overtrading/undertrading

[tokyojoe]

Hi, I just wanted to share a problem I am having overtrading/undertrading, I try & take approx 3 to 10 trades per day (dax) but I have been sucked into 30+ trades a day in the past (mid to end of last year)..... this is definitely the mother of all disasters.

The problem always results from 2 quick losses in a row, revenge trading I guess, so after nearly 4 years part time trading I am still trying to master this & not
overtrade.

I know my levels/price structure etc, but if after waiting for a fairly long period of time the entry criteria is met, I enter....if wrong.....hold a little with the stop (usually between 5 & 15 points, depending on how wild the beast is)....if stopped out, this is the critical stage where I know I must keep my head, because if the chase begins, it's over & out, bish bosh in the hole !!

These days I suffer from under trading (fear) I can see the entry point I need a mile off, I wait for it, BUT if I hesitate..... bang, it's gone without me. My main problem then is trying too hard to second guess what the algo etc will do at what I consider an obvious new entry point

I've deconstructed all I have learnt down to a clean chart, nothing more than I imagine most guys at my stage can do, but still overcomplicating it it my head, as knowing how price moves is just a small piece of the potential trade.

The mad thing is although I know simplicity is the key, it is far from simple to take a loss (due to usual whipsaw) & go into the next trade with conviction. I do not like wide stops, but I know the Dax often requires gargantuan stops to weather the whipsaw, but I think once it goes 6 to 10 ish points it often runs 20+

But perhaps I'm being too precise with my entry, hence the recent constant hesitation.

To me these days, no trades taken in a day is far far worse than taking 2 or 3 losses, because I now see it as lost potential earnings on the blatantly obvious entry points, BUT the bugger of overtrading is a gremlin that's constantly in my mind, as I know where these losses may lead.

I'd like to say we all know less is more in this game, but at the mo, my less is....well, much less, so maybe I should try that happy medium I used to have until overconfidence/underconfidence took over

Just wondered what you guys think, I would appreciate your thoughts

 

[paszkman]

do you have confidence in your strategy?

 

[tokyojoe]

Hi Paszkman, my confidence took a massive knock at the end of last year, became far too cocky with the belief in my strategy & I escalated my £pp before I should have, result....wallop !!

On reflection I guess I scared myself with how easily I was drawn into accepting too high profit & loss each day, it became normal to trade high numbers, then armageddon (obvious schoolboy error really)

Working on fine tuning my strategy with a more realistic target in mind

 

[paszkman]

Have you read any Mark Douglas? If you dont like reading, here he is:

 

[Jessi_trader]

tokyojoe , most of the people if not all, have exactly the same problem with some variations. few people fine tune their attitude quickly then others. Remember one thing, trading is mostly about phycology than depth of technical knowledge.

If you are able to form some basic rules for you and follow them religiously then your losses will start to slow down.

Also, the more you look shorter time frame the more you will be confused (with too many entry and exits and STOPS)...and also more BP ups and down... try following higher time frame and look for entry / exits and stop at higher time frames... that way you will have less trades per day as well.

hope this helps.

 

[tokyojoe]

Have you read any Mark Douglas? If you dont like reading, here he is:

Thanks Paszkman, will check this out

I Am also about to look into Robert Dilts neurological levels

No, I'm not for the nut house yet !

 

[Fugazsy]

Hi, I just wanted to share a problem I am having overtrading/undertrading, I try & take approx 3 to 10 trades per day (dax) but I have been sucked into 30+ trades a day in the past (mid to end of last year)..... this is definitely the mother of all disasters.

The problem always results from 2 quick losses in a row, revenge trading I guess, so after nearly 4 years part time trading I am still trying to master this & not
overtrade.

I know my levels/price structure etc, but if after waiting for a fairly long period of time the entry criteria is met, I enter....if wrong.....hold a little with the stop (usually between 5 & 15 points, depending on how wild the beast is)....if stopped out, this is the critical stage where I know I must keep my head, because if the chase begins, it's over & out, bish bosh in the hole !!

