need help: i have been trading for few years but i have a bad habet of trading against the trend,always traying to pick tops and bottoms, i am trading ym emini,on monday i did 8 traded 2 wins for few ticks and 6 losers,each time i put my stop 1 or 2 ticks above mkt high and get stoped on 8th trade i got stoped and then mkt cam down 20+ ticks, on tuesday i did 6 trades, yesterday again i did 6 trades traying to pick top,although my charts and strategy was saying go long. this bad habit have ruined my trading account,i have read many books on psycholegy inc Trading in the zone, Reminiscences of a stock opreator,change your thinking change your life,the stock maket wizards. has someone else had this problem and how they cured it,i will be greatfull for any help
Leave psychology to psychologists your problem is lack of trading method psychology plays role if you have trading plan but do not follow it as I understand you don't have it at all Trading "against trend" is not a bad habit it can be profitable if you have back- and forward tested trading plan. The same is true about trading "with the trend". So concentrate on trading plan and it's testing with simulated account.
To stop myself from picking tops and bottoms, my system now incorporates an exp moving average that acts as a censor; and only allows me to trade in the direction of the trend. Basically works like this: Up - OK to be long, can't short Down - OK to be short, can't long
You need to turn your weaknesses into your strengths. I have the same problem. What I did is define a more stringent method to do counter trend trades that would put the odds in my favor. Every top is going to be different you have to define which basket is belongs. For example analyze from a daily point of view, then intraday timeframe. What I look for in the am is different to the pm for example. You sound like you are swinging at everything. I scale in with larger lots when in counter trend trades and ALWAYS keep a reserve. On the 10am spike yesterday on the ER I started shorting above 720, why? Lastly before I enter I ask do I have an edge here? If in doubt stay out. Finally your focus is on tops and bottoms and therefore you are not seeing the meat in the middle. Do you know what I mean here? Your mind is not trying to figure out what's happening in the middle, instead all effort and focus is made on analyzing tops an bottoms. You look at a chart and you see the apex points and thats it. Hence the lack of improvement in trading with the trend and buying pullbacks. 1) define the trend use volume. 2) define typical pullbacks, let your focus be here, even better pullbacks to support (with a little stop running?). Have multiple entries but make sure your first entry has good probability of success. ie only take the best (when could a pullback be a reversal, if so exit at BE if possible.) 3) Define continuation breakouts. Hope this helps
I stopped trying to pick tops and bottoms only after getting burned countless times. The stop is clear and your risk well defined but the problem is you have no idea what reward your playing for.
Rasl, I think this is a stage most people go through. I certainly went through 12 months of counter trend reversal trading all the time. It worked ok on range days - but I got flayed alive on trend days. I'm now sticking with the trend via tests of key R & S levels - I still play reversal trades but only when around major R & S levels & with strong signals. Good luck J
You are not trading to make money. You are trading to be right. You are trying to satisfy some urge to be correct. The solution to your problem is well documented and easy to come by with some research on your part. However, the fact that you still do this repeatedly after years of trading indicates that the need to change is not yet outweighed by whatever desire you are satisfying. Fat people know how to lose weight. Drunks know how to get sober. But until the need to change is greater than the satisfaction they derive from the status quo, things will stay the same. In other words, it seems that you don't want to change your habit bad enough.
First of all, if your truly following your trading plan and these are pattern signals your getting from your strategy... This is not a psychological problem where your not following your trading plan when in fact you are trading your plan. Therefore, seems like there's something wrong with your strategy. With that said, does your backtest results of your strategy show a positive expectancy? If you say YES...the problem is not the strategy. It's you and that implies your fooling yourself into thinking your following your trading plan. If you say NO...there's your answer why your not profitable due to the fact your using a strategy that has a negative expectancy. Therefore, if there's something wrong with your strategy when there's nothing wrong with how your applying it... You could post its details, chart examples (bad and good trades) along with backtesting results. Next, ask for help in tweaking it sort'uv speak. However, if your not following the trading plan of your strategy that shows via backtesting it has a positive expectancy... You have a bigger problem to resolve because most traders can't fix what's causing them to not follow their trading plan (self-sabotaging). Last of all, there's a huge difference between counter-trend trading, trend reversal trading and trend continuation trading. You can break down each of the above three types of trading into further categories to help identify the type of strategy your using. This identification can also help with your position size management. Mark
If a trader didn't think they were making the right choice, then why would they take the trade?. I trade because I think my analysis of the market was correct and that I'll be right about future price movies....I dont see much wrong with this. I do some top and bottom picking from time to time as well, and I'd say that probably 30% or more of my trades last year were fighting the trend. It's possible to swim up stream....just damn hard. But in most cases, the harder something is to achieve, the bigger the rewards can be. When counter trading, keep positions at a size where, if the stock were to gap against you, you wont have a heart attack. If you cant get over the whole tops/ bottoms idea, try and wait for the break out from these tops and bottoms then ride the trend in the new direction.. that's a little bit safer. cm69
it's much better for u to stay trend.because it's not easy to earn much profit but have to take so much risk at each time.and for sure it works if u are good at cut lose.