasted reasonbly 80% , The stocks you are watrching that went down even though they have good earnings, could be just lack luster earnings during a down market, That'll take it down regardless of what its earning. To me ,. the market is the mother, the stocks are kids. Where mom goes, kids follow, may stray, but not far. Understand the market, and you will make money at least 50% of the times. You can learn to understand the market by trading SPY / QQQQ
I check the post date many times to make sure I am not reading a stale thread but for those who has the same issue check out this prev thread too http://www.elitetrader.com/vb/showt...highlight=wrong with me flashboy&pagenumber=1
Thanks for all the replies.. I think I will step back for a while and reevaluate everything. I have a trip to Chicago planned to see my kids in November and may not trade again until I return from there.. I believe FT71 was correct.. my biggest problems are: Putting too much emphasis on the money.. when I am up for the day.. then take a small loss I am always too anxious to get back to where I was .. so I press things Feeling the need to make money and do something.. I get upset with myself when I miss a move.. and then start to press to get a trade on.. Another big problem is not entering correctly.. usually not recognizing the setup right away and entering late.. and by doing so increasing my risk and lowering my reward on the profit target.. And some of the above problems are causing me to lose my discipline and trade emotionally.. I thought for sure I'd have been profitable in this endeavor by now.. but I'm not giving up yet.. and hope I will finally be posting a positive thread here in the time to come.. Good trading to everyone.. and thanks again
I stated that this wasn't the first time I've posted the same thing.. Thos who've been around here for a while I'm sure know me as Mr. Consistency (on the losing side of course)
I trade mostly mechanical systems, but I think the emotional component is fairly similar. My systems are all 1 to 5 day swing systems. Many of the mechanical systems have typical drawdown periods of 60 days or more. They also make the vast majority of the money in about 15% of the time. THIS IS HARD to follow consistently! I constantly have to remind myself that I will be +- 5% most months, and have about 2 good months a year. Trading is a game of statistics, which is something most of us cannot "internalize", The best you can do, imo, is to review your stats and equity curve and "remind" yourself of the true nature of the game. All the best