These days I suffer from under trading (fear) I can see the entry point I need a mile off, I wait for it, BUT if I hesitate..... bang, it's gone without me. My main problem then is trying too hard to second guess what the algo etc will do at what I consider an obvious new entry point

I've deconstructed all I have learnt down to a clean chart, nothing more than I imagine most guys at my stage can do, but still overcomplicating it it my head, as knowing how price moves is just a small piece of the potential trade.

The mad thing is although I know simplicity is the key, it is far from simple to take a loss (due to usual whipsaw) & go into the next trade with conviction. I do not like wide stops, but I know the Dax often requires gargantuan stops to weather the whipsaw, but I think once it goes 6 to 10 ish points it often runs 20+

But perhaps I'm being too precise with my entry, hence the recent constant hesitation.

To me these days, no trades taken in a day is far far worse than taking 2 or 3 losses, because I now see it as lost potential earnings on the blatantly obvious entry points, BUT the bugger of overtrading is a gremlin that's constantly in my mind, as I know where these losses may lead.

I'd like to say we all know less is more in this game, but at the mo, my less is....well, much less, so maybe I should try that happy medium I used to have until overconfidence/underconfidence took over

Just wondered what you guys think, I would appreciate your thoughts

good post, your emotions is taking over which is the norm.....

Set some clear rules to deal with for the time being, something like 2/3 consecutive losses and you finished for the day and turn things off completely , 2/3 consecutive losses is enough to tell you that you are reading wrongly, go back only the day after and try to understand why you were reading wrongly.

Discipline is a process is not a concept, you need to apply it to discover its benefits and easier it becomes when applied.

By gaining discipline you will also gain trust in yourself, you will know that you will be able to walk a away with losses when is needed, a loss day is only part of this business nothing more and a greater possibility in knowing more about yourself.

 

[tokyojoe]

tokyojoe , most of the people if not all, have exactly the same problem with some variations. few people fine tune their attitude quickly then others. Remember one thing, trading is mostly about phycology than depth of technical knowledge.

If you are able to form some basic rules for you and follow them religiously then your losses will start to slow down.

Also, the more you look shorter time frame the more you will be confused (with too many entry and exits and STOPS)...and also more BP ups and down... try following higher time frame and look for entry / exits and stop at higher time frames... that way you will have less trades per day as well.

hope this helps.

Hi Jessi, well said & a good point.

I do assume most people have the same fear/greed scenario in their head & this was one of the reasons I wanted to bring it up.

I work the higher timeframes as a reference point for the main levels of interest etc, then the low TF for entry, never the lower TF as a main level of interest (been there done that)

My main problem is shake out, i.e we all know the Dax will find support at say the high of yesterday, but if it doesn,t, then whaaaaaaaaaaaaoooooohhh !!!

Then I always allow for the probable clean out

I keep my stops reasonably tight, but not ridiculous, It just doesn't sit well with me to risk 20-50+ points.

But having said that, you guys are having it on toast & I have to admire your sheer b@ll@cks at standing firm

Coz at the the end of the day without any of us knowing the true market depth at any given time where the big fellas will take the price, we are all the blind leading the blind

What is great though is some mice have developed into grasshopper mice (check those little buggers out)

good luck to all trading today

 

[ffsear]

The problem always results from 2 quick losses in a row, revenge trading I guess, so after nearly 4 years part time trading I am still trying to master this & not
overtrade.

I have a "3 lives " rule with my trading. If i lose 3 lives (take 3 losses) then i'm done for the day and the computer goes off. Not only does it help limit any daily losses but it also allows me to cherry pick my trades... When I see a setup i'm thinking .. "Do i wan't to risk one of my lives on this? or do i want to hold out and wait for a more clear signal"

So when you get into that situation of having 2 losses in a row. Rather then look for revenge, think "Right, i've got one life left... better make it count."

