It is true that we made a bit of fun of the original request, but this does not mean that we did not take it seriously.
Trading is a risky business and the psychological part is the most difficult to master. It is as easy as a mouse click to pull the trigger and nobody protects you from yourself. Discipline is a question of first unlearning bad habits, then developing new habits which are appropriate for the specific task.
Tools can faciliate the transition. I have checked NinjaTrader. Within an automated strategy it is possible to calculate the profit and loss or the number of trades executed for the current trading day and stop the strategy, if the positive or negative target is reached. However, it does not seem as easy to collect the profits and losses of all trades that were entered during the current trading day from an indicator.
GetAccountValue(AccountItem.RealizedProfitLoss) can only be used within a strategy.
So the only thing that is really usefull is to work through the books by Brett Steenbarger, who gives a detailed description of the unlearning and learning process. Recommended read is his book "Enhancing Trader Performance".
Last edited by Fat Tails; October 31st, 2011 at 08:27 AM.
The following 4 users say Thank You to Fat Tails for this post:
This is the reply made on 10/31/2011. Just FYI!
That would be appreciated - thanks for your efforts to channel feedback and input for NinjaTrader here, we've added your Risk Manager suggestion to our tracking list with # 630.
Have a great trading day,
Thanks for your kind efforts! Is there anyway to calculate the number of lost trades on a certain instrument such as EURUSD? Then Ninja generates an alert message or interrupts the next trade. Is this can be done via indicator? Just curious.
In my BMW, we can set up speed limit and I set it at 75 mph. If I don't pay attention, it often goes above 75. Whenever it happens, BMW issues an alert sound. Upon alert, I usually speed down. I think this Risk Manager tool can be very similar to this speed control. It doesn't guarantee that we are not getting speeding ticket but it will help us to enforce our disciplines.
As someone who has suffered from lack of discipline let me advise you to fight fear with fear.
When we fail to follow our trading rules (like quit after 3 losing trades) we are doing so because of fear. Fear of missing out. Fear of being seen as a trading failure. Fear of never reaching our dreams. Fear of sitting on our deathbed wishing we had not washed up as a trader. Yeah...that kind of fear.
How do you combat this? An alert might be nice. Getting your broker to shut you down is another way to handle it. However, you haven't actually fought the fear yourself. You have delegated it to a computer program or your broker. You can always bypass these by ignoring the indicator or calling your broker and telling them to bypass your risk threshold. The logical you wouldn't do that. But when fear takes hold of a person they aren't logical. You become a monkey. Do not let the monkey win.
You've got to fight fear with greater fear. It has been proven time and time again that as a whole people fear public speaking/ostracism more than death. That's some powerful fear. When I was regularly breaking my risk threshold I made a deal with my wife. She saw my broker statement at the end of the day. If I lost more than $X or took more than X trades she got an expensive piece of jewelry. Like 2X the amount I lost expensive. That came from my brokerage account. To cap it off she would brag to her friends/family what an idiot I was because I couldn't follow my trading system I had to buy her expensive jewelry. My friends/family still think I'm crazy for trading but I don't exceed my daily limits anymore. Fear of public ostracism works.
Right now I have a new challenge. I told my coworker that he and I will have a contest in May to see who has the best washboard abs (currently I am fat but not obese while he is rip). Whoever loses has to wax (both of us are hairy guys) and wear a mesh shirt to work. I've been on my new diet for a month and haven't even contemplated breaking it because I'm scared as hell to get waxed and have my beer belly mocked in public.
Make yourself accountable to someone you trust and who has the motivation to keep you on track (like my wife benefiting when I lost too much $, or my coworker who will have to wax if he doesn't win). Building discipline is something you have to work toward and the best way I've found is to find something worse that will happen to you if you fail to be disciplined.
The following 4 users say Thank You to eudamonia for this post:
Thanks Edward for your detailed explanation! I think it will work great. However, I'd like make this clear that I am not making any excuses or blaming for others about my mistake. I AM TOTALLY ACCOUNTABLE FOR MY BROKEN RULES. I am doing hard everyday to make my fundamentals more strong and disciplined. I just point out Ninja is working on this issue and I think this will not harm anyone at all levels, as if the speed limit alerts helps the seasoned drivers as well as novice. I believe we can expedite their installation by channeling our inputs. Happy Trading!