I sometimes coach people on emotion management. It falls under the category of psychology in regards to trading. The first rule of emotion management is to have nothing to lose. Most traders think they are only losing money when they lose, but they're actually losing much more. Often times, a trader looks at success as a sign of something they want. For example, if you want to prove to your jerk of a brother that you are smart, trading may be an outlet for that. If you want to quit your suck-life job by the end of the year, trading may be your solution for that. When trading is more than money, it is hard to stop. If you stop you no longer have hope. As long as you keep trading, there is at least a chance that it could solve your problems. So, I'll ask you. In what way do you need to be successful? Does it validate your genius, or does it validate you as a hard worker? Does trading successfully put you into a much desired category of people you wish to be a part of? Does it put someone in their place who says you can't do it? What do you have to gain besides money for trading? And what would you be giving up by stopping? Those answers are the reason you can't stop after 3 losses. It's not the money, it's the hope.
You're going about it the wrong way. Instead of giving yourself 3 losers, give yourself ONE SINGLE TRADE PER DAY. You need to reserve this single trade for the HIGHEST PROBABILITY setup. If you win or if you lose, you stop trading for the rest of the day and switch to demo. Do this for 30 days, and see your results. If you aren't improving, then change to another setup, because obvious you can't tell what is a good setup and what is a bad setup. Once you get consistent, then start allowing yourself more numbers of total trades per day, in 30 day incremental steps. After a few months, you will learn how precious each single trade is, and after a while you'll realize that you don't want to just jump in willy-nilly.
I suppose this is the same as the gambler on a losing streak who keeps thinking the next time will be a winner? Not playing means there is no hope of recovering the losses.
==================== Good point,jed, i mostly agree ; not that i would want to trade every day if my plan includes high probability trading. %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% And when something is nicely trending on most time frames or trending all time frames [not noise]; i want to be in it, even if it takes more than 1 trade.But notice from experience, a good trend by definition gets profitable fast. I dont call a sideways trend a good trend; Its also called chop /slopp trend, or a rangebound...
I have to ask, does your method often produce three losing trades in a row? If it does, wait till you have three losing trades, then start taking trades. Four years ago, I started on a quest to change my ideals of day trading for myself. Instead of going for most profits in a day, I wanted to cut way back in time spent in front of PC and concentrate on getting losing percentages to below 10% in ES. Today, it is MOST important not to lose and be done trading after 30-40 minutes of day session, by reducing timeframes to minute and 30 second charts, I can have same amount of bars if I was trading 90 minutes or more. Many of the biggest moves occur in first 30 minutes, then I have rest of the day to enjoy life. I learn little from losing trades, I don't spend time trying to make them into winning trades. I concentrate only on the "whys" of the winning trades, they normally take off profitable in my direction almost instantly, if so much time passes and Price not going anywhere, I get out.
your problem is pretty normal. I have that too. particularly I am in a losing streak. when in a losing streak, I easily second-guess good trade in order to make sure it is a winner, so I wait until the acutal breakup/breakdown happens or a nice trend already well defined everyone can see it, so obvious, I am late to the party, of course end up I sold the bottom and bought the top. when in a slump, your mind is in the "trade to not lose" mode, so when you put on a trade, if a little bit red, entry a little bit early, you will get out pre-maturely, but your concious mind knows it is a good trade, so you may enter it again, of course red again, ..... another thing behind your mind to drive you to do that is "get my money back", when this demon possess your mind, you totally forget your trading setup/trading idea/trading strategy, so without any thinking, you keep jumping in inorder to recoup loss. so when those demons pop up my mind, I know I better shut down my computer, or tell myself loud "get my money back is a trading idea? your idiot, trade to not lose is a trading idea? your idiot". after several times, I am able to go back to my real trading mindset, not demoned mind set. so I can calm down, and observe the market objectively, and back to winning trading.