Help psychological problem

schoe

Well-known member
343 3
I am a discretionary trader I only use price action and no indicators prefering to keep things simple. I just break even and am not making huge profits despite attending several courses and spending several years practicing trading. I am very good at cutting my losses and try not to form an opinion about a trade but trade with momentum and the trend. I trade the Dow and Forex. My main problem is that I always seem to miss out on the big moves by taking my profits far too early. I watch the pounds ticking up on the blotter with CMC then take them after 15/20 points only to see the instrument carry on another 100 points.This may be because I have seen previous profits disappear and I don't have a set system. How can I resolve this problem. Should I use a Macd or a moving average or some other indicator to assist me or is this a psychological problem because of past scars.?
Any comments gratefully received.
 

donaldduke

Experienced member
1,665 257
You need to have some of sort of system that will guide you
in seting up your entries, exits (losses and profits) and
your position sizing.

Then you need to back or forward test (with a small position size)
this system so that you are confident trading it.

When you have a system and you find that market continues
moving in your favour alot after you exit then you can think about
altering your system to increase your profit size to loss size ratio,
but you would only do this if you found that this was consistently
happening.

A good book about systems development is Trade your way to
financial freedom by Dr Van Tharp.
 

jsd

Active member
232 3
do you use sensible stake size relative to account?

how do you think about money?

what was your parents attitude with money when you grew up with them. How do you feel with that?

try and keep one eye on both market action and one on your profits ,not both eyes on your wad...

trailing stop?

pivots,s&R as profit objectives? price action at these levels?

interesting subject that most people experience with the cause dependent on your mind and its beliefs.

jd
 

Trader333

Moderator
8,613 939
Sell half your position at the 15 to 20 points level, raise your stop to breakeven and allow the second half to run.


Paul
 

UBend

Junior member
20 0
Oh dear Schoe, sounds like you haven't got a suitable exit strategy!

A recent seminar that I was at had a talk by Mr Charts which helped me tremendously. He started his talk by explaining about his exit strategy. I thought he had it A*se about T*t to start with , but when you think about it it makes perfect sense. When you enter a trade you must have a good idea of where you are going to exit. Some people use targets but Mr Charts uses a very simple system which I am sure he wouldn't mind if I pass on to you.

If you use 1 min charts he will exit at the first candle in opposite direction or 10 EMA goes flat.

If you use a 5 min chart his exits are :-
1) 2 candlesticks against position & loss of ground = close half position. Third consecutive candlestick against causing loss of ground = close the other half.
2)Bounce off clear support/resistance then close half position
3)Close all position on a spike against you
4)Close all position if 10 EMA goes flat

If you can let your winners run I'm sure you will see a good increase in your profits

UBend
 

jsd

Active member
232 3
ohh forgot to add read The disciplined trader-mark douglas, encourages you examine your belief systems which ultimately controls how you behave whatever system you pick its your mental environment which governs how successful you'll be.
and lets face it we get exposed to a lot of S**T in life, that does have an effect, depnding on emotional experiences connected to the exposure results in the deeper formation of your belief system. But you can turn it round, pick up the courage, look inwards at yourself

jd.
 

BBB

Experienced member
1,071 3
Paul beat me to it! Thats just what I was going to say. It's also what I do.

People will tell you that this is potentially leaving money on the table compared to exiting the whole position in one later on. Of course this is right, but it wont help you - as you will be back to square one.

If you follow Pauls wise advise, you will be banking consistent profits, your confidence will grow - and so will your account and position size. It wont happen overnight, but the best things come to those who wait!
 

jsd

Active member
232 3
BBB said:


People will tell you that this is potentially leaving money on the table compared to exiting the whole position in one later on. Of course this is right, but it wont help you - as you will be back to square one.

If you follow Pauls wise advise, you will be banking consistent profits, your confidence will grow - and so will your account and position size. It wont happen overnight, but the best things come to those who wait!

hmmm i'd rather add than reduce with positive price action, what you have outlined above is a treatment for the symptom and not the cause, ie as above being a confidence neurosis.

I feel i have to point out that it might be acceptable for the 2 individuals above but not neccessarily acceptable, nor appropriate for human number 3 ,who may want to treat the cause and trade with confidence, to ultimately become free of fear of losses profits the whole sha bang.

jd.
 

schoe

Well-known member
343 3
Thanks everyone. Jsd you have lost me slightly if you keep adding to your winning positions how do you decide when to take the profits or cut the losses. Surely trading this way any winnings will eventually be cut out by a loss on another position.
UBend I have been on a one to one with Mr Charts and am aware of his exit strategy. I am not confident that exiting on two negative five minute bars is suitable for longer term positions and I can't always sit in front of the screen. I would like to leave some of my position on for most of the day if the trend is strong like the euro/usd today for example.
 

rossored

Senior member
2,103 54
quote : "i'd rather add than reduce with positive price action, what you have outlined above is a treatment for the symptom and not the cause"


i'm sorry jsd but you are plain wrong on that one. Scaling out at 15-20 points is good trade/money management - banking profits. Scaling in at that point when you're trying to increase your confidence level is not the thing to do. That would strike me as being foolhardy - thats not to say that scaling in in itself is incorrect - just in this instance.

I agree on the "trade with confidence" bit : but if schoe adds to position 1, and it turns tail and he takes a loss, and then he does the same with position 2, 3, 4 etc.... thats hardly going to be conducive to his confidence.
 

options

Senior member
2,374 218
Schoe.

..."is this a psychological problem because of past scars.?"


It is now.

The only way past this problem that I can see is to work to a plan and stick with it.

