Showing posts with label trading psychology. Show all posts
Showing posts with label trading psychology. Show all posts

Long time no see

It's a time for an update. As you know this is fifth year that I write this blog, actual trading sometime longer, but here is documented my serious attempt at this business. Then you know that I'm basically unprofitable, it's enough to visit my results label. I'm also stubborn. Sometimes its bad in making trading mistakes, and good in not giving up. I'm really slow learner and it's taking me ages to implement steps that I schedule for myself.

I updated missing days in my blog of course only after really good last day so I don't have to only blush in shame.

Right now I'm fighting battle with myself on maximum daily stop loss. It's going on for some time now. My declared number is fifteen pips. My stops are six pips, so about 2.5R. Usually I get emotional around daily stop level so I go for one more trade, then another. Occasionally realization that I broke my rules bring me in revenge and extreme emotions mode. Then I enter successive trades in short span of time losing six by six by six pips in rage. That's the present.

At least I can say that I learned some lessons so far, so it's not only bad. First I had problems with entering in direction of the trend, in my first years. I was only counter trend trader. Which is common and very debilitating trading behavior at many beginning traders. So much is left on the table, waiting out while price is moving in a trend just to get that elusive reversal. Only if you get it and it develops in new trend you are long gone out and looking again for another reversal. I succeeded in changing myself and going with the trend, or more accurate in direction of a breakout. It took me long time but I'm proud of that step because it was first step that made at least some difference.

After that came hurdle of averaging down when in loss. It was awful. I would try to escape every loss by averaging down. So I had many positive days with small wins made with averaging when they should be losing days. Add to that winning days from the start and it all looked promising. Only to face one day when trend is strong, there are no bounces and I'm on wrong side. Those days would take weeks of effort and apparent success and put me deep in the red. I didn't know how to stop myself. Only HPT's advice worked to have in account only enough margin to trade with one position. So I basically started to trade full margin.
Well after that step my averaging break in discipline transformed in widening my stop. That was disaster also. So not long time ago I changed setting on my chart to make invisible my stop level making it impossible to just drag and drop line on my chart that I did until then. So now I'm at that phase. My discipline problem transformed in overtrading easily making thirty or so trades. Mostly losing ones, waiting for big winner that will wipe out losers.
So now I'm in that step trying to stop my day after reasonable loss, reasonable based on what I gain on a good day.

It's all discipline problem, same problem from averaging until now. I believe it's basically avoiding acceptance of being losing trader. Because what if I follow all the rules and still remain to be unsuccessful and unprofitable. It's defeat so I basically chose not to face it. Instead of being losing trader and still trade despite of my unsuccess and basically just learn.It would be more beneficial then this hide and seek game with my own discipline.

Lately I lost interest in blogging regularly mostly because of my terrible performance. It's embarrassing posting daily how horrible I'm doing. Also google cut me out from their adsense program so that materialistic motive was gone. I would like to thank for all the clicks in last four years that transcribed in around $1800. Maybe now when I stopped earning from talking about trading I can start to earn from trading.  :)

 In last year there is one other matter that brought me big frustration and that is change in market behavior on small time frames that I use. Moves are shorter on sub 1min charts, there is much less follow through after signal for me. So stops are much more frequent. I learned to trade specifically and I'm not good at all in different trading environment.

In my recent trading last few months after some good head start I started going in to losing spiral that stopped after I lost basically all what was left in my trading account. I lost steadily thought the year losing 84% until August. Then with some gambling for fun I doubled what was in account. Then I doubled it again to cut loss to around 32%. At the end of the October I broke down losing 80% bringing me back to August levels where I no longer consider it serious trading because of lack of relevant size of trades. I was totally depressed and probably hit the bottom because I started browsing through all my old trading materials that I read long time ago looking for a spark, looking for something. I didn't found anything new but my resolution to continue by any means be it rereading old books and articles resurrected my trading spirit. It was down and out and few days later it was like what can I do but continue from wherever I know. I didn't put any more money in account. Somehow I can strive for good trading using demo like account, so let it be for now.
Even if I'm making Scalp and Swing frustrated by my stubbornness I continue with my quest. If Solfest can fight his mut how can I sit and do nothing. If MBA can do all what he is doing with serious money I have to keep on. Finally if A Pip Throwing Party can scalp so amazingly there is a real chance for success in scalping.

