struggling trader needs help

Discussion in 'Psychology' started by rnaugin, Mar 1, 2009.

  1. rnaugin

    rnaugin

    Hello everyone,

    I have been reading this board for quite some time, but this is my first post.

    I am a struggling trader, and I hope that by posting here I can pick up some advice and encouragement to keep going. I also hope that by airing this publicly I might be able to narrow my focus and solve it.

    It is a firm goal of mine to make a living trading. I am very committed to it. I have been trading on and off for the past 14 years, between job contracts. Total calendar time spent on trading related activities is probably 1.5 years.

    I "know" enough now to be successful. In fact I "know" enough about trading to write a very credible response to this post, should I choose to masquerade as an expert. :)

    Over the last calendar year, I've kept detailed notes on my trading and have addressed several important issues. However there is one thing that I just can't seem to overcome:

    Revenge trading. I hate losing.

    This is a tough one for me. My first loss of the day is pretty easy, I take it mostly in stride. However, it upsets me somewhat and I start to rush a bit. The second loss is usually due to obvious stupidity on my part, and that makes me really mad at myself. Then I start looking for anything that looks remotely like a setup or just take impulsive scalps.

    I only quit when I reach my "point of unbearable pain" which is sometimes more than 10% of my account. After than I am defeated and depressed and ready to give up.

    It sounds easy to say "just don't do that". But I can't describe how powerful the impulse is to "fight back". My hands shake and my heart rate goes up. I can't think clearly. I know in that moment that I MUST stop trading. Only rarely can I actually walk away when that happens.

    I am a very emotional, impulsive person by nature. Not to give the wrong idea, I am also responsible, stable and intelligent. But trusting my gut, making snap decisions with limited data and taking risks are strengths that have set me apart from the crowd and have lead to success in other areas of my life.

    I feel like I should be able to overcome those traits to trade. I don't overtrade for the excitement, as gambler would. I don't enjoy overtrading at all. It's just REALLY hard to stop myself when I am facing a loss for the day.

    Oddly, this has only been a problem for the past year or two. Before that losses didn't bother me as much, I thought of them as tuition. But I think it's starting to sink in that I might not actually be able to do this.

    I would really appreciate serious suggestions by people who have have overcome tough, personality based trading obstacles like this. As I said, I am very committed to making this work, but I'm at the point where I need some outside perspective.

    I'd also really like to hear from people who have fought their own demons and won.
     
  2. Discipline.

    Learn how to play poker correctly. (cross apply to trading and vice versa)

    Restraint. Learn it love it.

    Keep rules. Then follow them.

    Make 50-100$ a day and never get greedy. You can size up later.

    If you've been trading off and on for 14 years, there's something wrong.
    Just remember, this is a long game. Take home a small profit and call it quits. Do it everyday, it adds up quick.

    Even a tiny $20 gain a day X 260 trading days = $5200. Eventually after all those gains you gain confidence too, thus slowly increasing size and gains.

    That shouldn't be TOO hard. At least you would be consistently profiting. But most people just get greedy and want more and more...

    Good luck

    EDIT: For me, leaving my 9-5 and going full time has helped. Mainly because it has put pressure on me to NOT make sloppy trades. There's literally no room for stupid errors. With bills and expenses...you realize "wow this is it, it's just me vs me and I need to win"....for me this has helped me grow.
     
  3. Patience. Calm Professionalism. Apathy.
    *It's an attitude.
    Look at the forest instead of the trees.
    You CAN have your 'revenge', just not in
    that frenzied, compulsive state of mind.
    Good luck.
     
  4. Have to heartily agree with all the above. Also, keep your overheads as low as possible and don't try and make a decent income until your account size justifies it (stay clear of leverage). Build your confidence and have a reasonably objective set of criteria to trade from. Be patient and only trade when there is a trade there. Impulse /revenge trading will garuantee failure. Self discipline is as important as a system. Keep it simple and stress free and it will happen. Your account will gradually grow and you will have a winning mentality.

