The impatient gambler!

[rc450]

Hi all,

This is a journal which will hopefully see me turn from an impatient and unprofitable gambler into a patient and disiplined trader who is willing to wait on the sidelines for trades that at the very least appear to be high probability.

I'll be trading a live account risking 2% or less on each trade and will be trading, gbp/usd gbp/yen, eur/yen and eur/usd. I also keep an eye on usdx and usdjpy for general direction.

I'll be daytrading using 4hr and 1hr tfs for the bigger picture trading off of horizontal s/r and bounces off of sma's whilst looking for entries using 5min/1min price action and I'll no doubt throw in the odd punt for good measure. My stops will be 20 pips or less.

I've been gambling for about a year now on and off and have managed to dump at least 50% from two seperate accounts, this will be my last account and my last chance, if I haven't managed to turn a profit by year end (providing the account survives that long)then the towel will be thrown in and I walk away defeated.

I will try to update this each trading day and possibly add some charts, at least then you'll be able to see what not to do.

cheers

 

[advfntrader]

the way your a speaking it sounds as if you have already resigned yourself to losing. why don't you demo trade with the same stakes and system for 6 months to make sure you don't lose anymore hard earned money ?! you need to prove to yourself that you can be profitable

 

[Yamato]

I agree. Paper trade and see if you can resist your gambling urges. If you can't resist them in paper trading, you won't be able to resist them in real trading. Maybe profitable paper trading is not a guarantee for profitable trading, but unprofitable paper trading should keep you from engaging in real trading.

 

[Splitlink]

I've tried demo trading and it did not work for me. Minimum stakes (and you can go as low as 50p, if you want) but some risk should come into the equation.

 

[shadowninja]

When you've finally, truly decided you've had enough of letting yourself down and wasting your time, you'll stop chasing the market and start trading. Until then nothing will change. I would wish you luck but the last thing you need is luck as that'll just make you take crazy risks so I hope you win the battle.

 

[Yamato]

When you've finally, truly decided you've had enough of letting yourself down and wasting your time, you'll stop chasing the market and start trading. Until then nothing will change. I would wish you luck but the last thing you need is luck as that'll just make you take crazy risks so I hope you win the battle.

The break.com video in your signature is very related to gambling problems (which I have as well). I browsed quite a bit and found more about that story here:
http://highprobability.blogspot.com/2008/01/31k-goodbye.html
http://highprobability.blogspot.com/2008/01/stock-market-ruined-my-life.html

This guy seems like a "good" trader (not a "newbie" for sure), and the money he lost was money he had made. However he did make one major mistake I can relate to: he always bet all his capital on his next trade. He kept on making money for over two years, and then an accident happened and he lost most of it on one trade.

After you see this stuff happen, you realize that you're not fully in control of your trading, and just like I did, he also explored automated trading in depth, because that's a natural thing to do when you realize your impulses are stronger than you. For example, I think I've become a pretty good automated trading developer (except that by now I've run out of capital), while, at the same time, I am still too close to being a "compulsive gambler" when it comes to discretionary trading. Still unable to patiently wait for high probability trades, cut my losses when they go wrong, avoid overleveraging. I know when I see a high probability trade, but I trade even when I don't see it, time after time, year after year, decade after decade...

More interesting videos by HPT can be found here (his youtube channel):
http://www.youtube.com/user/HighProbabilityTrade

This one is quite useful for example:

I believe that us "gamblers" know quite a bit about trading, because in our quest for consistently profitable trading, we manage to learn just about everything about trading, yet it is all useless until we stop gambling and start using proper money management, stoplosses, and quit impulse trading. After all these efforts, I still wonder if I will ever learn, because this seems as hard as changing my personality. Can someone change his personality? Can you go from being a nervous person to a calm person? Can you go from being impatient to being patient? Maybe more than my efforts what will help is time going by. As you get older you might naturally become more patient. But then again, time is running out so that might make me impatient.

If there is one thing I noticed, from watching all these youtube videos of live trades, is that these profitable traders are always calm, whether they are taking a loss or making a profit. They definitely don't take losses personally, which is something I can't help. But maybe by not overleveraging, I will also take my losses less personally, and end this vicious circle.

