How do other traders stay humble and defensive after a long winning period in the markets? Losing periods eventually force humility and a defensive posture on the trader. But long periods of winning lead to a different state of mind. I eventually forget what trading very defensively was like and how important it is. Eventually the market whacks the trader with losses and forces him or her back into a humble and defensive state of mind. But ideally I wish I could stay in that state of mind all the time! So I am creating this thread as a reminder and journal to keep myself humble, feel free to add your own thoughts on this subject. A related quote by PTJ in Market Wizards, who actually uses a stronger terms than "humble", he actually uses the words "scared" and "frightened" "I am more scared now than I was at any point since I began trading, because I recognise how ephemeral success can be in this business. I know that to be successful, I have to be frightened. My biggest hits have always come after I have had a great period and I started to think that I knew something."
Being disciplined in the past isn't good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon.
Just remember that trading is a marathon. Short-term swings mean nothing, winning streak is no reason to celebrate just like losing streak is no reason to get despressed. Celebrate if you are able to extract money consistently, that's the goal.
The BF home page says it all. five elements in "BF or BS". Emotions are "tells". the tell says "iteratively refine" your approach before anything else. Absence of "tells" says feelings of comfort, support and confidence. Tudor Jones was stating that he had not completed his path in refinement. He felt he didn't have to. Markets have capacity. As a person trades without losses, his acount(s) compound. For any sentiment, there is a minority. A plan and strategy take this into account. I never trade over five times the capacity. Kelly came up with a formula for people who didn't complete their refinement process. Black Scholes just filled a gap between now and the END. It didn't get refined by Black Derman Toy either. Making money is a rapid growth process. Market capacities are hit well before having any emotional problems when using a completely defined system. Money is just a commodity. As a person uses a completely deifined system, all that is going on is that a rouytine is being carried out. No one can stop you from "taking". No one keeps what they "take of the market's offer". Money is given to people after the taking. It is given to people who are solving problems where there is not enough money to solve the problems. Bill Gates is going to work on malaria next. Buffett gives his money to Bill and Melinda. Bill knows currupt people take and hide his money. He is committed to helping children; he found this out when he had children. Your problem is just a "tell".
I suffer from extreme cockiness often, so far the best ways I have found to maintain discipline is to pay myself often and draw a new higher line in the sand or just take a couple of days off and not even look at computer. No matter how long I do this I still can't keep my ego in check after I have many winning trades and then when one obviously isn't working I can't admit it because I literally feel like god. I don't know if this is a human condition or a genetic flaw either way it has been discussed in depth on many threads.
sounds like poor gamblers. a professional is expected to win consistently or he is out of a job. if you take the losses you guys are talking about as a pro you have one of those closed office meetings. The outcome is never good.
A reality check is knowing that Mr. Market has multiple personalities and soon enough the mood will change, the rythm, the speed and patterns will change, but if your system(s) can adapt to that maybe go to a boxing ring or something and get knocked about, that way, I'm sure something can be done to stop the cockiness. I know what you say though, I feel the same way about wins and my abilities, makes me feel like a top dog when I know I'm not. There is a saying 'pride goes before a fall' and I need to remind myself again and again over that.
I am not sure what exactly you trade, but this sounds a bit delusional. Everyone has losing days, weeks, months and sometimes even years. In fact, a trader that shows a P&L profile that is too smooth (adjusted for the asset class and trading model) should make you suspicious - either he is selling tails or he's cooking the books.
When you get paid serious bucks to trade on someone's behalf, results are expected. You seem to be getting investing and trading mixed up... not good.
One method you MIGHT want to try is to have a friend or family member, or eventually an employee , to monitor your trades ( sizes, drawdown). Basically pay/have someone to act as a risk manager.