Psychological problem

[Memelistas]

Hello fellow traders,

I have this issue which I am trying to resolve for some time, but so far unsuccessfully. I lose money because I cannot control myself in a moment.
After extended time of studying and practicing on a paper (profitably apparently). I started trading small account profitably, then decided to go bigger - profitably again - being disciplined, reviewing and sticking to the (from my perspective) golden rules such as: risk management, not going against the trend unless it's a clear reverse, pointing out risk and target points etc.
But then I found out about leverage trading and no matter how hard I try, there is always that one time where I am caught in a moment where I decide to go large and always suffer a large drawdown.
No matter how clear the rules are in my head, it is as if I am not acting myself, but the devil hand clicks the button and boom I am wiped.
No matter if before the clicking I say to myself that it is wrong what I am about to do, I do it anyway just to realize later that wtf I just did.

As I said when I am trading relatively small - I do it with discipline and grit, but I just cannot resist putting some size, no matter how hard I try.
I know it's greed and acting out of emotion (or subconsciousness driven by dopamine which is injected due to the thought of instant gratification). I just cannot control it and the consequences are - probably you can imagine.

Is it in my personality?
Psychology?
Lack of discipline? I know it is, but so far no matter the effort, it is happening and might happen in the future.

Any advice on this?
Thankful on any thoughts.

 

[1nvest]

Have you tried automating your rules? You are clearly sabotaging your own success by as you rightly say your lack of discipline. So take away the human element, automate your rules. That would seem like the most appropriate method

alternatively, ask someone you know to place the trades for you, wife, partner perhaps. you'll soon see their approach is far different from yours. give them your rules, they will not be so impulsive

The other item you mention is that your account is small. psychologically, a small account, or a demo account by its size, means very little to you. I've found by placing a trade on a much larger account, far harder when the stakes are more important.

 

[pezza55]

I would say you need to go back to a demo account and get your strategy sorted. You need to set out your plan and keep disciplined and stick to it. You should calculate your lot size, SL & TP based on your risk to reward ratio. It sounds to me that you do not have that balance quite right.

 

[BigDeal]

It's possible - in fact quite probable - that you are thinking differently when the trade is larger than normal, because you feel uncomfortable when a trade moves against you, whereas your normal trade size would not concern you so much in the same circumstances. I think 1nvest's point is valid ie automate what you do, because if you have a successfully strategy it needs to be used across all trade sizes. However, maybe you don't really need to make these larger trades?

 

[Memelistas]

Thank you guys for insights.

Usually my trades are automated, however when I trade spontaneously and too big I am doing exactly opposite, even if I know I must put stops and targets. I just don't do it.
I understand that I need to keep disciplined and stick to it, but as mentioned before, when I see a potential to make it big, I do it without rational thinking. The disposition effect contributes as well as I only put mental stop/loss on the fast moving markets and tend to hold on losing trade.
Of course many times my entries are not optimal and my trade management is terrible due to the fact that I am overconfident and unprepared. Again the last statement is post factum.
Nevertheless it is not a problem in a system or in an actual trade, but what triggers that erratic (or rather stupid) behavior. It is true, I do not need to take those trades, but I do. Probably it is the greed part which dictates my irrational behavior. I also think it is that need to grow the portfolio quick, because trading a small is kind boring. It is just unbelievably hard to control myself when I am caught in the moment and see the juicy potential even if I have a good theoretical understanding of whatnots. I guess I just need to keep practicing self reflection of unwanted actions until becomes automatic in itself.
Thanks again.

 

[ffsear]

Nevertheless it is not a problem in a system or in an actual trade, but what triggers that erratic (or rather stupid) behavior. It is true, I do not need to take those trades, but I do. Probably it is the greed part which dictates my irrational behavior. I also think it is that need to grow the portfolio quick, because trading a small is kind boring. It is just unbelievably hard to control myself when I am caught in the moment and see the juicy potential even if I have a good theoretical understanding of whatnots. I guess I just need to keep practicing self reflection of unwanted actions until becomes automatic in itself.
Thanks again.

Yes, self awareness is what sounds like the issue here. You need to be able to identify those emotions when you feel like breaking your risk, sizing up and basically taking a punt. As soon as you feel that, walk away.

Listen to the logical side of you brain, not the emotional side.. This book is excellent on this topic...

Amazon.co.uk

 

[Farm Yard Forex]

So what is it about having the leverage that fundamentally changes the way you are now approaching your trades compared to when you didn't have it and were profitable? Have you tranisitioned from focussing on the risk to the potential profit at the expense of your risk?

 

[Atilla]

If you were trading for an institution you would be tightly controlled and watched and would not be able to do what you do? Red flags and alerts would be raised and you'd quickly get a tap on your shoulder or computer will tell you to naff off.

Personally, I wouldn't trust you either as you obviously have a control issue. It is psychological and you will end up losing all your money.

I would pass your system over to a third party to vet before opening a new trade. If they are contrary to the rules you have laid out for your self, they should reject your OT F***-It I know best or Diva Moments as they are clearly not profitable for you. (I love these Fuck-It and Diva Moments used by my esteemed peers. Made me laugh a lot. Really gets the point home does it not? )

In turn pay a small % of your monthly trading profits to who ever you pick to manage you. I'd suggest a girlfriend or wife as they will make sure you don't stray from the straight and narrow path your system is set on.


All the best

 

[WalletInvestor]

Do you have a trading journal? It might be a helpful tool for you to write down how you did on a given trading day. Break down the things that gave you good results and the moves that led to excessive losses, and summarize them on a weekly and monthly basis. I think this can really drive home the message that you need to avoid impulsive decisions.

 

[Atilla]

With due respect our trader has already identified what works n when it doesn't. He has already journified his erroneous habit.

I do feel we need an external control or restraint. Trying to get him to do this will not work.

Reward n punishment mechanism is required. Like a kick up the rear wd suffice.

This close your eyes and try wishing harder doesn't work imo. Even if it does will take a lot longer and cost more too.

However, if a trader continues to make bad trade decisions and doesn't understand why or what or when it's going wrong then a trading journal would be priceless to look back and understand reasons searching for clues on the causes.

 

[momo3HC]

That`s really strange. By all you said you must be profitable in both small and big accounts. If you fail in big accounts then you`re missing something from the small accounts trading rules (risk management, not going against the trend unless it's a clear reverse, pointing out risk and target points etc). There`s no other explanation.

 

[Jungletrader]

It's the greed part of us all .
As you say you over leverage and its putting profits ahead of the goal to take only the best trades and setups .
Cliché but money is secondary to making successful trades

 

[Atilla]

Has anybody tried to apply Max Weber's Bureaucracy to trading systems? Trading institutions have to some extent but I doubt home traders would think to do so. Thinking along the lines of who makes the entry decision? Who gives the exit nod? Who watches risk and calls time out? Who determines entry size? If each of these activities were broken down and given to an independent individual with a specific list of rules to adhere to then the psychological aspect can be removed.

imo it would be a winning strategic model to implement.

It would add up to removing aspects of personality in the work trading function. Lead to removing the "I did this or that what a clever sausage I am" emotions along with greed and power cravings the human dna is built upon.

Trading is such a personal and lonely work, one really does need to remove the id or the ego from the whole process. Hence all the talk about controlling one's psychology. Not suggesting the psychology aspect is not important but an alternative perspective to look at it as a mechanical process rather than one of personal judgement based on whims of the trader.

 

[alex4mor]

Hello fellow traders,

I have this issue which I am trying to resolve for some time, but so far unsuccessfully. I lose money because I cannot control myself in a moment.
After extended time of studying and practicing on a paper (profitably apparently). I started trading small account profitably, then decided to go bigger - profitably again - being disciplined, reviewing and sticking to the (from my perspective) golden rules such as: risk management, not going against the trend unless it's a clear reverse, pointing out risk and target points etc.
But then I found out about leverage trading and no matter how hard I try, there is always that one time where I am caught in a moment where I decide to go large and always suffer a large drawdown.
No matter how clear the rules are in my head, it is as if I am not acting myself, but the devil hand clicks the button and boom I am wiped.
No matter if before the clicking I say to myself that it is wrong what I am about to do, I do it anyway just to realize later that wtf I just did.

As I said when I am trading relatively small - I do it with discipline and grit, but I just cannot resist putting some size, no matter how hard I try.
I know it's greed and acting out of emotion (or subconsciousness driven by dopamine which is injected due to the thought of instant gratification). I just cannot control it and the consequences are - probably you can imagine.

Is it in my personality?
Psychology?
Lack of discipline? I know it is, but so far no matter the effort, it is happening and might happen in the future.

Any advice on this?
Thankful on any thoughts.

If you know what to do, but you are not doing it, I'd say you need a Mindset Coach. The main reason people aren't doing what they should be doing is because it brings up an emotion for them. The subconscious mind deals with our habits, beliefs, emotions, etc. The programming / framework of our subconscious mind is largely formed when we are children. The programming we have in our subconscious can trigger emotions which stop us from acting how we would like to consciously act.

 

[Atilla]

When you can’t do what you know is right for you, then most probably you lack discipline. We often confuse it with psychological problems but as you said you were disciplined and were making profits unless you found leverage. This clearly shows that you left discipline behind as you start getting successful. I think you should move back to a small account, set some rules and try implementing them without deviating from your path.

Beg to differ Catchpole.

If you say someone lacks discipline then you need to subject them to some form of corrective conditioning behaviour. Usually against their wish. One can not say I need to discipline myself and then proceed to punish oneself for breaking one's rule.

If one does do that then you have a Jeckly and Hyde character on your hands. The problem is indeed a psychological one. The gentleman knows he is doing wrong and indeed he is right in his assessment of himself. BUT that other geezer does what he wants as well and their lies ones psychotic behaviour.

 

[HeavLeighGill]

I see that there are some solid suggestions here, I'm curious as to whether you tried anything different or made any changes in the last couple of months? Are you still trading on your live account or did you go back to demo?