What helped you?

[trader_dante]

I think its interesting the ways in which you can change your emotions and get yourself on the path to being where you want to be.

For example the following exercise to help you control your attitudes to unneccessary risk caused by the money in a trading account being electronic (just a number and not mentally representing a real amount of money)

A trader would draw out the same amount of money in cash as he had in his account. So if he had £1,000 in his account, he would take out £1,000 in cash and keep it with him. Everytime he wanted to take a position he would calculate the risk he was about to take, count it out in cash, hold it in his hand and see if he still thought it was worth it.

If he did think it was worth it, he would go and put the money in the bin which physically enforced the fact that he was prepared to never see this money again in order to profit from a move in the market.

I read that once a year, Jesse Livermore used to go and sit locked in his own bank vault for the weekend, surrounded by his money to analyse his years trading. Infact in his own book he recommends regularly withdrawing money from an account - holding it in your hand. Realising the fruits of your efforts.

Anyway, a while back now I realised that I was getting far too upset over losing trades and not realising that any edge will naturally have losers - that is simple probability. To combat this, I trained my mind in a rather ridiculous manner.

Whenever I was in a losing trade, I made a promise to myself that if it turned into an eventual winner, I would do something I really didn't want to do.

For example, I would say that I would stay an hour later at work every evening for a week or something similar.

This might sound slightly mental to some people reading - like I am trying to associate winning with something I don't like which would be very negative. And I can see that. But what it did for me, was simply bring down the excitment of my winners (because they were mitigated by a negative experience) and balance out the pain of losing (because it was followed by relief that I didn't have to do something I didn't want too).

Anyone else tried any interesting brainwashing techniques?

 

[trendie]

.....
Anyone else tried any interesting brainwashing techniques?

never tried it, but toyed with something.
we are brought up the idea of a job, where wea re paid for "hours worked".
but we tend to confuse hours worked with "productivity".
in that we expect to go home with X amount fo money for Y amount of hours.
I know trading is more volatile.

I toyed with the idea of working as a commission-only salesman!!
in that, if I got 20 leads to chase, I knew I wouldnt get every sale, but that it would teach me the concept of taking every lead, but only to expect a certain number of hits. my income would fluctuate, but it would re-inforce the idea of not knowing which particular lead would create the income, but I had to go through them all to hit a particular target.
being an IT-nerd, and essentially anti-social, I decided against it.
but it proved a good thought-process to break out of the £X-per hour mind-block.

 

[Trader333]

I consider myself fortunate because I have the same feelings for either profit or loss situations. I think that I developed this as part of the same mentality I had when I was younger and was engaged in highly intense sports training for a particular event. Regardless of how I felt I always had the discipline to do what was needed. Eventually I was emotionless about the activity and just did it automatically. Trading is the same as I have automatic responses that are determined before I take a trade. It can be likened to much the same way as when you drive somewhere, if you have to brake or indicate to turn you don't get emotional about it you just go ahead and do it.


Paul

 

[FXSCALPER2]

In my case, I really really hate losing money.

The way I see trading is: have a way of staying with your winners and getting out of your losers quickly. I don't care about the individual flactuation in my account and I do not look at it during the day. As a day trader, I look at what I did at the end of the day. What I aim for is to have more winning days than losing days. If I have significantly more winning days in a month than I have losing days, I make money, otherwise I lose money. I just ignore what happens during the day. My job is to find trades that ensure I have a winning day.

 

[0007]

I used to have a problem with not acting on my stoplosses. I would sometimes mentally relaxt them because "I knew that my expert assessment of where the trade should go had to be right!".

Now, when ever a trade goes against me & I pull out on stoploss or before, if it's that obvious, I susbsequently review that trade and look at how much I would have lost If I'd stayed with it. I then get a very good feeling (almost proportional to the potential loss) from having done the right thing. Obviously there are times when the trade would have come good but this never bothers me since there are always new opportunities in the pipeline.

So it seems for me, that I find pyschological reward in knowing that i avoided a disaster by being disciplined. (If I ever need any more convincing I just refer to 2 spectacularly bad results cuased by ignoring stoploss.)

 

[shadowninja]

So it seems for me, that I find pyschological reward in knowing that i avoided a disaster by being disciplined. (If I ever need any more convincing I just refer to 2 spectacularly bad results cuased by ignoring stoploss.)

I should print out the info for mine from that day and stick it on my wall as a reminder!

 

[Hoggums]

For me it wasn't one thing that made me turn it around. It was a cycle of:

tentative trading -> success -> scaling up -> overconfidence -> losses -> analysis ->re-evaluation

Each time I experienced the losses they are were less crippling and I am now much more adept at spotting them and positioning myself accordingly. I haven't changed the way I trade for some time now - although it does get constantly tweaked.

 

[shadowninja]

Something that has helped me is that I realised that I need to regard trading as not like a paintball game (running around madly, shooting anything that moves) so much as a game of chess (taking time to plan my moves with an overall strategy that takes into account the opponent's techniques; the only difference is that you cannot control your opponent).

Hm. I wonder... the Art of War... is it applicable to trading?

Oh, and reading and re-reading articles and books on discipline (in trading, not kinky stuff!). I have worked out that I need to read it like one might read the Bible: take it in unquestioningly, as if it's the law, because, frankly, as I keep saying, there are a hundred successful strategies (I know lots of you use different ones to each other) and in the end, bad money management and discipline will be the over-riding factor.

(I tend to repeat myself a lot on this forum, but it's just as much me telling other people what I think as me convincing myself that it's true. If you say something enough, you'll believe it, and I know I have to believe that discipline is important; my big losses have told me so!)

 

[Tawe Trader]

What helped you?

I'd like to think it is ditching my 'trading EGO' but it's going to take me years to get rid of it. So as long as I am aware of it lurking in the background trying to sabotage my trading account, I believe I am at least heading in the right direction.

There are hundreds of excellent quotes from master traders but there is one from William Eckhardt that if you have been trading for any length of time does seem to ring very true - well for myself anyway.

'Losses make you strong, profits make you weak'

 

[lurkerlurker]

I've not read Trading in the Zone for awhile, but the first time it sank in I was particularly struck by a truth revealed by Douglas, which I shall paraphrase to the best of my recollection:

You do not need to know what the market will do next to make money

It helps to believe that - and over a large enough number of trades executed in conformity with your edge, it is true.

 

[grantx]

Paul,

That has got to be the ideal - total lack of emotion. It's probably also the hardest to attain.
However, as with athletics, you get out what you put in.

Grant.

 

[nine]

Total lack of emotion has been proven not to be possible.

A goal more attainable is to change the strength of the felt emotion and use planned/trained behaviours when you feel it.

 

[grantx]

Nine,

I said it was an ideal, ie something to aim for, whether ultimately attainable or not. Even if it is never reached, at least you can try and reduce emotion (as you say in your second sentence).

A good comparison may be when you first started driving – pretty frightening and complicated. Then it became automatic (although not completely void of emotion).

However, this can be a double-edged sword – indifference to losing and indifference to winning. The latter is Ok, the former is fatal.

Grant.

 

[shadowninja]

I've not read Trading in the Zone for awhile, but the first time it sank in I was particularly struck by a truth revealed by Douglas, which I shall paraphrase to the best of my recollection:

You do not need to know what the market will do next to make money

It helps to believe that - and over a large enough number of trades executed in conformity with your edge, it is true.

Here we go:

The five fundamental truths
-Anything can happen.
-You don't need to know what is going to happen next in order to make money.
-There is a random distribution between wins and losses for any given set of variables that define an edge.
-An edge is nothing more than an indication of a higher probability of one thing happening over another.
-Every moment in the market is unique.

(From Trading in the Zone by Mark Douglas.)

 

[nine]

Nine,

I said it was an ideal, ie something to aim for, whether ultimately attainable or not. Even if it is never reached, at least you can try and reduce emotion (as you say in your second sentence).

A good comparison may be when you first started driving – pretty frightening and complicated. Then it became automatic (although not completely void of emotion).

However, this can be a double-edged sword – indifference to losing and indifference to winning. The latter is Ok, the former is fatal.

Grant.

Hi Grant,

Yes. Good analogy and issues. I erred on the side of conciseness in my post above and lost clarity.

The interesting thing is that you shouldn't even try to reduce the emotion. Trying is often going to be counterproductive.

I don't know if you are familiar with awareness mediation (vipassana etc) but recent research has shown some stuff thats quite useful to traders.

0. If you ignore or try to ignore emotions your level of awareness of the emotion may decline but the underlying impulse is still there. This is because our brain is comprised of different processing centres some of which we are conscious of and some of which we are not. The problem is that you may no longer be conscious of it (suppressed) but a suppressed emotion still creates impulses ... and the impulses may generate actions and the actions are what damages your trading. So suppression is bad.

1. If you focus on the emotion when you experience them and then NAME them your brain processing moves from the amygdala to the forebrain. In doing so the level of the emotion is reduced (and thus its ability to generate impulse and hence action). Not only is it reduced at that time but any primitive linkages with prior events (which may be amplifying the pressure/pain in trading) are reduced ... extinguishing in operant conditioning terms. This is one the big reasons why awareness meditation decreases negative emotions.

2. The problem for a trader isn't actually the emotion anyway (unless its suppressed and thus causes an impulsive explanation that they can't explain afterwards (the "why the fxxx did I do that" experience)). The problem is the action we take when an emotion occurs in the amygdala and generates impulse. So if you add a plan for what you are going to do when you feel the emotion you can do the right thing (more and more often) instead of the wrong thing. This extinguishes the bad behaviour.

Denise Shull proposes a 4 step strategy for dealing with emotions that fits the modern view of our brains. She calls it ANNA.

A Anticipate the emotions (know when you are likely to feel X and how much)
N Notice the emotion (you can't deal with what you didn't perceive)
N Name the emotion (and repeat the name - take advantage of your brain's neuroanatomy)
A Address the situation. Execute your new plan for when you feel fear, frustration, whatever.

So, we no longer try to reduce emotions. Instead we anticipate them so they don't surprise us, notice them when they happen because we expect them and focus on them, repeatedly name them so that they primitive brain loses control and there is extinction of some of the emotional linkages, and finally address the situation with a new behaviour which is productive and gradually extinguishes the old bad habit.

I have found this strategy effective for overcoming a couple of nagging issues in my trading.

So much for concise

 

[grantx]

Nine,

Interesting stuff (I had to read it a few times).

If I’m correct, the first paragraph seems to be saying that without the emotions, we cannot control our actions. I can’t accept this. Consider this: in dangerous situations you feel fear (presumably the adrenalin) and you deal with it the best way you can. If the fear is suppressed that doesn’t mean you won’t recognise the danger and fail to respond. I think this is what I was saying in my reply to Paul’s post.

Shull’s four step strategy seems the simplest. The stress caused by a position suddenly turning or worse, losing control of a losing position (holding on) can only be eliminated by self-discipline. However, self-discipline has to be developed - for most, it isn’t something that can be readily turned on or off.

In the context of trading, the simplest method is using automatic stops entered simultaneously on opening a position. A losing position, while undesirable, is less stressful when closed automatically. It may be countered this doesn’t address the underlying psychological “weakness” (“problem” may be an overstatement). So what? This is such a narrow context (albeit important), I don’t see broader ramifications. Then again, where one is doing badly, it could affect one’s family/social relationships; then I suppose it does become a “problem”. Maybe I’ve lost clarity, here.

Grant.

 

[Splitlink]

"I have had a great many troubles, but most of them never happened".

MarkTwain

 

[Paul71]

Absolute rubbish! Emotion? Who or what is this thread aimed at? Lovers, Base jumpers, suicidal maniacs? Who?

Certainly not private traders with thier own capital who have two options,...

Trade, or don't trade.

 

[grantx]

Paul,

It's a question of addressing stress. If you don't have it, I reckon that's got to be the best; if you have it, then try to reduce it.

Grant.

 

[Paul71]

Paul,

It's a question of addressing stress. If you don't have it, I reckon that's got to be the best; if you have it, then try to reduce it.

Grant.

Hi, Grant.

Yeh, i agree with what you say.

Let me put it this way, and this is not a question directed at yourself, but, anybody.


Why should one trader, executing one trade, ...be under any form/type of stress?