Why it is so Difficult to follow the Trading Rules?

This is a discussion on Why it is so Difficult to follow the Trading Rules? within the General Trading Chat forums, part of the Reception category; Hi to All Trading is a platform where human weakness appears in a very cruel form i.e. loss of money. ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Aug 2, 2011, 9:11am   #1
 
3 Posts
Joined Aug 2011
Why it is so Difficult to follow the Trading Rules?

Hi to All

Trading is a platform where human weakness appears in a very cruel form i.e. loss of money. (Money, money, money Always sunny in the richman's world).

The simple task of following the rules is so painful and difficult to say the least. But why?

Why it is so difficult to make rules to guide the trading?

Why it is so difficult to get out in a small trading loss?
Why it is so difficult not to get out in a small profit and let profits run?
Why it is so difficult to stay out and wait for the next opportunity) when the market has gone beyond the determined entry point fast and furiously?
Why it is so difficult not to regret a loss making trade?

The real trading edge comes when a trader is able to overcome the difficulty associated with his trading rules and consistently able to follow them.

The answer most probably lies in in the question "What is the real cause for this difficulty?"

Please share your opinions and experiences.


Trader 23
Trader 23 is offline Trading system vendor   Reply With Quote
Old Aug 2, 2011, 9:38am   #2
Joined Nov 2008
Re: Why it is so Difficult to follow the Trading Rules?

I blame ABBA...
Black Swan is offline   Reply With Quote
Old Aug 2, 2011, 10:37am   #3
Joined Apr 2006
Re: Why it is so Difficult to follow the Trading Rules?

Quote:
Originally Posted by Trader 23 View Post
"What is the real cause for this difficulty?"
Personally I'd say its just a lack of belief in (or understanding of ) your edge.
the hare is offline   Reply With Quote
Thanks! The following members like this post: Hotch
Old Aug 2, 2011, 10:45am   #4
 
0007's Avatar
Joined Jun 2005
Re: Why it is so Difficult to follow the Trading Rules?

Humans are psychologically hard-wired not to fail. Taking losses, getting out early and obeying rules which, on first sight appear to be an admission of failure, all go against the natural grain.

It's like working in an unnatural environment eg. underwater or in the air - you have to learn to do things differently. Experience in other fields shows that training and the reinforcement of routines is a way of changing hard-wired habits. Learn to do this with trading and you are in with more than half a chance.
__________________
0007 -
"A Gentleman should not be seen before mid-morning unless he is returning home from the night before"
0007 is offline   Reply With Quote
Thanks! The following members like this post: Black Swan
Old Aug 2, 2011, 11:04am   #5
 
Hotch's Avatar
Joined Jul 2008
Re: Why it is so Difficult to follow the Trading Rules?

Quote:
Originally Posted by the hare View Post
Personally I'd say its just a lack of belief in (or understanding of ) your edge.
Exactly this!

Once you are confident in your edge and understand it, it's all downhill.
__________________
I'm just the guy that never tried, I'm just the stupid **** with brilliant luck and sometimes a bright idea.
Hotch is offline   Reply With Quote
Old Aug 2, 2011, 12:05pm   #6
 
Doomberg's Avatar
Joined Mar 2011
Re: Why it is so Difficult to follow the Trading Rules?

It took me a looooooooooong time to get discipline but when you realise that you are hurting yourself over and over again and that the majority of your losing trades are due to rule breaks, it becomes easier. And about losses, if i trade my strategies and make a loss i don't care get stressed because i know i was doing what i agreed with myself and gave myself a good chance
Doomberg is offline   Reply With Quote
Old Aug 2, 2011, 12:47pm   #7
 
3 Posts
Joined Aug 2011
Re: Why it is so Difficult to follow the Trading Rules?

Trader 23 started this thread Yeah, rule breaking is the major cause of being a net loser.
And it is quite true than we are hard-wired not to fail.

When traders with some experience make a trading plan they know there will be two or three or even more consecutive losses and they are part of trading if we keep them small. These losses does not reflect failure in any way.

But still when we actually encounter 3 consecutive losses something changes and if the 4th one is also reflecting a loss then the tendency to avoid that loss becomes so strong. This is the time when it becomes so difficult to cut the loss.

It's relatively easy to contemplate 4 or 5 losses in a row. But when they actually happen somehow the mentality changes. The whole process of taking the 4th or 5th consecutive loss becomes such a difficult task.
Trader 23 is offline Trading system vendor   Reply With Quote
Old Aug 2, 2011, 6:22pm   #8
Joined Apr 2011
Re: Why it is so Difficult to follow the Trading Rules?

One problem i experience is not admitting i am wrong and the market is going to turn round, no guesses for what happens next
mattboffey is offline   Reply With Quote
Old Aug 2, 2011, 7:06pm   #9
Joined Apr 2006
Re: Why it is so Difficult to follow the Trading Rules?

Quote:
Originally Posted by Trader 23 View Post
When traders with some experience make a trading plan they know there will be two or three or even more consecutive losses and they are part of trading if we keep them small.
People are living in a fantasy world if they believe that streaks of losses will be limited to just 2 or 3 trades.

I really would advise reading up on some basic probability theory, and gaining an understanding of what you'll most likely encounter for a given strike rate, and then confirming it with backtests.

Its not just consecutive losses that are the issue.

Handling this stuff even when fully prepared is hard enough, but practically impossible to handle otherwise.
the hare is offline   Reply With Quote
Thanks! The following members like this post: wackypete2 , Pazienza
Old Aug 2, 2011, 9:34pm   #10
Joined Oct 2006
Re: Why it is so Difficult to follow the Trading Rules?

It appears you know your issue and know what you need to do. A good book to read is Mark Douglas - Trading in the Zone, but then I'm sure you already know this.

The_Hare has made a very good point - belief is very important.

My suggestions would be to keep a very strict diary of your trading and more importantly your deviations from your rules. I did this many years ago when I first started trading live and can honestly say I could never break the double digit percentage in a given month simply because I BROKE my own rules. If I stuck to them and never overrode my rules I would have been far better off. It took me a long time to overcome this, EVEN though I knew it was detrimental behaviour.

>>People are living in a fantasy world if they believe that streaks of losses will be limited to just 2 or 3 trades.

The_Hare is very right here. I personally can spend 2 or 3 weeks in draw down, sometimes longer, and with 2 or 3 good winning days, be back into new highs. On paper it looks easy but being able to have a full belief in what you are doing and know that evetunally your system will come back is not easy at all.

The act of Quantitative Rule Based Trading is in essence very simple, it's our Mind that makes trading so extremely difficult, to point that very few people can be consistently profitable over a long period of time.

My personal opinion is your better off finding something you really love doing and earn an income that way. Don't trade for money, there are so many other enjoyable ways to make it :-)
tdrtw is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Why trading is so difficult? Joseff First Steps 69 Jul 21, 2011 10:33am
Article: Important Rules to follow T2W Bot Educational Resources 8 May 7, 2011 1:01am
Best Trading Journal to follow? mauzj General Trading Chat 2 Nov 13, 2008 5:51pm
Online trading-Rules To Follow fxfxforex Forex Brokers 0 Aug 15, 2008 11:09am
Which is more difficult? Day-trading or position trading Dispassionate Home Trader 42 Nov 23, 2005 6:29pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)