How do you control your emotion high and low during trading.

[firewalker99]

mine also

And what steps are you taking to really understanding something illogical as the market?

Although I admit I've found myself at a far better understanding of price movement opposed to a couple of months ago, I think trading a plan and understanding why price moves are two separate things. My eagerness to comprehend and understand buyers and sellers all the time, was basically (amongst other things) what stood in the way of getting started in developing a plan...

 

[superfly]

correlation

And what steps are you taking to really understanding something illogical as the market?

Not everything is illogical. Intermarket analysis, for instance, is partly logical

 

[rols]

May I suggest we offer up some practical tips for overcoming emotions instead of vagaries and platitudes.

Abandonment of ego and acquiring a masters trading knowledge involve years of work and for many are as achievable as a trip to the moon..

How about the newbie trader who wants to bet a few quid on the FTSE but gets freaked out when he's 50 quid down? Now the roller-coaster ride starts. Head spinning, heart beating and hands shaking.

Does he have to go through this experience again and again until he gains 'the knowledge'?

Or are there some simple practical solutions which may help him in the short term and set him on the road to long term success?

 

[andycan]

It is only natural that someone with ego problems who has overcome them or who has succeeded in spite of them believe that everybody has ego problems and that those problems must be dealt with in one way or another in order to achieve success


dbphoenix don’t take this the wrong way but your confrontations with Socrates
Demonstrates EGO your post though helpful still shows a willingness to be right
Let’s look what ego means:-
Your idea or opinion of yourself, or a great feeling of your own importance and ability:
Another dictionary states the above but adds self confidence
To have a system that works in trading you test it when it shows that you have the ability to be profitable you have to gain confidence to trade the methodology I rest my case
Sorry I think im demonstrating ego too

As rols said lets look at solutions rather than dwell on different points of view

 

[dbphoenix]

May I suggest we offer up some practical tips for overcoming emotions instead of vagaries and platitudes.

Abandonment of ego and acquiring a masters trading knowledge involve years of work and for many are as achievable as a trip to the moon..

How about the newbie trader who wants to bet a few quid on the FTSE but gets freaked out when he's 50 quid down? Now the roller-coaster ride starts. Head spinning, heart beating and hands shaking.

Does he have to go through this experience again and again until he gains 'the knowledge'?

Or are there some simple practical solutions which may help him in the short term and set him on the road to long term success?

You pretty much answered your own question, rols. If he wants to "bet", then there's not much -- if anything -- for it. He won't do any better than he would at any other betting venue, e.g., poker.

And it needn't take years, not in these days of replay and readily available databases. It takes work, but not necessarily the time it used to. One can, in fact, define and test a setup in weeks if he's a mind to.

As for "simple practical solutions which may help him in the short term . . . ", that depends on the problem. Has he decided what he wants to trade? Has he decided when he wants to trade it? Has he decided how much he's willing to risk? Has he decided whether he wants to follow somebody else's strategy or his own? If the latter, has he decided whether he wants to trade breakouts, retracements, or reversals? Or one can assume that one knows what the problem is and generate a lot of advice that is irrelevant to whoever is having the difficulties.

If you want to do well at poker, you have to know the rules, you have to know how the game is played, you have to know how to read the other players, you have to know how to manage your risk and your money. Same goes for trading. If one is unprepared to learn the bare minimum, he can't expect a pot of gold. May as well buy a lottery ticket.

Db

 

[dbphoenix]

It is only natural that someone with ego problems who has overcome them or who has succeeded in spite of them believe that everybody has ego problems and that those problems must be dealt with in one way or another in order to achieve success


dbphoenix don’t take this the wrong way but your confrontations with Socrates
Demonstrates EGO your post though helpful still shows a willingness to be right
Let’s look what ego means:-
Your idea or opinion of yourself, or a great feeling of your own importance and ability:
Another dictionary states the above but adds self confidence
To have a system that works in trading you test it when it shows that you have the ability to be profitable you have to gain confidence to trade the methodology I rest my case
Sorry I think im demonstrating ego too

As rols said lets look at solutions rather than dwell on different points of view

It's not ego but rather a refusal to be bullied. I believe that anyone who has the will, the intelligence, and the discipline can be a successful trader. I believe this based on my experience. Bertie believes something else. Those who believe as he does are free to do so. However, those who believe as I do should be free to do so as well.

