Not getting in....the right choice

Discussion in 'Psychology' started by RCG Trader, Jul 4, 2011.

  1. This thread will not last long, as I know there are not enuf traders to relate.

    But, earlier, I got a signal on the close Friday to get long the Euro. By the time I checked the spreads had gone to the weekend rates. No deal.

    So, Sunday evening comes. Price has gone away 30 pips. Spreads are normal. I get in. Ten pips later to the plus, my mind says, I am not following my rules. So I exit.

    Now, price has pulled back.

    The question I put to you traders, do you feel a winner when you make the right choice to stand aside?

    If you don't, think hard about why this is, and post it here. If you do, share this so that newbies can realize that standing aside is a good choice too, especially if you spot that you know that you are not following your plan.
  2. NoDoji


    Standing aside and waiting for more clarity is wise. Sometimes when you do this, you may miss a very strong move. Then you face the very real temptation to "get back" what you missed instead of patiently waiting for the next valid setup to appear out of the clarity that was expressed by the strong move.

    The ability to follow one's rules day after day is the toughest part of trading. Trading requires a military approach. This is the battle plan and if you don't follow it, you're probably going to get hurt.
  3. JM1987


    You have to remember to play as the casino and not the gambler. Yes that trade move may work out once, maybe twice, but how about on 1000 attempts? You must make the ''right move'' for every scenario, and if not getting in is the right move then so be it.
  4. cornix


    If your analysis turns out to be good, but you stood aside for a reason not related to discipline violation, then it's still good thing, another evidence that you read the market well.
  5. joneog


    Yes. It's still tough to stand aside and watch a trade go big. I think alot of people have a tougher time with this than taking a trade for a lose. In hindsight you say "damn, I could have made XXXX" Of course in hindsight you always look at the best trade that could have been made, and not the likely trade.

    I've also found that if I don't pull the trigger on one or two trades early, the next trade(s) I take that day will be losers. Therefore if i have some early misses, I take the rest of the day off. Start fresh the next day. Nothing worse than missing a big trade and following it up with a loser. (I'm sure a lot of people will disagree and say you have to stick with your system, which is true if you have a very mechanistic system w/o any discretion; but in that case you shouldn't be missing any trades).

    This is different than consistenly not pulling the trigger on good trades. Then there is a significant opportunity cost of not taking trades.
  6. Clearly the circumstances that drive this sort of standing aside will differ from trader to trader, but, hell yeah you should consider it a "win", especially if you can identify an objective way to avoid similar negative expectancy trades in the future. Sometimes a trade signal can be like a medical test and give you a "false positive" reading. Avoiding those keeps money in your account that would otherwise flow out in losing trades.

    I keep track of the trades I pass over because they are more likely to be false positives and the results do show that I've sidestepped more losses than gains. It's good recordkeeping discipline and you might just find something worthwhile in the data you collect.
  7. There was a time when I first began trading that I didn't know anything about the market. I would see every movement as a "possible trade." So when a big move would happen, I would analyze it and ask, "How could I have been clued in to the fact this was about to happen?" At that point, I felt like every move that happend I was missing out on. It was frustrating.

    Currently, however, I have a great system and I don't even notice movements that aren't triggered by my system. It's like in my mind they never happened.

    I've attached a chart of the last 4 weeks in the DIA; an ETF that moves just like the Dow. From left to right, there is an upward movement which I have circled. It moved over 2 dollars and when it happend, I not only didn't care, I didn't notice. I was too busy looking for my next entry. And the next move in the square I took as a put trade. Then, 4 days up (circled) covering over $3 of movement. Again, I didn't even notice. But I took the put trade in the 2nd box for a $3 move. After that, a $3.50 upward move. When that finished, I felt that the upward movement was confirmed so I took the long position with calls in the 3rd box for a $3 move.

    Some people would call the circled data "missed opportunities." But my system doesn't find them, so I pass. To answer your question plainly, I don't feel anything when I stand aside.