FB123....that is a fabulous post...very insightful and well articulated. Intuitively I know this but don't do it as often as I should. Amazingly when bad trades happen it sometimes ruins my week and only after a weekend off do I regain perspective and get going again in the right direction. I agree that doing this without fail is truly a key to success. Another aspect of this I have found is to walk away after a really profitable trade. My own demon is to want to make more after such a nice trade and I end up grinding away my profits and get more and more upset. Many times it's best to just leave well enough alone, walk away for a while, maybe the rest of the day and come back later. So this technique works for helping regain perspective after both losing and winning trades. One more note....I find it rather harmful after either some good trades or bad trades to push it too much into the end of the trading day or the trading week. Because if you are prone to not walking away and make a bad trade the tendency is to want to make it up before the end of the day or the end of the week and that NEVER works. There usually isn't enough time to let a trade setup and develop and so the tendency is to try to make things happen....and we know that doesn't work. Best of luck to you.
Thanks... one more thing I will add, for those that are trying to learn how to do control themselves properly: Take a look at Tiger Woods. The reason that Tiger is the #1 player in golf is not because he is more skilled than the other players, or because he can hit shots that they can't (although both things happen to be true). The thing that sets him apart is his mind. If you watch him play, you will see him hit a terrible shot many times per round. Sometimes it's really bad, like 50 years off line and behind a tree. Whenever he does that, he lets out a loud curse, slams his club into the ground, and looks like he just swallowed a raw egg. The man is a perfectionist after all, and he expects every shot to be right down middle of the fairway, even though he consciously knows that this is impossible. This is very similar to trading... we all expect every trade to be perfect, even though we know it can't be. And that's why we get mad when we screw up. The thing that makes Tiger special is not how he reacts to that shot, it's how he reacts to the NEXT shot. The next shot is always taken with a fresh mind, as though the last mistake never happened. And if he makes another mistake on the second shot, then he curses again - but the third shot is not affected, and so on. No matter what, he is always "grinding" his way around the golf course trying to shoot the best possible score that he can. I have seen him score 3 bogeys in 4 holes, and then pull himself together and grind the next 12 holes for par, followed by a finish with a few birdies. That takes a lot of mental discipline, because most people would fall apart after those first few holes went badly and wouldn't be able to grind out two thirds of their round just making pars after that, before the birdie chances came around. Many players would try to get those bogeys back right away because they couldn't stand the feeling, and would therefore end up pushing it and making even more mistakes. Tiger also leads the PGA Tour in par saves, which is emblematic of this ability that I have described. A par save only occurs when you first shoot a really terrible shot or two and then pull out a really good shot or two to save par. There is nobody in the world that has ever been as good as him at this. Other players make a couple of bad shots, and before you know it, they are dropping shots left and right, doing stupid things, and shooting themselves out of the tournament, but he never does that. That's why he's almost always near the top of every tournament he enters, and why he has only missed a small handful of cuts in his entire career. The next time you decide to trade, visualize yourself approaching the screen the way that Tiger approaches the course. Know that you are going to screw up, but make it your #1 priority to always clear your mind before the "next shot", or in your case, the next trade. Personally I try to visualize myself trading the way that he plays golf, which is why I have trained myself to immediately walk away when I do something stupid. It helps a lot.
Vespasian I am really sorry to hear about your decision because even if I don't know you personally, I am pretty sure that as a trader myself I can share the same passion and desire to trade as you. I will give you my 2 cents. If you managed to be consistently profitable and disciplined for 3 consecutive months, then you proved to yourself that your strategies are somewhat sound and that you can be a profitable trader. What fu@@ed you up was a bad day in which you made all sorts of mistakes; you ran into what I call a "newbie" day. We all do sometimes; I personally know very experienced traders who run into such days 2-3 times per year. It's pretty normal, especially for human traders. You got to develop rules to prevent a bad day from erasing 3 months of profits. It's that simple. I am a discretionary trader too. I do have lots of rules for all my setups, however my trading efficiency heavily relies on how well I can understand PA. I need to be sharp and focused for 7 consecutive hrs day in day out. I know that when I am focused and balanced it's very very difficult that I have a losing day. Even during range days or low-volatility days, I can still make money if I am INTO trading. However, I too experience days when I am not focused enough or have something else in my mind other than trading. Since I've had many of those days in the past, I tried to recognize the behavioral patterns that lead to such days. To mention a few: I log in late and don't run my daily routine/preparation; I am too anxious/eager to trade ---> jump the gun and don't let my patterns develop; if I have a losing trade, I want to make it all up right away and would either reverse or play the next trade with double size; I am very emotional ---> speak out loud, swearing, etc; I want to reach my daily goal within the first 2hrs ---> sign that I am not willing to spend 7hrs in front of the PC; I have a big bias on the market ---> most of the times, I am wrong and will get hammered fading the strong side of the market. I could name a lot more, but I am fairly sure that most traders can identify themselves into those clues. Now the big question: do you need to be 100% focused and sharp EVERY SINGLE TRADING DAY to be a good trader and to make a living with trading? My answer would be NO, you don't. We are human beings, not robots. A good trader knows when he's not into trading and can recognize his behavioral clues that may lead to a disastrous day. Hence, he/she will develop rules to avoid disaster. The most simple rule that comes in mind is to set a max daily drawdown limit that once reached will strike you out of trading. Vespasian, you are not a bad trader. Keep this in mind. If you've been able to make money for 3 consecutive months almost on a daily basis, you are a good trader. You just need to develop strict rules to manage yourself because you are your own boss.
