Day Trading & Forex Forum

RiskTrouble

Hi. I’ve been trading for about four years. I have a good price-driven model that I use to make short-term trades in various futures markets (primarily crude oil, British pound, FTSE, and mini-Dow).

I try to be in and out very quickly picking up 3-10 ticks at a time, and I can consistently make good profits (US$400-$700 per contract/per day) with a very high winning percentage (around 90%). I’m good at reading order flow and picking S/R areas on the chart, and I generally trade with the trend (buying or selling the pullbacks/bounces).

My problem is that I have outsized losing trades that are wiping away my profits and then some. These are trades that I know are crap when I have the opportunity to get out for a loss of 2 or 3 ticks. Instead of getting out with a 2 or 3-tick loss or even a 10-tick loss, I have simply watched these trades run against me -- just sitting frozen in the headlights of the order book.

I know this sounds like a complete cliché of Trading Problems 101; however, that’s not helping me control this behavior. I take full responsibility for it; it’s not the market, my broker, my charts, nor my data vendor – it’s just plain dumb ass behavior.

I feel like there a wiring problem in my head that is preventing me from gracefully accepting these losses (it’s not that I can’t do it – I simply don’t do it). It’s not as simple as putting in stops (although that would certainly help to reduce the magnitude of the losses). My successful trades can sometimes go 5 or 6 ticks against me, but I don’t sweat as long as the character of the market doesn’t change significantly (based on my read of the order flow and T&S). When the character does change, I don’t want to be in that position any longer. I want to be able to pull the trigger as soon as I know it’s wrong. I think part of the problem is taking money out the equation in thinking about winners/losers.

I would greatly appreciate hearing from short-term, discretionary traders who have successfully overcome such a problem. I know there is a lot of material out there relating to this problem, but I think the insight of a trader with a similar style will be more helpful. Given the flood of information that a short-term trader observes, I believe it’s easier to lose one’s perspective relative to swing or position trading. I believe that if I can find a different way to look at losses then I will be able to deal with them in a straightforward manner. For example, one trader said that he thinks of his losses as employees -- i.e., a necessary cost of doing business. That particular one doesn't work for me, but I like the spirit of it.

All constructive criticism and helpful suggestions are welcome, but no trolls please. Thank you.

Crap Buddist

I dont have the answer ,but have a question. Are you generally labelled as being correct in life, friends family etc.? Seen as being laid back? able to see the other sides view of events, no matter what the situation etc?

__________________


"You smell that? Do you smell that? Coin, son. Nothing else in the world smells like that. I love the smell of Coin in the morning."~ Colonel Coin

RiskTrouble

I'm happy with my life. I have a great family and a successful business (apart from trading). Since I work at home I don't leave the house as much as I should, but other than that I'm a balanced person. I am a bit stubborn (not one of my better qualities), but I don't have problems admitting when I'm wrong and I consider myself to be open-minded. However, I am a type A personality, and I'm would a little tightly. I recently started exercising again to help with stress management. I have a touch of perfectionism in my personality, and I don't think a high winning percentage has helped me learn to take losses comfortably.

Thanks.

laptop1

Most of you trades are winners right, and some trades goes against you 3-10 ticks right, but you don't mind, because most of you trades will win.

That's you problem, every time you make a trade you think you will win, You know how to take profits....

All you need to do is, reverse you thinking knowing what to do when you are wrong.

I could go deeper in to it, but I'm not sure how much room you give the market and what are you profit targets, that is, if you have profit targets or base it on feel to get out.…

You could double up if the market goes against you by 12 ticks with an absolute stop at 16, that is, if you are close to S.R You cant double up on any old number, there should be a good reason....

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To learn that a rich person .................................................. ........................................
.................is not the one who has the most, .................................................. ............
................................... .but is one who needs the least.................................................. ....

DemonHeadmaster

I agree. I think because you're so used to making money on pretty much every trade you put on, that when you put on a bad one you get annoyed. That there was some information, or something that you didnt notice that resulted in you putting on a trade that you thought was good, but didnt work out. Once you realise that you can cut the position straight away (and limit any losses), you can go back to making good trades again.

barjon

rt,

Two questions:

1. How often is "sometimes" (ie: what percentage of your successful trades)?

2. How often (percentage) do those trades that go 5 to 6 against go on to become your outright
losers?

If the answer to those questions is low (1) and high (2) then the arithmetic has given your answer and a stoploss order seems appropriate as a mechanical discipline.