 

[shadowninja]

Perhaps it's time to wind down the trading size so you don't mind taking the loss. I think the general consensus is that if you are attached to the outcome and the value of the trade, then you will have a tendency to let losers run and cut winners short. The notion of time running out will make you hope that each trade is successful and become desperate for profit which will affect your decision-making process.

Personally, when I started, I was trading too high, realised this and cut back dramatically. I can also sense my emotions. Perhaps I'm odd because (not just in trading, but every day life) I can feel anger or fear and think, "Hm, I feel angry/worried... why?" Then I can reason with myself and look at whether any decisions I'm making are being influenced by emotion... and then work out the consequences of my actions before I **** up. I notice that I tend to question myself a lot (I also question the actions of people around me which tends to annoy them) and think about how to improve myself in my activities whether it's trading, martial arts training, climbing, playing Battlefield 2... This may come from my regular meditation and tai chi practice. It may come from my intake of lots of fresh fruit and veg or omega 3 capsules. It may simply be because I am a bit weird.

 

[rc450]

the way your a speaking it sounds as if you have already resigned yourself to losing. why don't you demo trade with the same stakes and system for 6 months to make sure you don't lose anymore hard earned money ?! you need to prove to yourself that you can be profitable

Hi advfn, i've not so much resigned myself to losing more like admitted i have a huge problem with being patient and waiting for the right trades to come to me, if i can't overcome this i know that i'll continue to lose and if i can't achieve this by the end of the year i'm not so sure that i ever will. i hope keeping this journal will help me beat my demons.

I agree. Paper trade and see if you can resist your gambling urges. If you can't resist them in paper trading, you won't be able to resist them in real trading. Maybe profitable paper trading is not a guarantee for profitable trading, but unprofitable paper trading should keep you from engaging in real trading.

hi travis, the money in my account isn't much and is money that i'm willing to risk perhaps if i suffer 30% dd i'll close the account and hit demo mode, as splitlink said papermoney doesn't have the same feel, i usually do fine on a demo but can never trade the same way live. perhaps i'll run a demo alongside my live account and when i feel a punt coming i can demo it.

When you've finally, truly decided you've had enough of letting yourself down and wasting your time, you'll stop chasing the market and start trading. Until then nothing will change. I would wish you luck but the last thing you need is luck as that'll just make you take crazy risks so I hope you win the battle.

hi shadowninja, nail on the head springs to mind, chasing,fighting, adding to losers, turning the pc off and going out hoping when i come back everythings ok (it wasn't, cable dumped 400pips and i was long halfway through the move,). all that stops here, i need to change and now! i hope by keeping an open and honest journal i at least give myself a fighting chance.

thanks for all the input guys.

 

[Yamato]

I've tried demo trading and it did not work for me. Minimum stakes (and you can go as low as 50p, if you want) but some risk should come into the equation.

It is not working for me either, in the sense that it's not teaching me much: neither to cut my losses, nor to wait for the right opportunities. I don't weigh my choices well enough nor do I cut my losses (the two things seem to go together). On the other hand, I have a hard time doing that in real trading as well. I am trying very hard to learn to cut losses and be patient, in the chart game, but I am overwhelmed not by emotions, but rather by impatience. If I could just have an automated stoploss (which I can have in real trading but not in the chart game), half of the problems would be gone. The other problem is to avoid overtrading, and that's even harder than the stoploss.

 

[Sang Froid]

The break.com video in your signature is very related to gambling problems (which I have as well). I browsed quite a bit and found more about that story here:
http://highprobability.blogspot.com/2008/01/31k-goodbye.html
http://highprobability.blogspot.com/2008/01/stock-market-ruined-my-life.html

This guy seems like a "good" trader (not a "newbie" for sure), and the money he lost was money he had made. However he did make one major mistake I can relate to: he always bet all his capital on his next trade. He kept on making money for over two years, and then an accident happened and he lost most of it on one trade.

After you see this stuff happen, you realize that you're not fully in control of your trading, and just like I did, he also explored automated trading in depth, because that's a natural thing to do when you realize your impulses are stronger than you. For example, I think I've become a pretty good automated trading developer (except that by now I've run out of capital), while, at the same time, I am still too close to being a "compulsive gambler" when it comes to discretionary trading. Still unable to patiently wait for high probability trades, cut my losses when they go wrong, avoid overleveraging. I know when I see a high probability trade, but I trade even when I don't see it, time after time, year after year, decade after decade...

More interesting videos by HPT can be found here (his youtube channel):
http://www.youtube.com/user/HighProbabilityTrade

This one is quite useful for example:

I believe that us "gamblers" know quite a bit about trading, because in our quest for consistently profitable trading, we manage to learn just about everything about trading, yet it is all useless until we stop gambling and start using proper money management, stoplosses, and quit impulse trading. After all these efforts, I still wonder if I will ever learn, because this seems as hard as changing my personality. Can someone change his personality? Can you go from being a nervous person to a calm person? Can you go from being impatient to being patient? Maybe more than my efforts what will help is time going by. As you get older you might naturally become more patient. But then again, time is running out so that might make me impatient.

If there is one thing I noticed, from watching all these youtube videos of live trades, is that these profitable traders are always calm, whether they are taking a loss or making a profit. They definitely don't take losses personally, which is something I can't help. But maybe by not overleveraging, I will also take my losses less personally, and end this vicious circle.

I felt every word of that post, and in parts agree. I recently had a thread on here about being in the 90% of losers. I was not a trader but a gambler, and an impulsive one at that.

You're right, I've not been able to change as such, I still feel the 'need' to trade which is why high time frames don't even come close to my strategy for me. I can't wait for days on end for the perfect set up. I need to get into a trade quick, not look, set my s/l and t/p, get out quick, then turn my laptop off and not look at metatrader until the next day.

This is now the only thing that works for me, otherwise I overtrade my account and gamble. I now employ strict money management techniques that I adhere to, and never close a trade manually, I let the trade hit either my s/l or t/p.

I've not been able to change my style, as you said, this is akin to changing my personality, but I've been able to ALTER the variables that were harming my results, the things I am able to change I have done. I can change my discipline, I can walk away from a trade while it is running, I can use s/l's I can turn my metatrader off and not look at it once I've made my trade for the day. If I don't do this I WILL continue to trade, I would have the attitude "that looks an ok trade I might just make one more and double my profit for the day". I can't help myself, it's all or nothing.

So yes I hear you, but discipline discipline discipline is the name of the game for me.

 

[Yamato]

Thanks for the feedback. I am glad there are gambling personalities that managed to keep themselves under control. I hope to slowly achieve that as well, even though it will be harder since I am a non-disciplined (rebellious to my own rules) gambler. I did find though that if I get home at 5 PM (CET, Central European Time), I am able to make pretty good trades, since my top and bottom picking tendencies work best at about that time. They would work best at from 10 PM to 11 PM (CET), but so far I've been unable to do nothing for all those free hours I have before 10 PM. I don't know what discipline is. If I have chocolates I eat them all, if I have cigarettes I smoke them all... I need to have no cigarettes, no beer, empty refrigerator... and I'd need to not be home before 10 PM. I can't resist temptations. But I might get better in the future. As I get older, I am... have you ever heard about obsessive-compulsive personalities? I am not exactly that, but I have some of that, and these people cannot stop themselves from doing stuff, like a reflex I have...

 

[Sang Froid]

Thanks for the feedback. I am glad there are gambling personalities that managed to keep themselves under control. I hope to slowly achieve that as well, even though it will be harder since I am a non-disciplined (rebellious to my own rules) gambler. I did find though that if I get home at 5 PM (CET, Central European Time), I am able to make pretty good trades, since my top and bottom picking tendencies work best at about that time. They would work best at from 10 PM to 11 PM (CET), but so far I've been unable to do nothing for all those free hours I have before 10 PM. I don't know what discipline is. If I have chocolates I eat them all, if I have cigarettes I smoke them all... I need to have no cigarettes, no beer, empty refrigerator... and I'd need to not be home before 10 PM. I can't resist temptations. But I might get better in the future. As I get older, I am... have you ever heard about obsessive-compulsive personalities? I am not exactly that, but I have some of that, and these people cannot stop themselves from doing stuff, like a reflex I have...

I have to check the front door is locked seven times each night before I go to bed otherwise we will get burgled. That's each and every night and exactly seven times. I'm not so sure OCD could come into trading, maybe I'd have to make a certain amount of trades each day, it doesn't even bear thinking about, there is no room for OCD and trading, it's too close to superstition for me.

I'm all or nothing, I have an addictive personality, if I have two beers and there's six in the fridge I have to finish them all etc... just the same as you.

Trading is a job, not a luxury. Once I've made my trade for the day that's it, win or lose. My money management techniques take care of the rest. At the end of the month I should be in profit. I have to tell myself this on a daily basis. I even have a post it note stuck to my monitor at home, ONE TRADE PER DAY.

It's been hard, it's been a long long and rocky road so far, I've overtraded two accounts to extinction, and over levereged one account so much I halved my starting capital.

Like the OP here, I reached a point where I said enough is enough and I began to learn from the ground up again. I'm still on the way up but can see the error of my ways. There is no room for compulsiveness in this game, it will eat your capital in the end.

Addiction is a strange thing, there must be some release of endorphins when a trade is made and completed to profit. That drives us to make more trades, this simple chemical reaction is hard if not impossible to break. If I smoke, drink beer and trade at the same time I'm worried my head might just explode

 

[Yamato]

Yeah, "one trade per day", I remember that. I kept writing it on my journal, on my .txt files, everywhere. But I have a hard time following it. We'll see how it goes. Everything you said about yourself applies to me, addictive personality and all that, except for locking the door. I don't feel compelled to check if it's closed. Another thing is that I have problems going to sleep on time. I always sleep at least half an hour less than what I'd like to sleep. I have a restless mind, that rebels itself to me.

For now it's been impossible to control these urges (when trading and those few other situations I mentioned), but I've been getting better and better. As my understanding of the problems at stake increases, also my control over myself increases.

There's two types of problems that I am slowly understanding, regarding my trading:
1) having an edge
2) enabling your edge to work

My edge obviously keeps on improving, because if the markets are not random, the more you see them, the more you understand them.

As my edge keeps on improving, I am less inclined to do things that I know to not work. Somehow I think that the gambling behaviours are more frequent when you don't know what you are doing and you don't know what exactly works.

In other words, if we knew exactly what produced money, we'd just grab it from the market when we needed it. The reason we engage in compulsive behaviours is that we don't know exactly how to grab that money. I don't know what more can be gathered about this, but this much I am pretty sure about.

Let's take other activities that require great concentration at which we succeed, unlike trading, Tying your tie: once you learn it, you just do it. It's not like you keep on screwing around by making the wrong knots, and undoing them, over and over again. We tie it right and we go to work. We don't let compulsive behaviours interfere with it. Tieing our shoes.

Swimming. Typing wih all your fingers. You either know how to do it, or you don't. If you do, then you just do it, and don't focus on how you do it right or wrong: you just do it. But trading is harder to learn, and the keys don't stay still. Price keeps on moving all over the place, in unpredictable ways. So it's hard to say "i've learned how to trade". All these things I mentioned can be figured out, because your tie, your shoelaces, the keys.. all these things stay still and don't move. Trading means interacting with things that are moving and changing. It's like learning how to deal with certain people. You think you've figured it out, but you never know what the next guy will be like. Maybe you'll get killed, regardless of how you deal with him.

To sum it up, even if trading is one of the hardest things to learn, I believe it can be learned, and the more you know about it and about yourself, the closer you will get to learning it. Once you learn a way to make it work, all these things will become second nature, all addictions will go, and you will stop torturing yourself about what you're doing right and what you're doing wrong. I also believe that I should keep on paper trading as much as possible before that time comes. I just have to keep on practicing on and on, until I learn it. I have to be patient because I can see that my number one problem is patience. I should be patient enough to accept the fact that I won't learn it within the next hour. If I do that, I might learn it at that very moment. Once I accept that I have to be patient with myself and my mistakes, and that I... then I might be ready for trading profitably. Maybe what I've been subconsciously looking for is to figure out every single trade ahead of me, which will never happen. I don't know.

As I said, I'll keep on practicing.

 

[options]

I've tried demo trading and it did not work for me. Minimum stakes (and you can go as low as 50p, if you want) but some risk should come into the equation.

All mental. Some can make it 'real', some can't.

Some 'NEED' the 'THRILL' of real money on the line.

I would offer that these are the real gamblers destined to lose overall.

Not suggesting that you yourself are Split.