    Good luck.
     
  5. TsunTzu

    TsunTzu

    If you can meet with triumph and disaster
    And treat those two imposters just the same;


    Snippet from If by Rudyard Kipling.

    The thing is your going to loose, I often loose more times than I win. You cant get angy about it its part of the game. You need to look at why your getting angry. It sounds to me as if you get angry because your actually not trading to your plan, and then you get in some kind of self destructive feedback loop.

    The market doesnt know it you have won or lost, nor does it feel your revenge. Your wasting valuable focus getting mad. Identify the triggers. If its loosing money, then your in the wrong game. Step out of yourself and look at yourself in front of your screen, look at how you are and consider how you want to be. Then step back into yourself and take in the learning. You can sort it out with a bit of basic NLP. Check out http://traderfeed.blogspot.com/ for more useful info on this sort of problem.
    All the best
     
  6. NoDoji

    NoDoji

    Wow, that really struck a chord. I, too, considered my losses last year the cost of tuition and my confidence remained high for quite some time. However, I had no other job to fall back on that would pay the bills, I'd been withdrawing from my account all year, I'd chalked up net losses, and by the end of October I was at the point that I had to make this work and there was no longer room for error. I started this year with a minimum required return of 100%. If you think trading is psychologically difficult when it's not your bread and butter, you have no idea the demons that haunt you when you're at this point.

    I would recommend you keep a detailed journal of your trades. Include your reason for putting on the trade, your stop loss and expected profit (the loss should never be more than the expected profit), and a post-trade analysis. Review this regularly and it will help. (I post my journal on this site, so I can get feedback from others: http://www.elitetrader.com/vb/showthread.php?threadid=132626)

    I also recommend reading "Trading in the Zone" by Mark Douglas for the psychology angle.

    Best of luck in your trading!
     
  7. rnaugin

    rnaugin

    Thanks everyone for the kind replies.

    I really like the Kipling bit.

    It's encouraging to know that others who have found it difficult have then been successful.

    I am keeping a detailed trading log when I trade, although I am not currently trading. It's very helpful to review and has helped me overcome other issues.

    One thing I would add is that it's very helpful to log what I thought and what I felt throughout the day, in addition to just a raw list of trades and why I took them.

    They say in the books that being under pressure to succeed is a recipe for disaster. However I think that in my case it was an important step to start really feeling the losses, rather than just thinking of them as a necessary expense.

    I think that echos what Jaytrade and NoDoji were getting at.

    Thanks again everyone and during my next attempt in a few weeks I will see if I can do any better.
     
  8. Pita

    Pita

    you should trade methods instead of (assumingly) discretionary. Backtest and chose 2 or better 3 different markets and trade them with fix entry/exit rules. Let this be the backbone of your trading and do other plays when you are in the mood for it. Methods sure need to be adjusted as well eventually but mostly just one at a time (thats why you should trade more than one).

    The reason for revenge trading is actully not to egalize a loss but is triggered by unconsciously regretting all those potential setups which were inviting you for the ride while you were too scared to press the button.

    Emotion is a killer in trading. You know if you want to be successfull consistently then there is nothing less important than the very next trade!
     
  9. One thing that has helped me ENORMOUSLY was keeping an affirmative thought journal. I have had some serious problems with impulse and revenge trading myself. A message that I write a lot is "I am a disciplined, profitable, calm, patient, net profitable trader" Get a little calendar book with enough room to write a paragraph everyday. I think it could help you a lot. Keep your head up man.
     
  10. oraclewizard77

    oraclewizard77 Moderator

    Good idea. I also would set a daily stop loss, and maybe take a day off if you hit that loss instead of getting into the frame of mind that you will make it all back the next day.

    Also, a good expression is if you are digging yourself into a hole stop digging. In that I would suggest if you are starting to lose, decrease the amount of contacts or shares that you are trading, and once you get back into the mind set where you are making money, increase the contact size.

     
    #10     Mar 6, 2009