That two camps disagree need not mean that one is right and one is wrong. If one requires the support of a group in order to persuade himself that he has an edge, then it's unlikely that he has one.

Db

 

[rols]

You pretty much answered your own question, rols. If he wants to "bet", then there's not much -- if anything -- for it. He won't do any better than he would at any other betting venue, e.g., poker.

And it needn't take years, not in these days of replay and readily available databases. It takes work, but not necessarily the time it used to. One can, in fact, define and test a setup in weeks if he's a mind to.

As for "simple practical solutions which may help him in the short term . . . ", that depends on the problem. Has he decided what he wants to trade? Has he decided when he wants to trade it? Has he decided how much he's willing to risk? Has he decided whether he wants to follow somebody else's strategy or his own? If the latter, has he decided whether he wants to trade breakouts, retracements, or reversals? Or one can assume that one knows what the problem is and generate a lot of advice that is irrelevant to whoever is having the difficulties.

If you want to do well at poker, you have to know the rules, you have to know how the game is played, you have to know how to read the other players, you have to know how to manage your risk and your money. Same goes for trading. If one is unprepared to learn the bare minimum, he can't expect a pot of gold. May as well buy a lottery ticket.

Db

Being pedantic and asking questions is not offering solutions I respectfully submit.

I'm sure many successful traders have started out as spread betters.

Quite simply; whether trader X is trading Pork Bellies or the Topix is not the issue. If he cannot control his emotions then his judgement will be impaired. He may well read 1000 trading manuals between failed live trading sessions and be the supreme master of Price, Volume, S & R but will this be enough to give him the confidence to use the knowledge to his benefit?

Straight forward practical solutions. Answers on a postcard please.

 

[andycan]

It's not ego but rather a refusal to be bullied. I believe that anyone who has the will, the intelligence, and the discipline can be a successful trader. I believe this based on my experience. Bertie believes something else. Those who believe as he does are free to do so. However, those who believe as I do should be free to do so as well.

That two camps disagree need not mean that one is right and one is wrong. If one requires the support of a group in order to persuade himself that he has an edge, then it's unlikely that he has one.

Db

Good answer!!!
and i totally agree though, the support of a group may not be to win praise but simply to have company
trading to me is bloody boring and i enjoy the company of other traders.

 

[dbphoenix]

Being pedantic and asking questions is not offering solutions I respectfully submit.

I'm sure many successful traders have started out as spread betters.

Quite simply; whether trader X is trading Pork Bellies or the Topix is not the issue. If he cannot control his emotions then his judgement will be impaired. He may well read 1000 trading manuals between failed live trading sessions and be the supreme master of Price, Volume, S & R but will this be enough to give him the confidence to use the knowledge to his benefit?

Straight forward practical solutions. Answers on a postcard please.

Asking questions in order to determine the problem is not pedantry. If nothing else, it's basic courtesy.

As for reading 1000 manuals and being the master of PV/SR, it will be enough to give him the confidence to trade successfully if he translates all of that into a consistently profitable strategy. And if it's consistently profitable, there's no reason for him to be emotional about it.

If one wants the answers on a postcard, try the Darvas Box*. Or a MACD histogram divergence. Or a stochastic rollover. A few simple rules, but relatively useless unless they're tested.

Db

*The box is defined in two steps. First the top of the box is found. This is a price that has not been exceeded for three bars. This highest price will be the top of the box.

Second the bottom of the box is found. This is defined as the lowest price where there are no lower prices for at least three bars. The starting point for searching for the lowest price is the point where the highest price is found. This lowest price establishes the bottom of the box.

Once the box is completely defined, enter the market when the price pushes through the top of the box.

If one wants real-time charts to practice on, see the "Plotting S/R" thread below.

