Losing - painful?

[bedsit]

For me I struggled with the same issue until I realised that my thinking was wrong. In life and work we are taught that decisions are either right or wrong. Its easy to feel that with losing trades that you were somehow "wrong". The change came with me when I understood that trading is about probablities and therefore losses are an integral part of a winning system.

Hi Shanghai.
I would say that's the right way. A trader should feel uncomfortable with a losing trade only if they didn't follow the rules, otherwise should accept it as an inevitable part of trading.

 

[Shanghai]

And also to add that if you are comfortable with accepting losses as part of your system you will probably be more willing to cut the losses short rather than hang on to a losing trade in the hope that it may come back.

 

[meanreversion]

Here's an alternative approach. Keep a record (Excel spreadsheet) of every trade you do, entry, exit, size, P/L etc. Now, if you decide not to take a trade (due to concerns about losing money), put that on the spreadsheet as well, along with its ultimate P/L had you been trading it normally.

At the end of the year, add up the P/L from all these skipped trades - it will make you far less shy about trusting your system, I guarantee.

 

[Shanghai]

meanreversion on the money as usual.

 

[Hotch]

I think most people use alcohol, or if you're Dave, coke.

 

[GlenGary]

Hey guys, new here, Is a losing day concidered, 100% loss of your account,? Personally, if you lose a trade, the you need to rethink your strat, AT THAT POINT, to stop the loseing.. Get ahold of the situation instantly, before opening another ticket. You should have a game plan, BEFORE entering.

 

[MarketMoverTrader]

How do you cope with losing days?

I know that losing is inevitable part of trading and accept it as a probability game, but still feel uncomfortable when it happens.

Any technique to overcome this lousy feeling?

Read 'Trading in the Zone' - if I tried to give you my own advice here it would just be substandard paraphasing of that book anyway. Then do the exercise at the end of the book. I had a guy speak to me this week because he was not getting anywhere in his trading. All his problems he described made it obvious the problem was mental (self-sabotage) rather than technical. I told him not to come back until he has read that book. I personally think it's the gold standard in trading psychology, as do many, but some may disagree of course.

Overcoming those negative emotions could turn out to be the hardest part of trading, and many stuggle with it for years, if they ever overcome it. I know it's a problem for me too, but better than it used to be. I know a very successful trader that trades 99% like a robot. Losing trades don't phase him any more than winning trades do. He just trusts his edge and carries on. Maybe one day I can get to that stage. I think it takes focus and practice to eventually become a 'new person' in a way. Hope that doesn't sound too wishy washy, and that it makes sense.

 

[MarketMoverTrader]

Hey guys, new here, Is a losing day concidered, 100% loss of your account,? Personally, if you lose a trade, the you need to rethink your strat, AT THAT POINT, to stop the loseing.. Get ahold of the situation instantly, before opening another ticket. You should have a game plan, BEFORE entering.

I agree, never enter a trade any less perpared than you would like to be. But if you take a losing trade, but were still operating in your strategy and sticking to your rules, no need to re-think anything. It's just part of the game. As long as overall it's like 4 steps forward, 1 step back. Or 2 forward, or whatever your win ratio is. But if your strategy is losing over an amount of trades that provide a good sample size, then re-think it all I guess. Re-thinking your strategy after 1 losing trade is a mistake (in my opinion), because no strategy provides a 100% win ratio and you have to eventually settle on something that works over time, and stick to it.

 

[MarketMoverTrader]

Here's an alternative approach. Keep a record (Excel spreadsheet) of every trade you do, entry, exit, size, P/L etc. Now, if you decide not to take a trade (due to concerns about losing money), put that on the spreadsheet as well, along with its ultimate P/L had you been trading it normally.

At the end of the year, add up the P/L from all these skipped trades - it will make you far less shy about trusting your system, I guarantee.

Brilliant advice. I'm an excel junkie, because it will have the result as he says. Often there's no seeming incentive to take the time to record your stats and analyse with winning trades, but it will be a huge benefit in time.

 

[GlenGary]

I agree, never enter a trade any less perpared than you would like to be. But if you take a losing trade, but were still operating in your strategy and sticking to your rules, no need to re-think anything. It's just part of the game. As long as overall it's like 4 steps forward, 1 step back. Or 2 forward, or whatever your win ratio is. But if your strategy is losing over an amount of trades that provide a good sample size, then re-think it all I guess. Re-thinking your strategy after 1 losing trade is a mistake (in my opinion), because no strategy provides a 100% win ratio and you have to eventually settle on something that works over time, and stick to it.

