Keep Calm and Don't Move Your Stops.....

A little risk management saves a lot of fan cleaning!

The Purpose of Life is Joy!!

Tuesday, December 6, 2016

Old News is New News

I've taken three days off so far. Probably going to take another 1-2 days this week. Been looking for answers as to why I am losing.

Turns out its pretty simple.

Fomo, greed, ego.

These manifest themselves almost exclusively in choking off trades that are winners.

The fomo works like this. I am in a winning trade, its gone 15-20 ticks my favor but I have a planned exit at 55 ticks based on structure. I move to BE. Price takes me out and then goes to the original target. This happens a lot. Combine that with the normal distribution of losers and you are no longer a break even trader or a winning trader. You are losing. This is a drain on mental capital as well. Much frustration results from this behavior.

The greed looks like this: I am in a winning trade. Its gone nearly all the way to my planned exit. I get greedy and extend the exit by another 50 ticks, price reverses and takes me out at a break even or some other much smaller gain.

Ego looks like this: I have had  a losing day so far for whatever reason. I rationalize that I am good enough to make it back so I keep trading. This works just enough to re-enforce this bad behavior. Or worse, I increase size to make it back. I don't do this often but once in a while it does happen. It happened last week.

Of these three, the FOMO is by far the largest reason I am not making money like crazy. In my battle to end this behavior, I have over the years vacillated between trading small size and looking for big winners and trading larger size and looking for more smaller winners.

The answer of course is to just put on the trade and walk away. But when I do this, invariably I get stopped out and some other larger move happens just before I get back to the computer.

So when I get back to the charts for real, my plan for the remainder of the year and for next year is simply to avoid moving stops at all. Just let the trades play out. I'll watch videos, read, whatever, but if I am to make a long term career out of this, I need to solve this issue pretty darn quick.

My year will end on December the 16th. I will not be trading past that date and I will resume on January 2nd, 2017.



5 comments:

  1. You, me, the guy that doesn't know what MACD is and even the highly trained pro sitting on Wall Street is prey to this

    Market makers know this, and it will never change. Ever.

    Detaching from money achieves this. Easier said than done

    ReplyDelete
    Replies
    1. much easier said than done....but I intend to try.

      Delete
  2. I've found GoToMyPC to be a life-saver where this is concerned. Although you can still tamper with orders through the smartphone, I've found that this somehow puts enough distance between me and the markets for me to allow the trades to play out.

    Made it to 100% return in just under 6 months with 1.79-2.23% risk/trade after implementing this (and a few other notable changes).

    ReplyDelete
    Replies
    1. Very nicely done. what were some of your other "notable changes".

      Delete
  3. Very nice James, that's rare to achieve and even harder to maintain.

    ReplyDelete