 

[tokyojoe]

Thanks for your thoughts, will have a good look a later

 

[tokyojoe]

Ref DAX.
Check the futures out first hour before the open and last 4.5 hours after the close.
Seems to offer levels away from the cash levels more.
Respects levels within the futures.
But will give pain to the cash traders.
Bit more spread or comm.

If you follow it on a regular basis will help you understand the market more.

Good Luck

Hi 30 sec, I trade within 8am-4.30pm only myself, I've tried all the out of hours stuff, but I found it too life zapping.

I too pay attention to the timeframes you refer to, it was well worth a mention, thanks for sharing.

The hardcore boys are at it early doors till the bitter end, my hat goes off to all that can do that, I really do respect the fact that they have learned their craft & optimise the trading day, but my main aim is to make money within the standard London market hours, with lots of homework of course, inc watching price flow in out of hours (well my out of hours anyway)
(Cake & eat it you may say)

"One day rodney, one day !!"

 

[tokyojoe]

I have a "3 lives " rule with my trading. If i lose 3 lives (take 3 losses) then i'm done for the day and the computer goes off. Not only does it help limit any daily losses but it also allows me to cherry pick my trades... When I see a setup i'm thinking .. "Do i wan't to risk one of my lives on this? or do i want to hold out and wait for a more clear signal"

So when you get into that situation of having 2 losses in a row. Rather then look for revenge, think "Right, i've got one life left... better make it count."

Excellent point ffsear, I have tried that one after a bad morning, but then....... the afternoon session !!!

note to self, MUST RESIST !!!!

Crackin' point you make though, make the last one count

 

[tokyojoe]

good post, your emotions is taking over which is the norm.....

Set some clear rules to deal with for the time being, something like 2/3 consecutive losses and you finished for the day and turn things off completely , 2/3 consecutive losses is enough to tell you that you are reading wrongly, go back only the day after and try to understand why you were reading wrongly.

Discipline is a process is not a concept, you need to apply it to discover its benefits and easier it becomes when applied.

By gaining discipline you will also gain trust in yourself, you will know that you will be able to walk a away with losses when is needed, a loss day is only part of this business nothing more and a greater possibility in knowing more about yourself.

Thanks Fugazsy, you & ffsear are definitely on the same page with this "three strikes rule" as I imagine many disciplined traders intend to do.

I wonder how many actually do ?

 

[BSD]

Think there is sure to be a pretty conclusive correlation between those that can cap their losses in some way and over-all net profitability over time.


"An analysis of the profiles and motivations of habitual commodity speculators

The focus of this study is the habitual speculator in commodity futures markets. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorists and policy makers. Responses to a 73-question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time. The typical trader studied is a married, white male, age 52. He is affluent and well educated. He is a self-employed business owner who can recover from financial setbacks. He is a politically right-wing conservative involved in the political process. He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler. This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style. To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; that is, being in the action is more important than the financial consequences. Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position."

http://onlinelibrary.wiley.com/doi/...199810)18:7<765::AID-FUT2>3.0.CO;2-U/abstract

 

[tokyojoe]

Think there is sure to be a pretty conclusive correlation between those that can cap their losses in some way and over-all net profitability over time.


"An analysis of the profiles and motivations of habitual commodity speculators

The focus of this study is the habitual speculator in commodity futures markets. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorists and policy makers. Responses to a 73-question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time. The typical trader studied is a married, white male, age 52. He is affluent and well educated. He is a self-employed business owner who can recover from financial setbacks. He is a politically right-wing conservative involved in the political process. He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler. This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style. To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; that is, being in the action is more important than the financial consequences. Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position."

http://onlinelibrary.wiley.com/doi/...199810)18:7<765::AID-FUT2>3.0.CO;2-U/abstract

Good archive BSD.....wait a minute !!!.... white male, married, self employed, aggressive investor........NO STOP LOSS !!!

ring ring......"hello, is that the Samaritans, I think I may have a wee problem ??"

