There I said it. I'm just completely obsessed with where my account is currently at, and it always effects my trading. If I'm trading well for a while, I'll start to worry about giving it back and tighten up, get conservative. Then comes the inevitable losing streak, and so I get aggressive to try to make it back with miserable results. Sanity returns, and cycle repeats again. I KNOW it doesn't matter what number it's at, I know that my last trade whether winner or loser has no bearing on the next. But I just can't get past that habit of letting the number dominate my actions, and I'm sick of it. Anyone with some advice? Something besides taking the number off the screen or avoiding looking at it, tried that many times already.
Trade with size so small that the PnL really has no meaning to you. Focus 100% only on executing properly. And keep a good journal, not only of the mechanics of the trade, but your emotions. How you felt prior to entering, while in the trade and critique afterwards. Trade 10 shares at a time if you have to, but you have to trade so that the money truly doesn't matter. Up the size gradually as you progress. If you can't break the cycle, you're doomed. If you can't afford to trade small because you need the income to live, then you're also doomed.
I have one suggestion. For the longest time I have been trading very small size and ranking my "results" only from statistics like win ratio, winning percentage and average winning risk reward. I have also been tallying my results with "units" a unit being the amount of risk I put on a trade. IE I can lose a maximum of 1 unit on a trade and I adjust size accordingly, if I need a wide stop I only trade the number of shares that when I reach my stop I lose a certain dollar amount, my risk unit. This way at the end of a week if I have gained 5 units I know that 5 units could vary depending on whether I risked $25 or $400 a trade, depending on what I decide, usually a fixed amount for quite a while until I am confident with a strategy then I increase risk. One benefit of this has been that I find myself focusing on things that relate purely to my own performance and not really on a dollar amount. This has enabled me to increase my risk size without bugging out too much since I am already used to this abstract thinking, not based on dollars. Since I am not watching profit and loss flash money I can trick my brain into performing the same whether I stand to lose $25 or $400 on a trade.
I've been through this so many times, I always regain my sanity after a big give back and slowly work my way back up. I dont think of my account in terms of dollars or how it impacts my lifestyle (it doesn't), but the bottom line does act like my gauge of progress as a trader. I think what happens is that after a drawdown, feelings of frustration and thinking that my recent efforts were all wasted just chew at me, and I start to trade anxiously. What is everyone's attitude towards losses? I know practically speaking, what's lost is lost and that the next trade should always be looked at from a clean slate, but is shrugging off or ignoring losing trades the right way to learn how to deal? Or am I not taking my losses seriously enough as warnings that I should slow down or stop for the day? I read that some big traders like "the flipper" have external risk management set in place so that they "shut down" after a certain point. Is that in reality the best way to manage things?
that's what i'm doing. it is still hard. read about behavior finance. http://www.clicklive.com/NYMEX/symposium_2003/kiev.htm http://www.turtletrader.com/behavior.html http://nobelprize.org/economics/laureates/2002/kahneman-lecture.html
============ Thats good, when trading well ,to tighten it up , sometimes tighten up stops so you dont give profit back. Also losses do come in streaks , so you got that right also; but gettting aggressive during a losing streak is 100% wrong, and will kill your trading if you keep doing that.Trade smaller If you keep aggressive trading during losing , your trading is doomed also; focus on process, certain amount of P & L is noise. Except for ego, why when losing, would you do more of what causes you to lose??????? Consomme did you know the definition of a fanatic is someone who loses sight of goal/process; and redoubles his speed. Redouble your speed during losing streak =doom also. Except for ego why , when losing do more of what causes you to lose, unless you like losing????? Hope this helps.
Permit me to offer a helpful sexual analogy, as is my wont. Does a guy with a big dick worry about how big it is? No. A big account is like a big dick. Make it bigger with your outside earnings and your account envy will disappear.