First off, how do you define your entry? get this wrong and half the battle is lost from the start. you say you follow momentum. do you just jump in when it starts moving and try to hold on? Or do you trade breaks of sup/res/trendlines tops/bottoms etc.
If you have a method of entry and it's working, then use that for your exit. (Reverse it.) This is where one single ma will work well. If price crosses that, exit.

Being good at cutting your losses is no good if you cut or have stops too close in the market. It sickens to then see the trade go in the direction you expected; more so if it shoots off.

"... My main problem is that I always seem to miss out on the big moves by taking my profits far too early. I watch the pounds ticking up on the blotter with CMC then take them after 15/20 points only to see the instrument carry on another 100 points.This may be because I have seen previous profits disappear and I don't have a set system."

Now weigh that up with the times you have seen the 15/20 points profit, then watched it reverse the other way again. Glad you were not in the trade. Or probably were in the trade and you didn't take the 20 points. Sick feeling that. You get 3 losing trades. Feel dejected. Watch the market for a while and the next 3 trades you would have done, go right. You enter on the next trade signal and get screwed again.

I'm glad you brought this up actually. Everyone has done this at some point. Time and time again. Me included.

Solutions then:

If you can get a 15/20point trade a day; bag it and walk away. Do not worry about what the market does after that. It is of no concern to you. you have done your job and made profit. do this everyday and you can build up a decent roll.

This is great if you are trading full sizes (2 x 10 lots) or at least £5 point with cmc. The same would apply to the advice given above of selling half at the 15/20 point profit, locking in a stop and trailing the rest to a subjective profit level. ie. Don't try to hold it until it hits the moon.

If you are trading at less then these levels then the natural temptation is to hold for the bigger profit. Indeed the only option is to hold for the longer ride. and the only way to do this is by trailing your stop and having that set at a proper distance away. Sometimes this will pay off. But what happens when a 'normal' stop of 30 points isn't enough? You have 50 points profit up. Ten minutes later it the other way by 80. This is where the plans go out the window and you must rely on intuition. That 30 point stop would have been no good. Much better to take as much profit as you can, before it hits your stop.

The better way though is to trade bigger size, shorter time period, smaller profit target. = More profit, less time in market. Job done. Go down the pub. But this is a lot more stressfull due to the larger possible losses. Very important to have a method that can give you 10 points consistently.

So key to everything is to have a defined entry/working the trade/exit plan and to stick to it. If this fails. 'May the force be with you.'

Thing is, you can't tell when the market is going to give you 100 points/pips. It doesn't do it everyday. The eur/usd of late has had some great runs and some painful sideways action in the same day. Best you can do is to be ready.
 

TheBramble

Legendary member
8,395 1,170
Schoe, so many good pieces of advice, any combination of which should help you.

What interests me is your comment that you're making 15/20 pts on trades, but just breaking even - how do you manage that?

My own advice consists of just 3 things (touched on already):-

1) Trailing Stop. Once your position is in profit, move the stop to entry and keep moving the stop in the direction of the trade (never reverse it!) until it reverses against you and brings you out.

There are a number of systems/methods for calculating size of stop and they depend upon your trading timescale. As you're trading Forex and the DOW I guess you're intraday and would suggest using the previous 5-min bar high/low as the simplest approach. But you would obviously want to play around with this to find an approach that suited your personal psychological risk levels.

2) Scale-out. When you hit your 'normal' 15/20pt profit - sell half your position. At least until you're more confident with your stop-loss setting from point (1) above.

3) Get some psychotherapy. JSD already made a very astute recommendation regarding consideration of your parents' attitude to money. We are all products of our social environment and I'm sure you'd be quite amazed just how what we 'learn' in our formative years gets 'translated' into adult decision-making processes and behaviours that are totally inappropriate.

Without any personal recommendation for the following, it may be of interest to you, most probably because you see this issue yourself as a psychological one - therefore, it is.

http://www.takethat.co.uk/acatalog/TTL_Net_Works__NLP_for_Traders_and_Investors_59.html

There is also a clinical psychotherapy practice which specialises in financial traders issues and ISTR they are based in Suffolk/Norfolk, but for the life of me can't remember their name and couldn't (on a quick search of the net) find details, but another t2w member may have that info.

HTH
 

oatman

Senior member
2,879 22
If you can get a 15/20point trade a day; bag it and walk away. Do not worry about what the market does after that. It is of no concern to you. you have done your job and made profit. do this everyday and you can build up a decent roll.

This is the best advice.
Also good advice is to take 50% and run the rest with a trailing stop.
Build your £$£ and your confidence will grow. This is a confidence thing. Once your fund is above a certain level(only you will know when that is) you will ignore the money and trade the points.
You cannot trade if you're watching £$ signs.
Judging from your results, you already have a good method.
Your analysis is good, so believe in it.
 

DESKPRO

Active member
120 0
Funny my problem at the moment is I have entry and exits defined (using Capital Spreads new order) but when logon and even though my levels haven't been hit I start trading because I think I am going to miss out on some money making opportunities. Concluded that I am doing this for the excitement and trading is giving me a buzz. Reading Van Tharp "Financial Freedom via Online Trading" and one of the points that is made in it is that your trading pln should be really boring but I am finding this to be a problem. Also at the mo am too impatient to accept because the thought of taking say 6 losses on the run and waiting for the bigger profit run.

Out of interest how many of you sit and stay outside the market if your entry signal is not hit or like me do you try and trade because you think you will miss out?

I know this is a psychological problem I need to resolve if I am to be successful at trading.
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock