I think I am having a breakthrough as we speak. I stopped trading cash a few weeks ago and went on the simulator and stopped second guessing my trades. I enter the trade, set my stop and my target then leave it alone until one or the other is hit. After three weeks my win rate is almost 80%. I think I am pretty good at spotting a decent setup but after entering I go through all kinds of gyrations instead of leaving the damn thing alone. It remains to be seen if I can do it in real time.
Yeah, the mind loves to play tricks, so that's why you have to keep to the discipline of your trade (btw, that's a damn good win rate, I'm only 65%-75%, but I split my contracts and let 1/2 my winners run, so it's OK). To this I would like to add: Always trade according to the bigger picture... larger timerframe ... higher fractal, etc., however you want to define it. Always enter your position using the lower time frame, but always refrence the higher timeframe for the true direction of the market. Best, Jimmy
Nice post. For beginning traders, fear is the hardest thing to break thru. You need to give your trade a reason for entry, have patience, and stick to your stops. I read a post on here where someone said, "If you ran a hedgefund, and you just lost 1million of your clients money, and the client asked you why you lost so much, how would you answer that question?" "why didn't you cut the trade?" "Do you have an answer?" My worst trades are the ones that I enter without a plan, and the best trades always have a plan with a stop and target. Learn to stop giving reasons for a trade to- "come back your way, so you can just exit at break even", and learn to cut the F**KING trade right that moment. Give yourself rules: I learned rules from getting my butt kicked in the markets, which are: 1.Never add to losers 2.Set stops 3.scale out/ put in a trailing stop so a winner doesn't become a loser 4.have patience, and wait for the setup and target. 5.don't chase the trade, (wait for the pullback, there will always be a pullback.) You may have all read this a million times and think, yadayadayada, but I think in order to understand what it means, you have to learn it for yourself. And that means you will probably end up losing money. How much depends on how stubborn you are, and how quickly you learn how to manage the trade. I read the rules and I don't feel anything, like the rules mean nothing, but when you are looking at a screen with red letters that say you have just lost a couple grand, then you go back to ask why, then you will say, I should have followed my rules. That's why trading with pre-defined stops is one of the most important rules,(it cuts out making the mistake of letting your brain reason you into staying with the trade. Your subconscious is telling you you will be a loser if you sell for a loss. Well, I'd rather lose $100 over $1000. Overall, trade with a plan and know how to manage the trade.
Livermore's great and overlooked point is that you can't override you nervous system hard wiring so you have to trade in a way that it can't trip you up.
my biggest breakthru came when I changed my frontend from sim to live. My account balance actually started to change then.
for me, there was no sudden eureka moment.. it just seemed to appear over time after putting on thoousands of trades (not paper trade) .. there comes a point when you just enter a long or short or stand aside based on what appears on the chart. Put in a stop and target profit and switch off your screen to do something else. Turns out well most of the time.. Can't mechanize it or even put it in words, but you just know what to do in response to what the market is doing.. strange i know, but true.
Man, this thread is so good I couldn't even read it all before I had to post - so many folks have shared similar experiences... The biggest " ah-hah" has been deciding what kind of trader to become (system vs. discretionary) I am a discretionary trader. I am an intuitive person, that has not usually done well in any area of life where too much structure or rigidity is required. Early on, as a losing trader, although in my guts I wanted to trade by intuition/what I can see/feel now, I was trying to incorporate elements of "system" into my trading due to a lot of things I had read about following rules, statistics, "edge", etc. etc. that had convinced me I would be a losing trader if I did not incorporate a bunch of "rules" into my trading. I ended up with a useless hybrid mindset full of half-baked ideas and efforts to incorporate "rules" when I really am not wired that way. The biggest symptom of this was the TA indicator Grail quest. You see, you can't consistently follow rules that you don't truly believe in and don't really want to follow. Arbitrary pre-set profit targets? Man, I tried that and it fried by brain to get out at .5 when the market was able to provide 2.5 Once I stripped all indicators except volume and a DOM to trade off of, and really studied PRICE/VOLUME/PACE, I started to see the pulse of the market - for example, I could spot when a spike up is happening on thin volume/wide spread and not likely to hold vs. an actual accumulation by big bidders. This helps me to determine whether or not it is time for a quick fade scalp or time to look for a pullback to scale into a trend trade. All of a sudden, I found myself on the right side of trades most of the time. My current hit rate is about 85% whereas it used to be 45% when I was a "system-messionary" trader. My intuition (confirmed by price action) about price action has developed to the point where I am a winner. I have stopped feeling guilty about not having so many rules. I am free and easy when I trade, less fear involved. If I see an awesome setup, I'm not afraid to hit it big. When I'm not so sure, I scale back. I still don't know where the market is going to end up at the end of the day - but I usually pretty much know where it is going in the next 3 or 4 minutes, which is enough time to grab .5 to 1.5 pts. several times per hour. I can only manage this type of concentration for about 1 or 2 hours, then I have to stop. This type of tape reading from the DOM is very tiring. I try to avoid sluggish, whippy market periods. I often hit 10 or 12 small winners in a row during that period. Once in a blue moon I get out of my zone and have a few losers in a row, then I stop immediately to avoid big damage. Moral of the story? When I followed my guts instead of the loose compilation of other folk's trading "musts", and became self-honest enough to see that I was the architect of my own destruction up to that point, things changed - permanently.
My success is simply the result of studying many others failures. I learn from my own and others mistakes, which is plentiful on ET. Pretty much everything that has been posted here, I have studied from the results of others, both good and bad, and have folders of prints from ET threads to prove it. So learn from others. Oh yeah, I had one of those "Ahhhhhh" type moments and realized it was a "JUST DO IT" type thing, and hey, I'm doing it, no BS. I don't gradually learn things, I learn things in one moment, and it might have taken around a year for me to have that one single moment where something clicked in my mind and changed the way I was trading for the better, but it happened. Good stuff on this thread.