Changes

-8 pips

Today wasn't really a situation for me to trade but I didn't trade for a long time and I wanted to start even for experimenting purposes.


I want to limit myself in a effective way. Previous problem of averaging that was my number one problem is solved by using whole margin. So averaging went away. If for some reason I start again to have more money in account than it's necessary for position averaging would be back in no time.
So I made few changes to address current problems. Changes that I can follow and not deviate. First of all I wanted to cut my exposure to market when I'm heat up. So I decided to allow myself only five trades a day. Previously I had experiment with one trade a day that wasn't success. With five trades I can trade but I'm omitted in doing twenty or more trades when I have a bad day. For some reason I believe that I can follow that rule even I couldn't follow rule of having max loss of -25 pips which was basically designed to do the same.

Second thing I'm lowering my take profit level to maximum of +15 pips. I'm not allowed to earn more on any trade then that. Why I chose to do it? Firstly when I have theoretically unlimited potential on any trade I'm prone to fantasize about big profits, that leads to big emotions, greed and who knows what. I abandon efficient scalping and drift in some dream land, then I do it in losing trades also. So I move stops because I can afford to lose -20 pips because of big profits that are awaiting around the corner, off course just in my mind. If big profits are impossible it would be much harder in my mind to justify big losing trades when they are in the making.

Third thing that I changed is nice little feature that Oanda allows me. That is I changed position sizing from fix round number to 99% of margin available. With that I address an issue that I have with changing size, it allays affect me in negative way. Now on my every trade size is different, so I hope I will detach from number of units that I trade.


My idea of where I want to be with my trading is in doing few good scalps in a day when I trade and nothing more. I want it to be stable and uniform, without oscillations in my strategy and expectations. Taking five to ten pips in a trade and having similar stops day in and day out.
Wish me luck in sticking to my rules.


Tilt

I'm still enjoying my vacation but have some spare time today to catch up on reading blogs because it's windy day.

So I read on some poker blog about problem with tilting. In poker people are considering being on tilt as a normal occurrence that is happening from time to time. They even can notice that they are on borderline to go on tilt and quit before they do some damage.
Wikipedia defines term as: "Tilt is a poker term for a state of mental confusion or frustration in which a player adopts a less than optimal strategy, usually resulting in the player becoming over-aggressive."
It's something common and can be expected. To deal with it first comes prevention. Simply avoiding situations where you are putting yourself in a position where it can easily happen. When on tilt the most important thing is to recognize it and acknowledge it. Then you have a chance to walk away.
Watching poker shows with professionals playing we can see that they are not totally immune to tilt and that it's common for them also. So simply there is no escaping to being on tilt this way or another. Only solution is to adapt to it and minimize negative effects.

This bring us to trading. I always thought that I have unacceptable characteristic for successful trading with my averaging habit. That I'll simply need to find a way to cast out that habit completely if I want to progress. But now I think different. It's probable if I continue to trade for rest of my life that averaging bug will be with me in one form or another whole time. I can adjust, minimize it but shouldn't worry to much about it like I was. It's just me being on tilt. Everyone have their own way for tilt. Black put in tens of trades in a span of one hour and 20 pips range. RCM holds big losing trades over few days as do FXpropTrader.
I just average down position after position until I use up all margin and hold several hundred pips loss because I didn't want to close -15 pips loss. Just recently DNTRader had -1000 pips day that way.
So what I'm saying tilt is fact of life in poker and obviously in trading too. It is necessary to minimize the damage with prevention of situation that can lead us to it. Also, easier said then done, we can acknowledge that we are on tilt when we recognize ourselves in that situation and pull out the plug to stop the bleeding. It is not necessary to self-pity and think that it's only me who have that awful problem that is going to ruin me. Tilt is here and it's here to stay. We can accept it as a fact and deal accordingly or bang our head on the wall.