Similarly, if you can't bring yourself to pull the trigger then the only way is to pass the buck to someone else via a resting order. I suffered from a similar problem so I use resting orders all the time, albeit that I'm working a longer time frame than you.

Hope this is helpful.

good trading

jon

options

Oh this is going to turn out to be a good thread!

RiskTrouble you already have part of the answer, you have said it yourself; and Crap Buddist didn't have the answer then but his 'grasshopper' question may have given him the answer now.

K, firstly I was exactly where are now. And I mean exactly. Ftse futures e mini dow on a 2 min time frame. 7 out of 10 average. Then one trade would kill the day or even worse the whole weeks work.

It didn't happen often, most times I would cut and be quite happy to be proved right by that decision.
BUT, when it did happen it wasn't a hand to the mouth oh dear moment. It was a baseball bat to the back of the head moment.

It could not go on. Especially as i was sitting electronically side by side with my mentor. He made money most times whereas I would get hit by the baseball bat sometimes.
I could go on but you get the gist.

The short term answer is to put on your chart an appropriate STOP moving average and when the price makes a whole closing bar under that, exit regardless.

The longer term answer is...YOU.

It is all mental.

Buks' signature: "I have seen the enemy... and it's me."

Crap Buddist: "Are you generally labelled as being correct in life, friends family etc.? Seen as being laid back? able to see the other sides view of events, no matter what the situation etc?"

RiskTrouble: "...but other than that I'm a balanced person. I am a bit stubborn (not one of my better qualities), but I don't have problems admitting when I'm wrong..."

Yes, you do!

"...I have a touch of perfectionism in my personality, and I don't think a high winning percentage has helped me learn to take losses comfortably."


You got that right!

The long term answer then.

Now. What worked for me, and I am not saying that it will work for you or anyone else, but, my answer was to move out on the time frame, and I mean a lot.

From 2 min charts I now trade from weekly, daily and hourly taking an entry or exit on a ten min can still cause a baseball bat to the back of the head moment for me. Note, I said can.

I was trading the wrong time frame and the wrong market for me

Everyone wants to be a futures trader don't they? Trading 30 or 40 times a day, Hell make it 300 times a day. Come out at the end of the day 200 grand up on the account and then do the same again the next day.

That is the common perception as to what we want. The perception that has been fed up to your mental dinner table.

The reality is that few can trade by looking through a microscope at the market and make a living for any length of time without suffering from burnout or an account that is on death row.

My answer was to take a step or two back. I can see a whole lot more. But I think that mainly to be able to trade a market consistently and properly over the years is to understand that the short market moves are just blips and small ebbs and flow of the bigger ocean wave, and that they do not count. They are designed to wrong foot.

Think of yourself as an ocean going liner rather than a speed boat. It takes a long time for the liner to turn and then goes with the flow. This is the market mass moving the liner. The whole of the market cannot turn the liner on a 2 min or ten minute time frame. The orders coming in from all over the world simply do not allow the dynamics of this to happen. It takes a lot longer than this time for the orders to be processed. Even on a hour time frame you my not see the true intent.

But my last word on the matter is that you can still scalp on a hour chart

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"Adapt or die!" Said the Coackroach to the Dinosaur.

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"I have seen the enemy...and it is me."

Follow the path of least resistance.

Crap Buddist

OK, well what are you thinking when you have that trade going against you. ?

What do you tell yourself, your inner voice, what do you say?

I think what can help for us to correct this is to perhaps maintain a running verbal dialouge ,speak it out as you are trading, reading the market, even record yourself.

Now whats your inner voice saying when you know its going against, likely to get worse etc, what are you saying to yourself?

I think, all that needs to be done maybe is to replace that, with what you know you should do but dont, replace that inner dialouge.


Thinking about it, im sure theres a greater chance for you to deliver the behaviour you want of yourself if you express your mind external verbally instead of silent inside.

Its likely to be more empowering , a greater authority of your own voice , very subtle and simple .


Very typical situation you put forward , I'm just pushing with ideas, maybe a few more members with greater knowledge of mind conditioning /behaviour change for this will winkle some techniques forward to help further.

__________________


"You smell that? Do you smell that? Coin, son. Nothing else in the world smells like that. I love the smell of Coin in the morning."~ Colonel Coin