Turning from a trader to a gambler.......

So the last couple weeks on my spread betting account I have had a string of a good luck (or showed great skill as a trader, you decide) and have made a decent amount of $$$ (what I regard as decent $$$, a lot would regard as lose change)

Anyway along with this I have started to increase in confidence I have started taking some stupid decisions which are nothing more than a pure gamble and started to make a few loses because I have entered trades for some of the dumbest reasons, or just for the buzz of making $$$. Today I have realised what I have done and decided and emptied the spread betting account and walked away from with a healthy lose despite a few recent loses.

However despite this I'm still kind of itching to jump back in, and keep thinking about putting money back in the spread betting account and going again. What can I do to stop myself from becoming a gambler who will inevitably lose it all?

forefit said:

So the last couple weeks on my spread betting account I have had a string of a good luck (or showed great skill as a trader, you decide) and have made a decent amount of $$$ (what I regard as decent $$$, a lot would regard as lose change)

Anyway along with this I have started to increase in confidence I have started taking some stupid decisions which are nothing more than a pure gamble and started to make a few loses because I have entered trades for some of the dumbest reasons, or just for the buzz of making $$$. Today I have realised what I have done and decided and emptied the spread betting account and walked away from with a healthy lose despite a few recent loses.

However despite this I'm still kind of itching to jump back in, and keep thinking about putting money back in the spread betting account and going again. What can I do to stop myself from becoming a gambler who will inevitably lose it all?

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The point is, you are answering your own questions. You know what needs to be done, keep on with the disciplined stuff and as soon as you sense the other voices in your head trying to influence and take over, you must stop and walk away. Clear your head and then come back ready to do battle again.

The problem with doing well is that you get cocky (well, I do) and then you think you're invincible. The market then reminds you in the rudest possible manner that you're a hair on its scrotum.

I'm beginning to think that sometimes it's actually ok to lose money. If that makes sense? kinda bring you back to reality and prevents you from getting overconfident and cocky.

Actually are there traders who say to themselves write if I make myself xxx amount of money in xxxx time I will stop for a wee bit so don't end getting carried away and too confident. Is this a practice used by traders??

Hi forefit - Focusing on money is a good way to end up losing it by letting it run your position for you. Plan your trade in advance and concentrate on following the plan during the trade, not how much money it looks like it might bring you / lose you while it's running. When you see the entry price, you must also be able to see the target exit and stop-loss exit: if you can't see both ways out, or you don't use them when you get to them, you're not ready to trade yet.

There are occasions on which it is OK to lose money -
1. you had a poor plan and this is the cost of getting out so that you can improve your plan based on the lessons learned in this trade;
2. you had a good plan but you did not stick to it: a good trade could be OK for 5 minutes or 5 days of work, but a good plan is for every trade, for life;
3. you have a good plan, and you are sticking to it, but the market has gone in the less likely direction to what you thought it would - this is just a cost of doing business, no trading system can produce 100% winners. Welcome to trading, at this point, you are a trader.

forefit said:

Actually are there traders who say to themselves write if I make myself xxx amount of money in xxxx time I will stop for a wee bit so don't end getting carried away and too confident. Is this a practice used by traders??

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This is a good idea if your success makes you change your trading plan so that you take extra risks - e.g. after 3 good small wins, you stake your whole account on the next trade. It's a good idea to concentrate on what you could lose, not what you could win. A trading plan should beclome less risk-accepting as you become a better trader, not more.

Maybe also if market TA patterns, normally giving say a 60% possible win rate, suddenly gives 80%. The probability is that it will soon start to revert to the mean, that is 60%, by giving 40% for a period. I am not talking about your personal win rate in actual trades, I am talking about the technical behaviour of the market.