 

[andycan]

Rols
I know what you are saying because I went through it.
My only advice I can give to you and anyone else is perseverance
Yes you have to put some rules in place but I suspect the problem lies in what one deems as an ability to read the market.
There are times when a market shows its hand and there are times when it does not experience shows you which one as for the set ups or indicators or whatever people use it becomes a matter of personal choice what do you think the market is about?
Some looking at it as support and resistance, demand and supply
Some don’t care, they follow there indicator and when it’s at the top they sell and at the bottom the buy.
I see the market geometrically/mathematically/structurally
I don’t care about news though I know it moves markets and im aware of macro economics situations I know lots of different indicators and oscillators just so I know what others are thinking I also trade futures because I find them straight forward
How does this help you? Knowing that someone has gone through it and overcome it
I do get occasionally emotional in my trading but when I enter a trade I ask myself a few questions



1 which direction is the trend
2 where am I going to enter the trade
3 what is my goal (min objective)
4 where am I wrong and where is my stop
And can I afford this trade


when I follow my rules it does not matter whether im right or wrong the fact is my trade is a good trade and if I win it’s a good win and if I lose it s a good lose
what newbie’s have problems with is when they lose they try and reverse the trade with no thought they try and fight the market and then they end up losing double that’s part of the reason beginners get very emotional they see the market as an entity taking their money when the market has no interest in you
Take one trade at a time win or lose make a note why you took the trade mark it on a chart
See how good it was or bad eventually you yourself will see a pattern when you do best and when you don’t and you build on that

 

[Lightning McQueen]

May I suggest we offer up some practical tips for overcoming emotions instead of vagaries and platitudes.

Abandonment of ego and acquiring a masters trading knowledge involve years of work and for many are as achievable as a trip to the moon..

How about the newbie trader who wants to bet a few quid on the FTSE but gets freaked out when he's 50 quid down? Now the roller-coaster ride starts. Head spinning, heart beating and hands shaking.

Does he have to go through this experience again and again until he gains 'the knowledge'?

Or are there some simple practical solutions which may help him in the short term and set him on the road to long term success?

in total agreement rols
as a noob trader this will affect me big time I would imagine, so my plan of action is to ignore the money element by trading peanuts to start with (hence the finspreads account, rols ) and concentrating on the points, hopefully being able to increase position size as the sphericals will allow, without panicking.

that is my plan to help myself in the short term, any other help would be very welcome indeed

cheers

don

 

[superfly]

sharing my reality

i believe that the more I focus on executing effective risk controll

the less volatile my ROI and my emotions are going to be

 

[superfly]

so the question for me is how mutch of the combination of risk- and emotional tollerance is wise for my approach.
under current conditions.

 

[rols]

Asking questions in order to determine the problem is not pedantry. If nothing else, it's basic courtesy.

As for reading 1000 manuals and being the master of PV/SR, it will be enough to give him the confidence to trade successfully if he translates all of that into a consistently profitable strategy. And if it's consistently profitable, there's no reason for him to be emotional about it.

If one wants the answers on a postcard, try the Darvas Box*. Or a MACD histogram divergence. Or a stochastic rollover. A few simple rules, but relatively useless unless they're tested.

Db

*The box is defined in two steps. First the top of the box is found. This is a price that has not been exceeded for three bars. This highest price will be the top of the box.

Second the bottom of the box is found. This is defined as the lowest price where there are no lower prices for at least three bars. The starting point for searching for the lowest price is the point where the highest price is found. This lowest price establishes the bottom of the box.

Once the box is completely defined, enter the market when the price pushes through the top of the box.

DB. Your answer illustrates that you only perceive a solution within the confines of your own trading experiences. How many traders here can honestly say they have a consistent, lasting profitable strategy based on the criteria you submitted earlier?. If this was the norm rather than the exception these boards wouldn't exist!

If successful trading really was only about following instructions to the letter then it would be easy. It's those grey areas in between; discretion, intuition, personal issues, annoying things that make the whole business much more complicated than baking a cake.

We are human. We have emotions which affect our every action.

The title of the thread is How do you control your emotion high and low during trading?

The secondary question is If you had say 5 consecutive losing days. Does it affect your confidence at all so that next trade you lower your stakes than normal or you keep it the same. Also when you had 5 consecutive winning days, Does your confidence increase and your play with a little more stakes than normal or your keep it same.

My turn to be pedantic.

