2/28/09
Back to trading psychology
From all the communications sent to me, there seems to be a common trait among many traders. I won't take up valuable space on here but will try to summarise as follows: Measure your risk BEFORE even thinking about a trade. Amateurs only think of how much they can make. Professionals only think of how much they can LOSE. Pretend you are a millionaire with a $1million trading account instead of an amateur with a $pauper account. Millionaires are the most tight, stingy bastards I know. They will not part with the smell off their own sh*t!!!!! Thinking this way changed my trading. Only trade when everything lines up AND you have all the variables on your side giving you the LOWEST RISK. If everything is not lined up - easy - NO TRADE. If in doubt, STAY OUT. Never ever forget the # 1 rule in trading - Capital (account) preservation. You will NEVER, EVER miss a good trade - there is always another being set up RIGHT NOW. Hang on to your hard earned money, even if its money you have said you can afford to lose. Lose it, and you have to take money from a place that you can't afford to lose to replenish your account if you want to continue trading. I see so many over trading and blowing their wad. Go out and buy Playstation or Wii I trade TO LIVE, the losers LIVE to trade.
3/4/09
Thanks for the kind words. I wish I was "up there" with Jacko - he's got $millions, I have only $thousands - but $money is not everything - I like to think I can trade as good as "me old mate". "Old" - that's a laugh - he's ten years younger than I!!!!
As you can see from some of my experiences, I was told and taught but although I listened, I didn't "hear". I don't know how to explain it. For me, it seemed as if I had to go through torture and loss of $hundreds of thousands before "the light went on". Others, like Nicola here, only have to be shown once and they get it straightaway. I share (or did) your need to take something and make it better. I would always find something, trade it, prove it works and then try to improve on it. I bet you also troll all the Forums out there looking for new systems, strategies and maybe indicators - I know I did. It was only when I got to the "light going on" moment that I realised I knew more than most of the scammers and developers out there. At that point, I accepted my strengths and weaknesses and developed my own method using what worked for me. When you develop your own method/strategy, you know more about it and understand it better than anyone else and it gives you the confidence and belief to use it. My method is not new, just applying common sense to tried and proven practices. My advice is to know what works for you then build YOUR method around it using everything and anything you have learned and trade it until you make it into a profitable method. You will be amazed at how much you will grow as a trader by doing this. Thanks for visiting and feel free to ask questions - we are building up a team of quality traders on here. 3/4/09
Hello fugly,
I hope you're not! How would you know when the trend ends? I'll give you the answer Dr. Joe gave me - When it stops going up! what if their is no discernable trend and you keep switching between buying and selling till you no longer have any money left to buy or sell? By the way, it's not possessive so it's there, not their. If you are switching between buying and selling especially until you have no money left then you have no business trading. You are taking things in isolation. I posted somewhere that we trade price action at support and resistance. This, along with the direction from the higher time frame, guides us in our trades. Also we manage our trades once in a position. If we have put on a trade that we can't afford to lose, then again, we have no business trading and are just fodder for the big guys. what if you buy on a decline in an uptrend and the price goes further south and you buy some more and it goes down still some more and you realize its a trend change Unless the brokerage houses put a fake move on, it rarely happens to me the way I trade. Go back to Post # 26, I think it is. I trade on momentum not on guesswork. I only want the market to fill my order if it moves in my direction. On a dip in an uptrend and IF price action was at support and everything else was lining up, I would place a buy order several pips ABOVE the high of the preceeding bar - if price doesn't go up, I don't get filled. What I'd like to say if I may is that trading really isn't simple, if it were simple 90% wouldn't fail assuming the majority ie 90% are capable of successfully accomplishing simple tasks. If you find the majority unable to successfully do something what does it tell you .... it tells you what you thought to be simple is actually not so. SIMPLY because most people haven't been able to do it. You are welcome to say anything you like as long as it is either constructive or funny. After having been through the trading