FB123, Wow, that was some really good advise and I have not really thought about that side of visualization. Ironically this summer I started playing a lot of golf and I was amazed at the similarities between trading and the game. Last Monday I shot my best game ever and two days later I started well with several pars and a few bogeys and was way ahead of my partner. On the 6th hole I blew up put two balls into the forest and took a 10 on a par 5. It ruined the whole rest of the day for me. My buddy (a good golfer) has a mantra that he's always quoting to me on the course. "Follow a bad shot with a good shot". Thank you, I appreciate the time and effort you put into that post.
Since you all mentioned the similarities between golf and trading I have to say for those that play, that Poker is alot like trading. Of course there is the element of the unkown...what variables are headed your way...but it's how you control the situation you are in that matters. It's how you wait for a setup, let it develop, cut your losses (fold the hand if the betting gets out of hand and your not favored), being aggressive when necessary and being passive when necessary. Forcing the situation and trying to make things happen in trading or poker makes a big difference. Bad hand or two, and trying to make it up fast is the same as in trading. Playing poker can really give you an insight into where your at mentally for trading. And, of course, you can lose or make a ton in each!
Did you bother to setup a business plan for 2009? Did this business plan go awry after you managed to wipe out 2 months of past gains on a dumb trade that went for broke risking all those 2 months of gains? Clearly, you blew yourself out putting on 2 months of gains and not feeling how bad it is until after you lose it all. You had no money management rules in place and I bet you dont even have a yearly trading plan with goals either. And what about the past 7 months? You speak of only 2 months of gains. Sounds like the past 7 months you were break even? Nobody quits if they are up on the year. Yes, my advice to you is to quit and never come back. Close all broker accounts for starters before you do more damage. The fact that you put in the title of this thread that the market is out to get you, you have mentally and logically lost your ability to perform. Stick to letting someone else manage your money. Good luck to you.
That's another good point... poker and trading are very related, in that both require a lot of patience and emotional self-awareness, as well as the ability to read other people. In poker it's personally reading another individual, in trading it's reading the collective emotions that you are seeing played out on the screen. There is something in poker called going on "tilt". If you "tilt" in poker, it means that you are pissed off about a hand that just occurred (maybe some moron played the hand terribly but pulled out a great card on the river and smoked you and your pocket aces), and you try to get it back right away by pushing things. Vespasian, what you did today was go on "tilt". The answer is always to step back, as we have said. Here is a little more info on it as it relates to poker: http://en.wikipedia.org/wiki/Tilt_(poker) "Once tilt begins, players are well-advised to leave the table and return when emotions have subsided. When away from the table, players are advised to take time to refresh themselves, eat and drink (non-alcoholic) if necessary, and take a break outside in the fresh air. If none of these work in lessening tilt, players are advised to leave the game and not return to playing until they have shaken off the results that led to the tilt. The intent of the advice is to prevent the upset person from letting negative emotions lead to bigger losses that can seriously hurt oneâs bankroll."
Actually my Swing Trading is netting 30% returns per year on average for the last 3 years (That's how I've managed to pay most of the bills) It's only my Day Trading that I've struggled with, thanks for the advise but I would never let anyone else manage my money. Well maybe my buddy Redneck but that's about it.
FB123, To summarize; Before trading visualize myself having a bad trade. Then visualize myself getting up out of my chair and walking away from my computer and taking a short break. Then visualize myself coming back relaxed and focused as if that trade never happened and looking for just another trade that I execute without stress and anxiety.? How often should one do this and for how long? Could you share your personal experiences with this technique or others. Thanks.