 

[rols]

Rols
I know what you are saying because I went through it.
My only advice I can give to you and anyone else is perseverance
Yes you have to put some rules in place but I suspect the problem lies in what one deems as an ability to read the market.
There are times when a market shows its hand and there are times when it does not experience shows you which one as for the set ups or indicators or whatever people use it becomes a matter of personal choice what do you think the market is about?
Some looking at it as support and resistance, demand and supply
Some don’t care, they follow there indicator and when it’s at the top they sell and at the bottom the buy.
I see the market geometrically/mathematically/structurally
I don’t care about news though I know it moves markets and im aware of macro economics situations I know lots of different indicators and oscillators just so I know what others are thinking I also trade futures because I find them straight forward
How does this help you? Knowing that someone has gone through it and overcome it
I do get occasionally emotional in my trading but when I enter a trade I ask myself a few questions



1 which direction is the trend
2 where am I going to enter the trade
3 what is my goal (min objective)
4 where am I wrong and where is my stop
And can I afford this trade


when I follow my rules it does not matter whether im right or wrong the fact is my trade is a good trade and if I win it’s a good win and if I lose it s a good lose
what newbie’s have problems with is when they lose they try and reverse the trade with no thought they try and fight the market and then they end up losing double that’s part of the reason beginners get very emotional they see the market as an entity taking their money when the market has no interest in you
Take one trade at a time win or lose make a note why you took the trade mark it on a chart
See how good it was or bad eventually you yourself will see a pattern when you do best and when you don’t and you build on that

Thanks for the advice and thanks for putting it in big letters so all of us dumbbells can feel comfortable with it. :cheesy:

 

[dbphoenix]

DB. Your answer illustrates that you only perceive a solution within the confines of your own trading experiences. How many traders here can honestly say they have a consistent, lasting profitable strategy based on the criteria you submitted earlier?. If this was the norm rather than the exception these boards wouldn't exist!

Very few traders have a consistently profitable strategy. But that doesn't mean that having one is impossibly difficult. But it does take work. Most of the beginners I've worked with confuse being busy with working. The Darvas Box I posted earlier is about as simple as it gets, but how many people will actually pull up some charts and go to work? Few, if any.

If successful trading really was only about following instructions to the letter then it would be easy. It's those grey areas in between; discretion, intuition, personal issues, annoying things that make the whole business much more complicated than baking a cake.

It's a lot simpler than most people think. Trading the plan is part of the tuition, including taking trades that one "feels" he ought not to take even though the plan calls for them. Eventually one acquires the experience and can legitimately over-ride the strategy (see Stages of a Trader, below). But unless one is able to hold on to enough money to acquire that experience, whatever success he might have enjoyed will never materialize. That's the point of implementing and sticking to a consistently profitable strategy.

We are human. We have emotions which affect our every action.

True. But emotions need not be material to trading.

The title of the thread is How do you control your emotion high and low during trading?

Which I answered. It may not be what anyone wanted to hear, but that doesn't make it any less pertinent.

The secondary question is If you had say 5 consecutive losing days. Does it affect your confidence at all so that next trade you lower your stakes than normal or you keep it the same. Also when you had 5 consecutive winning days, Does your confidence increase and your play with a little more stakes than normal or your keep it same.

Which I also answered along with what I've found to be helpful advice from Vad Graifer. If no one else finds it useful, it's of no less use to me.

Most beginners want to trade what they feel because they've been led to believe that that's how it's done. It isn't, at least not for longer than most beginners' funds hold out.

Db

 

[Paddington]

I recently read Pitbull by Marty Schwarz (one of the traders featured in market wizards for those who have not come across him).

One of the quotes I remember was about ego and seems appropriate for this discussion:-

Page 287 from Pit Bull by Marty Schwartz: "I've said it before, and I'm going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to DIVORCE MY EGO FROM THE TRADE. Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. You have to stop trying to will things to happen in order to prove that you're right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you're right, but to hear the cash register ring.

It was apparently after he did this that he turned from successful to super trader, after 10 years of trading.