wringer and been spat out in tiny little pieces with all my fancy indicators stuck up where the sun don't shine, I feel qualified to say that it is the trader himself that decides whether it is simple or complicated. It was innately complicated and stressful for me BEFORE the light went on and until I found out it was I that was making it complicated. As opportune as he usually is, my old mate Jacko has just posted this post # 6430 on his thread: Mar 4, 2009 11:41am (5 hr ago) jacko Senior Member Member Since Mar 2006  687 Posts  Quote: Originally Posted by Phonetic  Jacko, i believe i've thanked you for your help in the past but I just re-read the first page of the thread after almost losing faith in this business and I just wanted to say thank you AGAIN. Im 20 years old and have been trading since 15 (started with penny stocks been trying at forex for almost 2 years) and have not been profitable ever. I've had some nice gains and then the market takes it all back. I will keep at it because I do believe I can grasp it and it will be worth all of the hard lessons learned. Thanks again Jacko, this thread has... Hi Phonetic, Anyone can succeed in this "trading" business. But you need to see trading as a little bit different to how you approach a normal job. In a "normal" job, you are expected to "work hard" and "rush around" and "look eager" and "be proactive" and "be busy" and "look important". (It is part of the political game of normal, big business) In trading, it is the opposite, you should park the "ego" at the door, be calm and patient, and trade ONLY when the risk/reward ratio is in your favor. It is not easy, but it is simple. You are only 20..boy, I wish that forex had been around when I was 20 !! . Jacko Since Jacko trades with $2,000+/pip contracts and has made $millions trading his simple method, he is far more qualified than I to say "Trading is Simple". 3/5/09
Trading psychology books
3/10/09
Only 5 months in Forex and you are already well on your way, Dan, congratulations. The one most important thing that you have done is recognise what does NOT work for you and are now trying to find that style and time frame which DOES work for you. I see so many wannabe traders plugging away losing hundreds of pips doing something in a time frame that OBVIOUSLY doesn't work for them yet they persist in throwing their money away. I did it and it took me longer than 5 months to change.
It breaks my heart when I see people losing money as fast as it can be printed. There was one guy in a chat/live trading room with a young wife and family who was not only losing hundreds of pips but posting and telling everyone about it. Everyone but him could see that it wasn't working for him yet he blindly turned up day after day to throw his money away. I was near to tears thinking of his situation and I couldn't take it anymore so I sent him a PM PLEADING with him to STOP everything. Finally, after a couple of PMs, he saw the light and stopped, much to my relief. If this guy is up to it, I would like him to come on here and describe his emotions, what was going through his mind, what kept him doing something that everyone knew didn't work for him, why he did this etc. This will be so important for others in, and those who will be, in this position. If he doesn't want to do it under his own handle, he can send it to me and I will post it anonymously. Although I don't understand it, it is something I did and had to work my way through it (over $200K lost later). This is the psychology aspect of trading controlling us. It is said that trading is 10% method and 90% psychology. Controlling your psychology aspect (or the man in the mirror in my case) is critical to your success as a trader. Although I thought I had mine tamed, it came back and let me know it was still there in my "quickie" USDJPY trade. When something is not working for us after we have given it a good try, we need to stop and ask "WHY?" How many of us have traded with something that does not work and asked "WHY ISN'T IT WORKING?" We just keep plugging away and HOPE that our "LUCK" will change. Hope and luck are not included in the recipe for trading success. I like to use a car analogy to describe this. When you start your car in a morning it usually starts on the first crank. What do you do when the day comes and it doesn't start on the first crank? You give it another crank and it still doesn't start. Since it has always started on the first crank, you should now be thinking "something is wrong with the engine". Well we give it a third crank and it still doesn't start and now it becomes a battle and you keep cranking away until you have a dead (flat) battery. So now you have two problems - the engine AND battery. This is exactly the trading scenario. Cranking away is each losing trade and the flat battery is an empty and lost account! 3/11/09 Glad you're here Honest Bill - we'll get you sorted out - don't worry. Might not be this month or next, but we'll do it.
