The Most Gut Wrenching Trades are the Winners

Discussion in 'Psychology' started by aeliodon, Nov 25, 2007.

  1. Because every step of the way you are faced with the temptation of 'taking profits' at new equity high water marks because you know there will be a pullback and you don't know how long or how large the pullback will last. And you're also constantly bombarding by the conflicting 'fundementals' spin machine.
    Holding onto your winners is the toughest skill to master and adding to your winners on pullbacks as you hold is nearly impossible. But if you can master this skill, all you need is one huge move: whether its a bubble going parabolic, or a bubble popping to make enough money to be rich.
  2. This is nonsense.

    Must you make everything so hard for yourself?

    Most trading firms behave roughly like market makers or casinos...
    And grind out money day after day... $10 or $100 at a time...
    With close to zero risk.

    A pro can do it on a small scale...
    Bright does it on a medium scale...
    IB's market making arm does it on a large scale...
    The NYSE and NASDAQ do it Big Time.

    Then at the end of the year... you have a nice 40-50% return on capital.
    Year after year.

    But just ignore all that... and go bet the ranch on a flyer.
  3. This is not my experience at all. It used to feel this way when I would get myself in trouble and start swinging for the fences a long time ago. We all go through that phase before we figure out that trading that way is unsustainable. A trade is gut wrenching for one reason alone: you are trading too big and are, therefore, not accepting the risk so you are on edge.

    The fact is, every trade is just another random outcome event. I know I will make money sticking to my plan and always taking the trades in context. However, the outcome of the very next trade is truly inconsequential to my plan. It is just another trade. I don't know if it will be in the winning or losing category, but I sure as heck am not going to bet big enough that it becomes an emotional or gut-wrenching experience. I do this day in and day out and try to simply accept that the outcome is random for every trade, so I have to size every trade to match my risk appetite and move on.

    I urge you to review what you are doing. If a trade is a runner, it is a runner and I'm just waiting for a signal to reverse or stop out (depending on context). If it happens to go a few points and stop me out of the balance of the position, then so be it. On to the next one.

  4. FT71,

    As usual, good insights.

  5. xxxskier

    xxxskier Guest

    nice post by FT71. FT71 is one of a handful of posters on ET that make it worthwhile to return to ET.
  6. Its pretty clear that this guy is one of those few who are consistently profitable.
  7. Consistency is really the ultimate goal. As I have always advocated since I began coming here several years ago, focusing on making money is really a distraction from what is really needed to make money. I have had many rough patches and have had to relearn a few things many times, but my goal is to squeeze out what I can get pretty consistently. With consistency comes the right mental attitude, confidence and, most importantly, clarity. My views on trading were not learned from a book or a seminar. It has taken a fair amount of introspection and "gut wrenching" to get there, so my opinion to the OP is as close to reality as I can get.

    The battle for everyone is really getting to know or figure out what you are comfortable with accepting as far as risk. That is the key. The mind is wired to avoid the pain of losing. This is the part that causes everyone to do things impulsively or to feel a wrenching gut while trading. Losses are inevitable and are just part of the process much like traffic is part of getting to work. It is not desirable, but it is something you know is a part of life and plan for. Once you figure out what risk you are comfortable with, it becomes easier to take enough of it to eek out some consistency. Over time, one starts getting a perspective on the market that will provide confidence and tremendous profitability. Until then, trading is really a fog of emotions masked by technical analysis and time and sales data. LOL

    My point: Spend more time learning about who you are and what you expect versus the reality of what is actually in front of you. Once you feel you know that well, you can come back and have less fear. Those who tell you to control your emotions and that trading is unemotional are really masking the fact that there is no such thing. Have you ever tried to run up 20 stories worth of stairs while breathing calmly through your nose? Go ahead and try it. You will end up with a black-out. Doing that exercise makes just about as much sense as trying to "control" how you feel or "make a mood" while trading. Instead, simply understand when your emotions kick in, how you react and, if necessary, walk away for a while. Like I said, if you understand who you are in relation to the market, then you are ready to be objective and to simply take the next trade. Do you really know what the outcome of the next trade will be? Can you really avoid a loss or guarantee a win? If not, then why focus on the impossible. Just accept it and move on. No gut-wrenching required. :)

    I'm not saying I'm completely there yet. But I can tell you that after struggling for a while, I started to recognize that being consistent (hence, profitable) is a state of mind/attitude.

    I hope that helps shed some light.

    Thanks for the kind comments. I'm just another guy trying to achieve consistency day in and day out.

    Cheers and good luck,
  8. Sponger


    That was one nice summed up succinctly what others take a whole book to write.
  9. But why bother with mediocrity. Some wanna test to see if they're stars.

  10. While many would say the initial post on this thread was incorrect for a whole host of different reasons, there have been some real quality responses thus far.

    The "Winning Trades" are those that you can execute in a consistent fashion, yield steady gains and allow you to increase your position sizing until you can make substantial gains, while using the exact same trading process you started with.

    Good trading,

    Jimmy Jam
    #10     Nov 27, 2007