But stopping trading when you have a good system just because you made some profit, although widely practiced by traders, seems to me like superstition.

forefit said:

So the last couple weeks on my spread betting account I have had a string of a good luck (or showed great skill as a trader, you decide) and have made a decent amount of $$$ (what I regard as decent $$$, a lot would regard as lose change)

Anyway along with this I have started to increase in confidence I have started taking some stupid decisions which are nothing more than a pure gamble and started to make a few loses because I have entered trades for some of the dumbest reasons, or just for the buzz of making $$$. Today I have realised what I have done and decided and emptied the spread betting account and walked away from with a healthy lose despite a few recent loses.

However despite this I'm still kind of itching to jump back in, and keep thinking about putting money back in the spread betting account and going again. What can I do to stop myself from becoming a gambler who will inevitably lose it all?

Click to expand...

You did the right thing walking away so well done.

Come back when you are ready to play the game properly again.

Winning will make you complacent and you will end up taking poor trades because you feel "invincible".

On the other hand, losing will make you fearful and you will end up missing good trades because you have no faith.

All traders have to battle with both winning and losing streaks and because of the above reasons, paradoxically, winning becomes as much a problem as losing.

A long time ago on here someone wrote something similar to you and I suggested to be overtly cautious when you are winning and I remember getting ridiculed as the consensus seemed to be "hit it hard when you are winning". I still maintain that being cautious is the right approach.

You are only as good as your last trade ; so the first trade you take that is sh*t (and I don't mean that is a loss, I mean that is not a good trade, according to your pre-defined plan etc) - well that's how good you currently are

the book linked here was pretty good re losses I thought

http://www.trade2win.com/boards/futures/24241-good-books-trading-3.html#post1591360

Personally I found (by accident) that my participation in extreme sports where if you become complacent/cocky you get hurt/die helped a lot. Once I moved away from ****ty weather England where I was indoors all the time and started participating on an almost daily basis I found the same attitude to managing risk followed me into trading.

I think the reason I have done well so far, is because I have kept pretty tight stops and let my profits go on. But I'm now going back and looking through my trades and seeing that I have entered some of these trades on the weakest reasons.

I also think my problem as mention is i focused on the money side too much, which therefore has meant I get over excited if i'm in profit or making a loss, kinda the feeling you get when you are at the racetrack and you stick on a tenner on a three legged rocking horse. How can I start getting less and less excited and emotional about making and losing money? I think this could help me alot.

trader_dante said:

You did the right thing walking away so well done.

Come back when you are ready to play the game properly again.

Winning will make you complacent and you will end up taking poor trades because you feel "invincible".

On the other hand, losing will make you fearful and you will end up missing good trades because you have no faith.

All traders have to battle with both winning and losing streaks and because of the above reasons, paradoxically, winning becomes as much a problem as losing.

A long time ago on here someone wrote something similar to you and I suggested to be overtly cautious when you are winning and I remember getting ridiculed as the consensus seemed to be "hit it hard when you are winning". I still maintain that being cautious is the right approach.

You are only as good as your last trade ; so the first trade you take that is sh*t (and I don't mean that is a loss, I mean that is not a good trade, according to your pre-defined plan etc) - well that's how good you currently are

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Just read your website, all it says is "The first goal is survival" that's all the advice I need

forefit said:

I think the reason I have done well so far, is because I have kept pretty tight stops and let my profits go on. But I'm now going back and looking through my trades and seeing that I have entered some of these trades on the weakest reasons.

I also think my problem as mention is i focused on the money side too much, which therefore has meant I get over excited if i'm in profit or making a loss, kinda the feeling you get when you are at the racetrack and you stick on a tenner on a three legged rocking horse. How can I start getting less and less excited and emotional about making and losing money? I think this could help me alot.

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I keep emotions out of my trades through a well defined plan. This normally involves entry by order rather than live, possibly using OCO orders, and always with both stop and limit orders at exit prices. I should then walk away but sometimes can't resist having a peep to see how things are going - but I nearly always regret meddling at this stage.

It's just part of the journey. Knuckle down, don't whine, and sort it out. If not, get out of the game.