Now one very important point - As I have told all the others asking for my help, the brain is a very complex, yet simple organ, it cannot handle learning two ways of doing the same thing at the same time and just fries itself. I know I have lost $tons trying to do it. Either trade what you have already or drop everything and open your mind to new ideas and methods. Your confusion is because you are doing a strategy that does not require you to watch price action and is reliant on squiggly lines. You are getting torn between the two methods. It is difficult for me to know exactly what is needed because I did it the other way round. I went from Daily price action to M15 and M5 using a proven strategy to get some action (stress and pressure) and very quickly came back to the real thing. I know you are in contact with Nicola and really, because she has been in exactly your situation, best knows how to help you so I am asking Nicola if she can help through this thread and I will give my input as needed. With so many people wanting information and answers, I have become disorganised in laying out this thread so I'm going to tell you what you probably don't want to hear and that is go back and re-read the whole thread again. But don't flash read - after reading each post, give yourself a test - ask yourself if you understand what was written, can YOU use it, how would YOU use it. By asking yourself these questions, you will learn so much more. As you do this, write down what you don't understand and then ask the questions. Your request to put up a chart and show examples is exactly what I will NOT do at this stage. Why? Because that is the easy way out and more important, will not help you with this method. This is not like the Pimp Strategy or indeed any other requiring you to blindly follow a squiggly line. You have to learn what each single price bar is telling you, then what a group of price bars are telling you, then what a swing is telling you, etc, etc ALL within the boundaries of support and resistance. I know you want it all in a couple of hours but this is a lifetime learning process and don't worry, Bill, you are in at the beginning, we are only at 18 pages BUT until you get over your reliance on squiggly lines and open your mind to reading and understanding price charts, you will be forever fighting within yourself. Like I have said in other posts, the first thing to do is learn BASIC price action from Jim and Mike (mbqb11 Resident Elmer Fudd) at James 16. No need to read current posts just the first 200 or so pages. Whether you read Jacko or not is up to you. He trades the 50% fib retrace in the direction of the trend on the Daily but has since dropped down to H4 supposedly because of volatility but I think he has chickened out. However, he has an uncanny sense of reading EURUSD and the funny mentals and can do what we do without all our hard work. But first you have to decide what your style and time frame is - squiggly lines with stress and pressure or emotion and indicator free trading. Until you sort out your internal confusion Bill, no-one here can help you. I'm sorry this is not the answer you were looking for 3/16/09
have finally made the time to answer this. Thank you to everyone who participated - at least you had a go - not like the lurkers and guys in the background who think they know it all - you know who you are!
Attached is a later chart so let's get into it. I wrote something like I hope everyone had their sell stop in place at 97.52 I think it was. Then I later wrote that there was a HUGE PROBLEM with it. So let us start there. The first thing, after identifying a trade MUST ALWAYS BE - WHAT IS MY RISK? Remember my earlier posts about millionaire and professional traders? The ONLY thing they care about is how much they can LOSE. Amateurs and all other traders think just the opposite - how much can they make. When professionals PLAN THE TRADE, the very first thing that goes down on their sheet of paper is HOW MUCH WILL I LOSE? Their whole plan is predicated around LOSING. If they are not comfortable with the amount they WILL LOSE, they will either reduce their positions (lower $ per pip) or NOT TAKE THE TRADE. They don't concern themselves with winning because they are successful traders, know it's all about probability, and will come out winners in the end (total number of trades). When they are comfortable with HOW MUCH THEY WILL LOSE, they go ahead and place the trade. This IMMEDIATELY takes all decisions and emotions away from you on this trade leaving you with a STRESS FREE TRADE. You then TRADE THE PLAN by letting the market either (i) take you out (stop loss hit) or (ii) put you in profit. Once in profit, your plan should tell you when to take profits, go to break even etc. It may not have hard numbers but just something like take profit at 50 pips on the first contract, bring rest to break even at 100 pips or take profits at first S&R, second S&R etc. If you feel the need to interfere with your Plan then you have not planned it correctly. Once in a trade with a plan - just let it go and do it's thing! If you plan it correctly, those demons, goblins, voices inside your head, man in the mirror no longer have a base on which to trick you on. So back to this trade. If you had a sell stop in place below the 97.52 support line, say 97.42, did you measure your RISK? Where did your SL go on such a move? If you did it correctly, your SL should have gone ABOVE THE SWING HIGH at say 99.23. That is a 181 pip SL! That is HUGE! Would you have been prepared to LOSE 181 pips? That is the FIRST