(PS I do use fixed stops now)

 

[Fugazsy]

Thanks Fugazsy, you & ffsear are definitely on the same page with this "three strikes rule" as I imagine many disciplined traders intend to do.

I wonder how many actually do ?

I also share ffsear view which makes you be more selective in your trades having a limit of 2/3 trades.

Myself the moment I learned to be engage in the market without having a trade made things much easier for myself, my reactive mode has been replaced by a detached mode, it makes me play in a defence mode, I realise that defence in trading is my best attack.

Do I miss a move? So what? I keep my stability, which is of a great importance than a winning trade.

I do not like to trade with apprehension, I want to enjoy it, I want be like a predator and then move in quickly when required, I can wait for hours, I will enter only by my guides, if I do not take any trades in day, that will fine, actually it will show me I am serious about it and I am not at the whim of the market.

 

[tokyojoe]

I also share ffsear view which makes you be more selective in your trades having a limit of 2/3 trades.

Myself the moment I learned to be engage in the market without having a trade made things much easier for myself, my reactive mode has been replaced by a detached mode, it makes me play in a defence mode, I realise that defence in trading is my best attack.

Do I miss a move? So what? I keep my stability, which is of a great importance than a winning trade.

I do not like to trade with apprehension, I want to enjoy it, I want be like a predator and then move in quickly when required, I can wait for hours, I will enter only by my guides, if I do not take any trades in day, that will fine, actually it will show me I am serious about it and I am not at the whim of the market.

Good post Fugazsy

 

[FCMForex]

Hi, I just wanted to share a problem I am having overtrading/undertrading, I try & take approx 3 to 10 trades per day (dax) but I have been sucked into 30+ trades a day in the past (mid to end of last year)..... this is definitely the mother of all disasters.

The problem always results from 2 quick losses in a row, revenge trading I guess, so after nearly 4 years part time trading I am still trying to master this & not
overtrade.

I know my levels/price structure etc, but if after waiting for a fairly long period of time the entry criteria is met, I enter....if wrong.....hold a little with the stop (usually between 5 & 15 points, depending on how wild the beast is)....if stopped out, this is the critical stage where I know I must keep my head, because if the chase begins, it's over & out, bish bosh in the hole !!

These days I suffer from under trading (fear) I can see the entry point I need a mile off, I wait for it, BUT if I hesitate..... bang, it's gone without me. My main problem then is trying too hard to second guess what the algo etc will do at what I consider an obvious new entry point

I've deconstructed all I have learnt down to a clean chart, nothing more than I imagine most guys at my stage can do, but still overcomplicating it it my head, as knowing how price moves is just a small piece of the potential trade.

The mad thing is although I know simplicity is the key, it is far from simple to take a loss (due to usual whipsaw) & go into the next trade with conviction. I do not like wide stops, but I know the Dax often requires gargantuan stops to weather the whipsaw, but I think once it goes 6 to 10 ish points it often runs 20+

But perhaps I'm being too precise with my entry, hence the recent constant hesitation.

To me these days, no trades taken in a day is far far worse than taking 2 or 3 losses, because I now see it as lost potential earnings on the blatantly obvious entry points, BUT the bugger of overtrading is a gremlin that's constantly in my mind, as I know where these losses may lead.

I'd like to say we all know less is more in this game, but at the mo, my less is....well, much less, so maybe I should try that happy medium I used to have until overconfidence/underconfidence took over

Just wondered what you guys think, I would appreciate your thoughts

Over trading can lead to substantial losses when the market is not clear enough.
There is no “right” or "wrong" amount of trades to be made on one particular day, week or month.
I guess that depends on an Individual trader and the method they are following.

Traders make this mistake when they feel overconfident, they don’t trust their methodology, want to make a quick profit or they are just following some one else’s advice.

Never Trade when market conditions are not clear to you

Simply follow the given steps :-

(i) Develop & Follow a Particular Trading method
(ii) Analyse the Market Fundamentally & technically
(iii) Keep a look on Trading Journal History to analyse your trading way whether you are Over Trading or Under trading