 

[firewalker99]

i believe that the more I focus on executing effective risk control

the less volatile my ROI and my emotions are going to be

As you say focusing on risk control is one way to keep you from being distracted and looking for things in the market where you might "feel" that you could be right instead of following the plan. I've listed some of the things to keep my attention to what I need to be doing, instead of what I would like to be doing:

- if the setup appears x (let's say on average 3-5) times a day, then at all times I'm aware of the number of trades I already took; then if I'm making a 7th or 8th trade I'm very likely not following my rules

- place my stops immediately when entering the trade, with a bracket order preferably, this way I won't be inclined to place the stop at a point where I can't afford any more money to lose, for sure the market doesn't care about that; placing your stop before when you enter a trade instead of after decreases chances that emotions interfere

- don't move the stop as price is going against you, just because you 'feel' that it's still going to reverse

- similar to placing a stop order, I place a limit order at where my first target would be (if the plan incorporates a fixed target); don't let greed interfere with the trade and don't move the target further just because you're willing to squeeze something more out of it. This hasn't been an issue really for me, but I've had the tendency to move my target closer to what's in sight, scared that it's not going to get hit. As they say, fear is a greater emotion than greed.

Just some thoughts on what has been helpful for me. None of these really apply if you don't trade a plan.

But to answer rols question, if I would be down 50 quid, imo the only sensible, rational thing to do is to check:
1) if your stops are in place,
2) if you took the trade on the correct signals,
3) whether you took the trade for the right reasons (if not get out immediately),
4) is the size you're trading in accordance with what you're willing to risk or can afford to risk on a single trade (if not get out before it gets even worse)
5) if you were not in a trade, would you enter now (in what direction?)

And best thing to do after taking that loss would be to get up and walk away from the screen, otherwise I'm sure some of us would do more stupid things (I pledge guilty).

 

[firewalker99]

It's not ego but rather a refusal to be bullied. I believe that anyone who has the will, the intelligence, and the discipline can be a successful trader. I believe this based on my experience.

Db

If intelligence would be a prerequisite, then I wonder why all the geniuses out there aren't lured into trading. Evidently a basic understanding and intelligence is required, but I think attitude, mental strength, letting go of the willingness to be right and a will get up after you've fallen down - not once, not twice, but multiple times - is what separates those that prevail and are profitable in the end and those that quit broke. That and of course discipline.

Something I read a long time ago in the Market Wizards:

All the reasons for failure you have mentioned so far relate to the
attitude with which people approach trading: a lack of commitment or funds going in. What flaws besides attitude cause people to fail as traders?

It's not a matter of intelligence, or even market knowledge. I've seen people with good trading skills fail, and those without any previous experience succeed. The main thing is that every trader has to be honest about his or her weakness and deal with it. If you can't learn do that, you will not survive as a trader.

Several years ago, an option trader who had scheduled to come visit me at my office asked whether I would be willing to review his trades for the past year before he came. I agreed because I genuine want to teach people how to trade.
He said, "I had 84 percent winning trades last year."
"Good," I said, "did you make any money?"
"Well, no," he answered, "I lost money for the year."
"Then the 16 percent is what we need to focus on," I said.
"That's why I wanted to send you my trades."

He sent me his trades, and I found that out of about four hundred trades he did that year, five trades accounted for almost all his losses. At first I didn't notice any common denominator. Then I checked the dates and discovered that four out of five of these trades had been
done on expiration Fridays.
I called him up and said, "I found your problem."
"Oh good," he said. "What did you find?"
"Four out of five of your big losing trades were done on an expiration Friday."
"Oh, I knew that," he answered.
"Well, there is a way to fix this problem," I told him.
"Good, good," he said. "I knew you would have the answer."
"Don't trade on expiration Fridays."
"Mark, what are you talking about? Those are the most exciting trading days."
"You have to decide whether you want excitement or you want to make money. Quit trading on expiration Fridays. Go out and do something else on those days."
"Oh no, I can't do that," he said. "I can't give up the action on that day. I'll figure out how to fix the problem."
"If you don't fix this problem by quitting," I told him, "it's going to quit you."

Six months later, he was bankrupt. He knew indicators inside and out. He was a workaholic and very intelligent. He even knew how to take losses most of the time. But he just couldn't stand aside on that one trading day. He had identified his problem, but he couldn't fix it.

 

[dbphoenix]

If intelligence would be a prerequisite, than I wonder why all the geniuses out there aren't lured into trading. Evidently a basic understanding and intelligence is required, but I think attitude, mental strength, letting go of the willingness to be right and a will get up after you've fallen down - not once, not twice, but multiple times - is what separates those that prevail and are profitable in the end and those that quit broke. That and of course discipline.

I didn't say that genius was required, nor did I say that intelligence alone was sufficient.

Db