question you should have asked yourself. If not, then either adjust your $/pip or do not take the trade. Now for those who are going to tell me they dropped down to H4 to identify a smaller SL, then at that point, they were no longer trading the Daily. You cannot trade a time frame with a shorter time frame's S&R. There are 6 H4 price bars within one Daily price bar and if you set a SL from H4 then it would be hit within that Daily price bar. If we managed our trade correctly, we should have taken profit when it hit support again at around 96.20, so we did make 132 pips. For those who do the Risk to Reward ratio, this was lousy. Now that huge down bar was not the normal range for this pair and we should expect the elastic band theory to take place after it completed. If you are not familiar with the elstic band theory, take the elastic waist band in your under pants or knickers and pull it out as far as it will go. Then let it go! This is also true for the distance price is away from the 20 - the further it is away, the more likely the elastic will pull it back. That being the case and since we all know what to do when price hits support, it provided another magic trade PROVIDING you knew where to put your SL. If you did know where to put your SL then you are back at the beginning of this post because it is another HUGE SL So, since no-one came even close to this, tells me you are all acting like rank amateurs. You will NEVER make serious money at this UNTIL you turn your logic upside down, forget about profit and CONCENTRATE on HOW MUCH YOU CAN LOSE. I promise you with 100% certainty that if you do this, you will turn your trading career around BIG TIME!
3/21/09
The following web page plays a great Wizetrade TV video interview with Mark Douglas, discussing the probabilistic nature of the markets and the mindset challenges that prevent many of us from achieving consistent results.
This is great but you have to ignore the greasy slimeball interviewing him 53 minutes on video http://www.viddler.com/explore/killbliss/videos/3/ __________________ 3/22/09
An observation if I may and it's easy for me to say just coming in 1 hour before NY closes due to my trip.
The next step in learning is how to use the skills we have acquired. This in itself is a skill. We must be very careful not to over analyse and over think - something for which I am also guilty. I love nothing more but to look at charts and think through every possible scenario, but for what? It doesn't get you anywhere. One of my fears with teaching my style/method would be that I would pass on my over analyical approach. The last thing we should be doing is bringing a M5, M15, H1 mentality to trading the Daily time frame. The beauty about trading the Daily time frame is that you plan your trade, put the trade on and let it work itself out, in other words trade the plan. Planning the trade only requires a 2 or 3 minute study of each pair after 5pm NY time each day then placing our stop/limit orders and then - living your life. You do not need to sit and watch the one eyed monster all day, you do not need to interfere with your plan, you do not need to do anything further until 5pm NY time next day. The absolute worst thing for anyone trading the Daily to do is watch what happens on a shorter time frame or watch the Daily candle DURING trading hours. We don't care what goes on within that Daily candle - all we are concerned with after 5pm NY time is where the candle closes and where it's been. This gives us the best of both worlds - financial freedom Now, instead of thinking what USDCHF should or shoudn't do or why a pair did what it did, just look at what the market is telling you. Use what the market is telling you to your advantage. Ok, smart ass, I hear you say, "what is the market telling you?" If you have to ask this question then you have really answered it yourself. The market is not doing anything, it is waiting. What is it waiting for? I have absolutely no idea except I know that when it gets it, it will MOVE. We must always be aware of what moves this market - it is not us tadpoles - the market is moved by the big players - the banks, the institutions, the trading houses, the Market Makers - when it's quiet like this, they too are waiting for their "bosses" - world banks, government banks who in turn are waiting for decisions from economic and government financial specialists. We must think LIKE the big boys - don't think against them. We need to let them reveal their intentions and ride on their coat tails. Remember when Dr. Joe visited CME - all he saw was the floor traders just FOLLOWING the market - when it went up, they bought - when it went down, they sold. It really IS that simple despite all today's electronic widgetry and gadgetry. As an example - look at EURJPY - it's still cranking away as if there were no tomorrow. I can't remember how many posts in the last 3 weeks were asking is it time to short - my answer was always the same - it keeps on going up until it stops going up. Thank you EURJPY (and of course, Dr Joe). The point I'm trying to make is don't let your new found technical skills stand in the way or blind fold your common sense. A common sense trader will always outperform a technical trader. We need to look no further than our resident pizza man - he uses what he has learned with a BIG helping of common sense. Dr. Joe realised all his academic qualifications were worthless and ditched them in favour of common sense - doing what the market tells you. 3/23/09
Bloody hell, Dan, Morris Minor to Ford Anglia to Ford Capri in 4 weeks!
Don't get carried away, lad, there are some huge potholes in the road that will tear the suspension off your Ford Capri before you can trade it in for a Mustang. It is good to hear that you have found the time frame that works best for you. Many traders under estimate the importance of correct time frame selection (note to myself to get on my soapbox on this). More important is that you ONLY have 4 WEEKS of this under your belt. This is not the time to bet the farm (as they say here). Baba G responded with seeing where you are after 3 months. For me, it's much longer than that, 1 year at least. You need to go through a full cycle of market tribulations and see how you live through that. If you look at a REAL trader's equity curve (NOT those published by scammers trying to sell stuff), you will see that it is not a straight line and suffers drawdowns (often when you least expect it). You need to feel the pain of that - and how you react to it. Just because you have a high success ratio NOW, does not mean that you can project it into the future. You will have so much success with your trading that you will feel like "you can walk on water" - this is the MOST dangerous time. Remember the last guy that thought he could walk on water - he got hung on a cross! I've done it a few times and can still see the scars in my hands! So, just keep doing what you're doing and PROVE to yourself (nobody else), that you can do it CONSISTENTLY over the long haul. It is disappointing that you do not trade your plan, after doing the hard work of planning the trade, BUT it is good that you are HONEST and own up and realise your limitations. So many wannabe traders LIE and fool themselves with so many things about themselves and don't realise that until they resolve their personality and character traits, they will never be really successful. Before you go any further Dan, you have not said WHY you do not trade your plan. Step back and ask yourself WHY? Your answers should reveal a great deal about YOU and YOUR plan. Keep asking until you get to the bottom of it and can put your finger on it and truly say "here's the reason why." I could tell you the questions to ask yourself but keep asking WHY? and they will come. Having found the time frame which is comfortable for you, you now need to FIND what type of trader you want to be, or more important, comfortable, in being. WHAT is your GOAL? WHEN do you want to achieve it? HOW do you want to achieve it. HOW do you want to spend your day, your life? WHAT makes you happy/sad? WHERE do I want to go in life? HOW do I get there? WHY? Ask all these questions RELATIVE to your trading and you will find your INNER trading self. When you ask yourself these questions, go and stand in front of the mirror and STARE at yourself in the eyes. You are looking at the Holy Grail. Ask him all these questions; he may try to lie to you to make you go away, but YOU will know when he is lying so keep asking until he gives YOU the TRUTH. You may feel different after your conservations with the Holy Grail - I know I do. It is always important to make a profit, no matter how or no matter how small - it is our REWARD and makes us feel good about ourselves and is very important for our psychological growth (not to mention the trading account). When you get down to serious trading, profit doesn't figure anymore, we always make a profit. What is then important is ROI expressed in percentage terms. After you have asked yourself these questions, you should have a clearer picture about what type of trader you are evolving into. You may end up being a scalper on the Daily time frame being happy with 50 pips or so per trade but knowing that you are trading 100 GBP/pip contracts or larger. You may not have the finances or the psychological make up to do this and may instead want to trade smaller contracts on longer trends. Or, you may be sufficiently skilfull to do both. I'm sure you have already read them, but read those pages again with the posts of the conversation between Jim and Jacko. Keep reading them until you picture yourself as either Jim or Jacko for they both have contrasting styles. While you are tormenting yourself with this and searching for the answers, you may want to trade 2 contracts (reduce GBP/pip if necessary). Take your profits on the 1st as you are already doing and then trail prices on the second one. Stop placement is key to this but until you find out from the Holy Grail the reasons for not trading your plan, no-one, NO-ONE, can help you. I'm sorry for being long winded on this, Dan, and that this is not the answer you were hoping for but the true answer is very deep and we need to keep digging to get there 3/24/09
According to the PMs I have received, common sense in trading may be far more important than I first thought. This being the case, let's look at analysis. ANALYSIS IS NOT TRADING
Trading and trade management is where the money is made.
CUT YOUR LOSSES
Your plan should identify your SL but just in case you decide to over ride it (are you reading, Dan?) - cut your losses as soon as possible LET YOUR PROFITS RUN
We always ignore the training we need in trading psychology in our quest for profits.
If it feels right - it is RIGHT
If it feels wrong - it is WRONG
TRADING IS SIMPLE - IT IS TRADERS THAT MAKE IT COMPLICATED
LESS IS MORE 3/24/09 If you have planned your trade correctly with your SL in place at the correct position then you just leave it be and "trade the plan". If it goes in your direction, then the next day you would look at Price action and decide whether to pull your stop in or leave as is.
If price goes against you and takes out your stop then, PROVIDING you planned your trade correctly and accepted the risk, that shouldn't be a problem. When trading the Daily, you enter your stop/limit orders, get filled enter your SL and forget it until the next day. Forget about watching the candles move up and down. We are only interested in where it closes. If you are doing this and not winning then something must be wrong with your trade selection. You should have at least 7 winners and 3 losers using price action where the winners will be far bigger than the losers. Getting out quick is for those people that don't have a plan and basically scalp the Daily. Or maybe for Dan that likes to plan his trade and then interfere with it. 4/17/09 There are as many arguments for, as there are against, in what you asked. PLAN THE TRADE & TRADE THE PLAN --------right Dan?
Apr 25, 2009
A ""MUST READ"" POST
On one of my psychology posts, I wrote about a guy on another thread and Forum who was trading a proven M5/M15 strategy but, for the life of him, could not make money at it. I knew he was a young guy, and, having been there, knew that he couldn’t afford to lose money. I saw all the signs of a guy wanting more to be seen by his peers as being successful than a guy wanting to make money, so I observed him as best I could. After seeing him write, post after post, how many pips he had lost, I sent him one of my “do you know what you’re doing type PMs”. He politely replied and carried on losing. It got to the point that I TOLD him to STOP trading and evaluate what he was doing wrong. Undaunted, he carried on trading and posting his losses. I then told him I hoped he was on demo. He replied it was REAL money so I sent him PMs begging him and pleading him to STOP before he LOSES EVERYTHING. Eventually he stopped and I am very happy to say he is with me on my thread and doing really, really good.