 

[rc450]

i've been a little too patient with entries this morning and missed what i consider two good trades on g/y and e/u both long both entries on 5 min tf's. the e/u trade was d/bottom 5 min with dollar index d/top on 5min and finding resistance on the 4hr 20 ma.
the g/y looked good to me for a long with a 15 pip stop with u/j and e/j looking supported by ma's, any break of the previous low and exit.
i was itching to take both but didn't which is not a bad thing as this time last week i would've been trading each 5 min candle long/short long/short and so on. all good in hindsight of course.

the only trade taken was a bounce off of the 1hr 20 ma on g/y with a 15 pip stop, u/j looked to have now found resistance and with g/y having come a long way to just push through the 20 and g/u hitting resistance all looked good so i entered short at 135.37 and was looking for a move back down to the 5m20 (at the time 25+ pips lower) and possibly below. it came within 5 pips of my stop and then moved 16 pips in profit before i nervously chopped it for +9 pips.

all in all not a bad morning as i've only taken 1 trade which i closed prematurely but it's not the end of world at least i sat and waited for that trade to come to me.

 

[rc450]

ok so the patience is there as i've waited for the market to come to me if anything i've been hesitating and not pulling the trigger having missed three good trades yesterday and two good trades today.
the one trade i decided to take today was a short on cable off the 5min 60 ma with the usdx hitting support at the bottom of the 5 min range, entry was sloppy and i was stopped for -17 was looking for it to test the previous lows although i would've taken 50% of the trade of at+20.

 

[Sang Froid]

ok so the patience is there as i've waited for the market to come to me if anything i've been hesitating and not pulling the trigger having missed three good trades yesterday and two good trades today.
the one trade i decided to take today was a short on cable off the 5min 60 ma with the usdx hitting support at the bottom of the 5 min range, entry was sloppy and i was stopped for -17 was looking for it to test the previous lows although i would've taken 50% of the trade of at+20.

Hi RC,

I'm not quite sure of your strategy. In the first chart you seem to enter because of an MA cross on the M5, on the second chart you seem to enter because the PRICE crosses what looks like a MA on the M1 chart instead of the M5? This to me is you trying to fit the market into your strategy to make yourself believe there is an entry point on any TF, instead of doing what you said in the first place of "waiting for the market to come to you".

I might be wrong, just how it appears ... prima facie

 

[SaiBaba]

All mental. Some can make it 'real', some can't.

Some 'NEED' the 'THRILL' of real money on the line.

I would offer that these are the real gamblers destined to lose overall.

Not suggesting that you yourself are Split.

Hello Options,

You do not 'NEED' the 'THRILL' ....Infact, what you need is a mind willing to accept what the market is offering...what you are suggesting is not correct. Having a thrill is leading the mind in the wrong direction...

SB

 

[rc450]

Hi RC,

I'm not quite sure of your strategy. In the first chart you seem to enter because of an MA cross on the M5, on the second chart you seem to enter because the PRICE crosses what looks like a MA on the M1 chart instead of the M5? This to me is you trying to fit the market into your strategy to make yourself believe there is an entry point on any TF, instead of doing what you said in the first place of "waiting for the market to come to you".

I might be wrong, just how it appears ... prima facie

hi sangfoidfx

the g/y trade was a short off of the (red) 60m 20 ma with the price stalling and looking like it was going to fall back also at the time uj and ej looked like they'd run out of steam. target was the (yellow) 5m 60ma with stop just above the previous 5m high.

the g/u short trade was the same but off the 5m 60ma (yellow 1 min 300ma) with the dollar index on 5 min support, my entry was premature as i got in before it touched and got stopped for 17. at the same time gy was also on the 5m 60ma (red arrow on attached chart).

what i try to look for is a bounce off of the 5m 60 and 1hr/4hr 20 ma's or s/r with price action as confirmation and using dollar index as a guide for gu, eu. and the same with uj for gy and ey trades.

i know i've a long way to go so any input is more than welcome

cheers

 

[lbranjord]

It is probably better to look for these EMA crosses on a MUCH larger time frame. Also, you haven't mentioned any backtesting. That will give you more confidence to Stay in your trades when you need to.

Try backtesting manually or with software to see if your system is to blame as well. (Can't win with a broken sword)