Emotions involved in trading own capital, where to now?

I day traded futures for a couple of years, spread trading Dax Eurostoxx. Made money but never amazing amounts. Spent 3 years at an option market maker, trading the last 2. Last 6 months I've been back futures trading from home. Own capital, reasonably limited, small size, spreads. Started ok but has been a slow bleed since December. I'm finding it very difficult to rebound from losing days, which I am aware are always going to happen. Anyway an unhealthy paralysis sets in after a losing day. I'm putting it down to it being my own capital and the lack of progress making me concerned about financial future. Anyway, close to calling it a day.

Firstly, anyone had a similar experience and manage to get through it (somehow take the emotions out of it).

Secondly, by having reasonable record several years ago, have I seriously damaged the chances of going into a prop firm due to the last 6 months? (Thinking is that it will take the emotion out of losing days and help me to be more aggressive when there is opportunity).

Any thoughts on the subject appreciated.

It's easier with your own money. Then you don't have to explain to someone why you lost their money.

You could -

1. do something else and if you're still interested keep this as an interest in your spare time, until you get confident again. You could swing trade rather than day trade.

2. perhaps it's not the money but the principle of losing. you hate losing more than others. traders will always lose sometimes. find an occupation where you will never lose and forget about trading.

3. golfer with a gippy putter syndrome? change your strategy. Don't pay for any courses. If you don't have the discipline to yourself via various resources that are online you shouldn't trade.

4. a saying I learned on a trading webinar last night is "over-analysis leads to paralysis." Perhaps your better strategy would require less thinking.

5. if you are wondering whether you fear losing money, enter a trade you know you are going to lose. it'll cost you but at the end of it you'll know whether you fear losing money.

et. said:

It's easier with your own money. Then you don't have to explain to someone why you lost their money.

You could -

1. do something else and if you're still interested keep this as an interest in your spare time, until you get confident again. You could swing trade rather than day trade.

2. perhaps it's not the money but the principle of losing. you hate losing more than others. traders will always lose sometimes. find an occupation where you will never lose and forget about trading.

3. golfer with a gippy putter syndrome? change your strategy. Don't pay for any courses. If you don't have the discipline to yourself via various resources that are online you shouldn't trade.

4. a saying I learned on a trading webinar last night is "over-analysis leads to paralysis." Perhaps your better strategy would require less thinking.

5. if you are wondering whether you fear losing money, enter a trade you know you are going to lose. it'll cost you but at the end of it you'll know whether you fear losing money.

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Thanks for the response.

1. Is definitely something I'm considering. I'm sitting Level 3 of CFA in June and may try use this to move into an area such as asset management.

2. I'm very much ok with losing and accept that it is part of the job. However, my day trading over the last few months has felt more like spending a day at the dog track. Back in the day, my favorite trades where when someone was mispricing something, most likely an illiquid contract. In these situations, I would know what my theoretical edge and although it might only happen a few times a month, I'd happily put on spreads that were 20 times bigger than what I was trading on an intraday basis. Knowing that you've an edge and leveraging it as high as you can go. These types of trades aren't open to the guy who's putting up £40k and not getting increased leverage. Obviously these trades weren't alway going to make money but being able to know that you had theoretical edge entering the trade meant there was never a feeling of being at a casino.

3. I'm aware that discipline may be an issue and that having a check list in place before putting on a trade is important, which is probably where number 4 comes in. I definitely have over analyise. Is some types of trading this is beneficial, it's just finding the right fit. Currently spending some time looking at pairs trading using stats and adrs/dual listings.

5. It's a fair suggestion but as I said under point 2, my current day trading feels more like roulette than trading. Probably a fact that I've been keeping from myself.

The majority of trader failed is they only able to capture profit trade and failed to understand losing trade. That's the reason why they failed to control the emotion due to they doubt that the losing trade could possibly reverse and make money.

fiftyfifty said:

I day traded futures for a couple of years, spread trading Dax Eurostoxx. Made money but never amazing amounts. Spent 3 years at an option market maker, trading the last 2. Last 6 months I've been back futures trading from home. Own capital, reasonably limited, small size, spreads. Started ok but has been a slow bleed since December. I'm finding it very difficult to rebound from losing days, which I am aware are always going to happen. Anyway an unhealthy paralysis sets in after a losing day. I'm putting it down to it being my own capital and the lack of progress making me concerned about financial future. Anyway, close to calling it a day.

Firstly, anyone had a similar experience and manage to get through it (somehow take the emotions out of it).

Secondly, by having reasonable record several years ago, have I seriously damaged the chances of going into a prop firm due to the last 6 months? (Thinking is that it will take the emotion out of losing days and help me to be more aggressive when there is opportunity).

Any thoughts on the subject appreciated.

Click to expand...

In my view the psychological aspect of trading is important but if you do not know you game inside out, does not matter how strong your are with you mind.

You may want to rethink the way you are trading, some times just a little hint can change the situation completely.

Did you read the Al Brooks's books, if not, have a look at it and see if it can inspire you.

All the best.

You sound like you're having a hard time and you have my sympathies.

Perhaps the first step on the road back is to fully understand that what you are going through is entirely normal if you want to earn money this way. So don't feel bad about it, just accept it as an occupational hazard.

You've been around for a while, so presumably you know that the concept of "consistent profitability" is largely a myth in the real world. You are going to have fat periods, you are going to have lean periods. Nature of the beast.

When you fully take that on board, you might be able to sit back calmly and re-evaluate. Perhaps market conditions have changed and you have not adapted sufficiently quickly? Perhaps you need to pursue alternative strategies? Perhaps you just need a complete break for a short period?

One thing I have found is that every change I make to some extent resets the clock, even when my method does not change. For example, when I moved from a smaller to a larger account, using exactly the same approach, it was totally different. It took time before I could get back into the swing of things. You've had a major change in the last 6 months (back trading from home) - perhaps you are just having a period of adjustment?

The key thing to remember is periods where you don't know your a$$ from a hole in the ground are perfectly normal, even if you've been killing the market for decades without a losing month.

I know it's a cliche, but have you thought of going back and reading Reminiscences again? It's all in there, and every time I read it I realise what mistakes I have been making, and understand how to fix them.

Good luck with it all.

fiftyfifty said:

I day traded futures for a couple of years, spread trading Dax Eurostoxx. Made money but never amazing amounts. Spent 3 years at an option market maker, trading the last 2. Last 6 months I've been back futures trading from home. Own capital, reasonably limited, small size, spreads. Started ok but has been a slow bleed since December. I'm finding it very difficult to rebound from losing days, which I am aware are always going to happen. Anyway an unhealthy paralysis sets in after a losing day. I'm putting it down to it being my own capital and the lack of progress making me concerned about financial future. Anyway, close to calling it a day.

Firstly, anyone had a similar experience and manage to get through it (somehow take the emotions out of it).

Secondly, by having reasonable record several years ago, have I seriously damaged the chances of going into a prop firm due to the last 6 months? (Thinking is that it will take the emotion out of losing days and help me to be more aggressive when there is opportunity).

Any thoughts on the subject appreciated.

Click to expand...