Absolutly right Mover,

Its easier to take small S/L, then a large one by letting it get out of control.. Of course you will make a bad spot, like MarketMover said, its part of the game. YOU, YOURSELF, needs to be able to recognize a bad spot, or a bad move, there is a differance.. The object is to stop the leak ASAP.. But, then again, this is comeing from a newbie. I've been in the forex trade for ummm, well, 6 days now, including today. Money Management is a whole nother part of the system.

great profits to you

 

[Shakone]

I have a phobia about public speaking. Unfortunately (or maybe fortunately) my job required me to do lots of it. My body would go into flight or fight mode, it would be painful before and during. The reason is that the mind confused a threat to the ego (embarrassement, making mistakes, not being good enough etc.) with a threat to my life, and the feelings of discomfort kick in, and can be very powerful. It wasn't rational to react like that, but it is quite common.

In your case I don't know if it is irrational to be that uncomfortable, only you can decide. If you are depending on that money for food and to live, or if you are risking too much, or don't have an edge, then perhaps it is rational to fear losses and feel pain, and your body is telling you that.

But lets assume you are risking a small %, your life (and account) isn't at risk and you have an edge, then the reaction should not logically be there. Again, it is of course very common.

So then you have to try to short circuit this cycle and do something about the ego, and disconnect a thought process from a bodily reaction or feeling. The thought process is that you lost on a trade, but so what. You lost yesterday, or last year or whenever, so why is this loss making you feel uncomfortable and those past ones aren't. If you felt tense afterwards, pulse quickening, feeling of discomfort, adrenaline flowing more than normal or any other type of reaction, that doesn't need to be there. There are ways to disconnect it. I won't say it is easy or always achievable, but it has been beneficial to me.

Alcohol or drugs can do it, but please don't.
Cognitive behavioural therapy is the modern medical method.
Meditation has been around for millenia, works towards achieving it, and you can do it from anywhere, so that's what I use.

Also here is a post
http://www.trade2win.com/boards/general-trading-chat/88622-breaking-down-mental-illness-taboo-2.html#post1067752
That explains it in a better way than I can.

 

[Black Swan]

Bedist, a few more thoughts/mind dump..kids footy is all off, 'kin rain..

Mark Douglas has been mentioned 'up thread' and he constantly runs a theme, throughout all his narratives, that we have to re-wire our personal hard drive in order to be ready and able to accept losses, not an easy task as it flies in the face off and then crashes and burns into our core belief system..

What other employment could we enter were we know tomorrow that one thing is absolutely certain; "Tomorrow I will at some stage probably lose money, or be in a loss making situation/s with one or more trades."

Who on earth would welcome that scenario as part of the opportunity to do business? Us that's who.. Douglas also talks re. obtaining a "winners' mindest". Iirc it was me and Mean Revision who recently discussed sport, the winners' mindset and its alignment with trading; football you can't score every shot on target, tennis you can't win every game/set, golf you can't win every hole/match..even snooker there are times when you sit there as you watch your opponent build a frame winning break..in trading you have to constantly re-set your mind, find your trading equilibrium, and go again.

Just another thought; if day trading you need to pace yourself to prevent mental and emotional tiredness. A pattern that happened to me often; I'd take up to 5-7 trades on the Euro off a 5 min, from 7am up to when the NY opened, if 4/5 were losses and 1/2 wins and I was down 3/4% I'd be relieved if the next trade/2 trades would bring me back to close on break even for the day. I'd be so relieved I'd call it a day and felt OK with my performance, inevitably other trades would then offer themselves up that I'd pass on, convincing myself that I'd pulled things around and tomorrow was another day.

The *cure* was/is to take less trades, by either moving up to 7/10/15 min TFs, and/or adjusting the optimisation of the strat to (hopefully) select better trades with higher probs. If I'd taken 2 trades and I was only one trade down, I'd still have plenty of go in the tank to take on the afternoon session..Even now that's how I operate when day-trading, I still use the 5min TF price action, but insist on 2 other conditions being met before I pull the trigger and If I hit circa 50 pip (day trading) target that's it, job done...but I don't fixate on that target..

Finally, staying in the game/what doesn't kill you makes you stronger etc...Another aspect of our trader masochim is that when starting out we have to choose between a long painful death as opposed to a short bolt out of the blue. Imagine you have a terminal illness, but the really good news is that a cure maybe just around the corner, what ya gonna do? Fight to stay in the game is what you're gonna do by adjusting everything in your lifestyle to give you that fighting (sporting) chance..

 

[Ross Spur]

The loss = business expense idea is the way to go, if you can. When I had a 'normal' sole-trader type business, doing something completely different, I never gave writing cheques for expenses a second thought, even though the outgoings exceeded the turnover in some months.

Sitting at a screen looking at a p/l figure turning increasingly negative is very different, though!