Anyway, I wanted to get inside his mind to understand why he kept on trading when he knew he was losing trade after trade so, he has kindly sent me his story. For anyone in a similar situation – STOP TRADING RIGHT NOW! I was first introduced to spread betting and by extension, trading, by a work colleague who had been experimenting for about 3 years and seriously making good profits for about 2 years (thus 5 years exposure in total). He used a 'recommendations' service which sent out internet alarms and SMS text messages with entry, stop, take profit levels and covered GBPUSD, EURUSD, USDJPY, USDCHF, Gold, Oil, FTSE & Dow. He also liked to trade the news. It has been an ambition of mine for a few years to be able to work from home, cutting out commuting time and hassle as well as facilitating focused work time (ie no typical office 'interruptions'). I have not yet been successful in finding any potential employer with my same view (although at present I am lucky enough to have negotiated working from home every other week, which is a step in the right direction). I was therefore more than interested in any opportunity that might facilitate my earning a living from home, which this 'spread-betting' appeared to do. I therefore signed up to this recommendations service, watched the daily videos explaining the technical analysis behind the 'calls' and placed a few demo trades. Having got to grips with the trading platform, I was already for the news of a Bank of England interest announcement. As soon as the announcement was made I placed a GBPUSD and a FTSE bet, both @ £5 a point. I used common sense for the trade direction (a cut in the rate would mean a weaker £ against the $, so that was short and would make UK companies more competitive, so that was long). For the first few seconds I had difficulty getting my ticket filled, but as soon as it was I was straight into green and the value of my bet was increasing phenomenally. (No idea of a target of course) after the first 5 minutes the 'spike' settled down into a down move, straight past my entry and after 15 minutes right to the 'automatic' stop applied to all trades by the company I was using. I lost about £1,300 (of my £1,500 account) in 15 minutes. After 90 minutes price was back up where I had originally been filled & rising. I told the story to my work colleague who explained that he used a 'straddle' strategy (ie orders both a bit below and a bit above the price just before the announcement). That way you were guaranteed your fill price, but you had to be quick to close 'the other side' once one of your trades had been opened. He also told me he used much tighter stops (about 20 points) and had targets set (at the previous swing high / low price before the announcement) thus he usually looked to get 50 to 100 points. Having witnessed for myself the speed with which you could make (or in my case, lose) money trading news, and now armed with the 'correct' strategy to be sure I was always on the 'winning' side and was limiting my loss with a tight stop, I was all prepared for the next announcement. Unfortunately what I hadn't realised was that the stop levels used by my spread betting company were dramatically increased around news time, so whilst I was unable to place the stop as tight as I would like, and in the panic of the move both my orders opened, one I made a really good profit on, and the other I lost even more) so net I was down. After a few months of this and the sometimes right sometimes wrong calls of the recommendations company I was making some & losing some, net was probably slightly down. (I had reduced my stakes greatly, as I didn't want to put any more money into my account). I started to research the internet to see if I could find a better 'recommendation' company and came across a Forex Forum and was particularly fascinated by a 'trader' who was teaching others how to trade. Here there was much more about key price areas & levels and a candle formation called a 'pin bar. I took what I could from this excellent free advice site (as a lurker) and started to only look for pin bars on the four hour timeframe. I found the massive stops a problem, but never the less, found trading opportunities and traded them, often making quite good profits, only to let them all go back to loss or break-evens, because my targets hadn't been made (I looked to get twice the number of pips as the pin was telling me to risk). Whilst I read a lot of 'it’s not the pin, its the position that is important' I never fully understood what this meant or how to apply it. About a year or so after my initial forays into the spreadbetting world I saw some posts on another thread titled 'its all about the pips'. Their concept was that by trading for an hour or so a day, if you made a consistent 50 pips you could make enough to live on and actually spend your time living your life. Well I was sold, that was exactly what I wanted to achieve, work form home and have more time to enjoy my life and do all the things I never have either the time or the money for. Not only that, but here was someone who was actually doing it and willing to teach others. This thread led me to another and from there I joined their “live trading room”. With very little left in my trading account I 'invested' a further £500 to get me going with the new strategy. The first few weeks were indifferent, I didn't take many trades and lost as much as I made, however after a month or so I followed USDCHF short (for about five hours) which they had explained where they thought the take profit areas were. Instead of taking part profits off at these levels though I added small amounts. Thus when the final (fourth) target was hit, I had three times my stake all making profit, with minimal risk as at each stage I had protected the profits with my stop movement). That really gave my account a boost and re-confirmed my belief in the “live trading room”. I then wrote myself a plan, how many pips I need to make each day to be able to grow my account to a suitable size to be able to make up a sufficient fund to have the equivalent of three