Review of trading history shows....

[Stockness Monster]

.... my “success” over several years is down to nothing but wild risk taking aka gambling.

I’ve been going into VERY oversized positions with momentum. Sometimes getting big wins. Mostly panicking and exiting and then spending days licking the wounds to my psyche.

Some may say that results are all that count. I’ve not had a losing year ever but feel stressed all of the time and don’t like this. Perhaps the wins are what is reinforcing my haphazard behaviour.


The crazy thing is that I have a very good trading edge. It should involve me risking no more than 1% a trade, and doing so at only at the open.

But I just can’t do it. I can’t even get around to documenting it. Instead I try and hit home runs. I’ve doubled my account in the past month and then given back 20% and feel way worse than before the large gains. It’s too much. This has to end.

Successful trading isn’t just about confidence in a trading edge. Trading is about all of the other stuff in our minds.

Now how to combat it.

I guess this is the first step to admit that I have a problem.

Any tips on resources of where to go to “fix “ my habit of self sabotage? Things that have worked with close to immediate effect.

Many thanks.

 

[crud-cutter]

.... my “success” over several years is down to nothing but wild risk taking aka gambling.

I’ve been going into VERY oversized positions with momentum. Sometimes getting big wins. Mostly panicking and exiting and then spending days licking the wounds to my psyche.

Some may say that results are all that count. I’ve not had a losing year ever but feel stressed all of the time and don’t like this. Perhaps the wins are what is reinforcing my haphazard behaviour.


The crazy thing is that I have a very good trading edge. It should involve me risking no more than 1% a trade, and doing so at only at the open.

But I just can’t do it. I can’t even get around to documenting it. Instead I try and hit home runs. I’ve doubled my account in the past month and then given back 20% and feel way worse than before the large gains. It’s too much. This has to end.

Successful trading isn’t just about confidence in a trading edge. Trading is about all of the other stuff in our minds.

Now how to combat it.

I guess this is the first step to admit that I have a problem.

Any tips on resources of where to go to “fix “ my habit of self sabotage? Things that have worked with close to immediate effect.

Many thanks.

Hi, you are certainly right about the wins reinforcing the 'haphazard behaviour'. And 'haphazard' is putting it politely - face facts, ultimately it will almost certainly destroy your account!

Here is an email from Boris Schlossberg (of BKForex) on the subject:
********Start of email *********************************************

​ Dear Ian​

​ The Power of Negative Thinking​

​ ​ ​ ​

Most retail traders I talk to (including yours truly) suffer from a trinity of sins that ruin the best laid plans, the smartest strategies, the most brilliant research. ​ Fear of missing out Anger at not taking the trade due to fear of losing Revenge on the market due to a trade gone bad The third of those sins is the most deadly because it always involves massive oversizing and the absence of any stops which inevitably leads to a blown account. Here is the thing though. No matter how much “mindfulness” you practice. No matter how much you mediate. No matter how much vegan food you eat. You will likely never conquer your behavioral weaknesses through mental training or physical discipline. If you really want to play the game I think you need a very different approach. First and foremost take all the money out of your primary trading account and put it into your secondary account which will act as the “bank”. Transfer just $1000.00 into your trading account and leave it be until you either have blown through the whole wad or doubled it. If you have a setup you like - trade it. If you want to trade my setup - be my guest. If you want to discover your own then experiment until you find something that works for you. That is your only job. Will you still suffer from FOMO? Yes. Will you still have pangs of regret at trades not taken. Yes. Will you blow up that thousand bucks? Almost certainly. But do that over and over for a few months and you will most likely be able to keep the thousand bucks floating in the market longer and longer each time. You may not think so, but losing a thousand bucks over a period of three months is a vast improvement over losing it in just three days. ​ ​

​ Live Trade Indices, CFDs and Futures Every Single Day. For Free​

Once you’ve done the slow bleed for a few months try to teach yourself to stop trading if you lose $100 bucks in a day. See if you can do that at least 20 times consistently without breaching those risk limits. You’ll still bleed money, but you will habituate yourself to the single most important trait for the trader - the ability to leave the game when you are playing badly. Lastly try to make 1000 trades without ever changing or lifting your stop. If you break that rule, start from zero and repeat until you can reach that goal. So what will you learn by doing this? You will learn how to lose - which is the only thing that matters in trading. If you do this seriously something dangerous may happen. You may actually start winning. Winning at trading is just another form of losing because it will instantly make you arrogant and sloppy. ​ ​

You will want to double your trading size and start trying to bully the market. If that happens. It’s ok. Drop another thousand bucks and start all over. Eventually you will learn to keep your profits. Once you can double your thousand bucks two or three times you may consider the next step and double your starting stake. Some traders may never get beyond that stage. And that’s perfectly ok. You can trade a small account for a very long time and just keep doubling a tiny base. I’ve known many traders who are capable of trading small accounts but do poorly once the size increases. It’s all about creating comfort. Trading is not about strategy or indicators but about mastery of your setup. As Anthony Criudele says it's not the indicators I use, it's how I use the indicators There are a million strategies for how to win in the market and a thousand opportunities to do so every day. But there is only one way to lose. And almost nobody wants to learn how to do that well.​

**********End of EMAIL ******************************************************************

In many things I disagree with Boris, but trading much smaller than you can do is one where I completely agree. One trainer on a trading course was universally mocked for his erratic account. He would regularly (3 or 4 time per year) completely wipe out his trading account! But he always siphoned off the majority of money from his big ( 200% to 300%) winning months so he always had funds to replenish his trading account. He has been trading his own account for over 20yrs, so it obviously worked for him!

Good luck,
Ian

 

[crud-cutter]

While on the subject of account size and psychology, I take a slightly different approach to Boris Schlossberg in that I also believe that it's vital not to have too small a live trading account.

So what is 'too small' and what are the advantages of having a larger account size than Boris suggests?

To me it is absolutely crazy to be undercapitalised, so you are risking more than you are comfortable with. This puts you under intense mental strain from the start of your trade (or even before entry) so that you are likely to do one of the following:

1. Prevaricate about entering the trade. - This is terrible because timely entry is the key to avoiding stress during a trade. Get a good entry and you are never under serious pressure!

2. Set your initial (or emergency) Stop Loss too tight. If this is combined with problem number 1. then its a recipe for consistent losses!

3. Exit too soon. You went to all that time and effort to get into a trade and a then hint of a reversal has you exiting because you're under such pressure to have almost every trade a winner. Resulting in frustration.

4. You're unable to trade multi-unit - absolute minimum for me is 2 Units, normal minimum is 3 Units but over 3 is better. Very few traders can trade even close to their best if they only trade a single Unit (whatever size that is)! If your account isn't big enough to trade 2 Units then few would doubt that you are undercapitalised.

Why do most traders need to enter a trade with at least 2 units? - Because you never know how far the trade will go. Of course it may immediately go against you and stop you out, or it may go 10 pips and then reverse (and stop you out unless you moved your Stop Loss into a profitable position or at least enough to cover your spread/commission). But equally it me go for 100 or more pips, how do you feel when you exit at +1 or even +10 and it keeps going to +50 or +100 ?
Personally I actually feel worse than I would taking a loss from a trade that was immediately 'went wrong' and stopped me out! So I always trade multi-Unit and take at least some initial profit 'too soon' at which point I make the trade ultimately profitable by moving my SL into profit. Then I can relax and try to manage the remaining units to milk as much as the market will allow me!

 

[Stockness Monster]

Thanks for the replies. I really am now beginning to focus on my internal state. I've not taken any trades this week which is a start and from next week will try and use the Seinfeld method of stringing together multiple days (or 1/4 size trades)