months net salary (safety net) and a trading account where risking no more than 2% per trade, if I maintained my daily pip target, I would make my current salary plus still be growing my account. That was the easy part, but then the serious business began. The pressure was then on. I HAD to trade every day. I HAD to make my target number of pips. If I lost on a trade, I HAD to make that trade back and then trade again to get my daily pip target. If I didn't get the trades in the live room sessions I HAD to keep an eye on the charts to ensure I got the moves 'out of hours'. That was the beginning of the second end for me (as you know, you commented on my posts on the thread where I was consistently losing week in week out) But I couldn't see where I was going wrong, everyone else in the live room was making pips every session (some experienced members significant number of pips), but I knew my target was relatively modest and it didn't matter what others were making. I was getting up earlier & earlier to get my analysis done on more charts before the live room then I had time to check them to their analysis before 7am UK time, but even doing all of this didn't improve my performance. My dream was still very much alive, I just HAD to work harder, analyse better, get in (to the move) earlier, tighten my stops, let my winners run, watch the indices, gold, read more widely, watch the higher time-frames, never trade in the CCI danger zone.........As soon as I learnt all of that, my results would turn around and I would start to see some consistent profitability, week in week out (every one gets a bad day / week / month). It was only when you (Strat) PM'd me to suggest I stopped doing what I was doing if I wasn't getting the results I wanted that I started to think about what I was doing. I eventually (it took a couple of weeks) realised that I didn't actually understand their trading strategy at all, I was just trying to copy other, more successful people. In the past, this had worked well for me in the other aspects of life: I find traits that I admire in people and attempt to mimic them, which leads to me achieving what I wanted to. However it certainly hasn't worked in the trading environment. I have now (as of the end of March 2009) given up on the short time frames and indeed live trading. My 'business plan' is in the bin. I have started down The Path of Learning. I am demo trading only for the next three months. I am reading as much of the 'Strat’s stress free trading' and 'J16' threads as I possibly can, and really trying to learn the material and apply it to my trades. I am studying (basic) price action. I am attempting to refine my understanding of Support & Resistance. I am experimenting with trade management. Most importantly I am trying to learn patience. X number of pips a day is great if you can do it (and respect those that can & do) on the low time frames in an hour or two a day. I can't. I consider what I am learning now to be more about 'investment' strategy than something I can hope to make a living from. My goals are more realistic, I am not under pressure to make enough in the next 3 or 4 years to be able to 'trade for a living'. I am hoping to be able to make a better return each year than the 'experts' that I pay considerable sums to each month to manage my pension fund. So have I answered the question as set? probably not. Let me try again: what was on your mind and what made you continue to trade when you were losing hand over fist? I had a plan, which I was committed to (as its conclusion was the realisation of my dream, to be able to make a living from my home) I HAD to achieve (or better), my daily pips target, each day, every day. There were two sessions in which to achieve this When I was suffering from inability to pull the trigger (usually due to a losing day the day before) I could see everyone else who had taken the trades of that session declaring their pips (+30 to +100 usually), so I HAD to take the next trade because I had missed that good one. Sometimes it worked, sometimes not. Sometimes I would have five or six trades running at the same time, all making profits. That proved to me that I could do it; for a disproportionate number of losses afterwards. Each week I reviewed my trading and vowed that it would be better next week, after all, everyone else was doing very well, I was just a bit slower to really master the strategy. Perhaps if I got up ten minutes earlier it would give me time to do a more thorough analysis I would 'get it' Why you did you continue to do it? what went on in your mind? Because I am quite a determined, single minded personality. I was justifying the losses as 'learning' experience which would eventually all turn around and I would be as good as the rest of the club. I just needed to apply more effort (this has worked for me in other areas of my life, particularly my career, so why should trading be any different as I wanted it to become my new career?) What was driving you etc., etc I don't think this is a major reason, but I think they are really nice guys and good teachers and mentors, I didn't want to fail in their eyes, or even fail them as a student The biggest driver for me was this (trading) is the only realistic option I have yet come across which enables individuals to earn their living from their own homes. This is something I have been trying to achieve for many years. The club was the first time I came across other people that were actually doing it, if it worked for them, why shouldn't it work for me? With hindsight I can see that I was (and perhaps still am) very naive, I have read in many forums that 95% of people who try to make money by trading lose it and give up. The biggest clue should have been the reaction of my (now) wife when we were first dating. She found out that I had bought shares in RailTrack (admittedly it was many years before we had met), but she still found it inconsistent for some-one who is naturally very risk adverse and tight with money....... __________________ |
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Trading Psychology |