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Commitment to the trade


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Commitment to the trade

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  #1 (permalink)
Omaha, Nebraska
 
 
Posts: 3 since Nov 2011
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Ok, this is my rambling newbie post, please bear with me! So I've done everything "wrong". I started with an undercapitalized account ($5000) and only sim-traded for a few weeks before going live daytrading the ES. My only prior related experience is basic stock and mutual fund portfolio management, never actively daytraded before. Sim-trading seemed easy, I only had 1 down day in 15 days. My strategy in sim was just playing the short-term price action, watching for trends on a 1 or 2-min chart and playing 2-6 tick gains with a 2-3 tick stop. Piece of cake, why does everyone say this is so hard?? So then I go live and (you already know the punchline.....) it's NOT the same as sim! Fills are much harder to get, and the mental edge I had in sim is GONE, now it's my own money and my aggressive trading style is not there any longer. So I take some time to study up on trading methodology and try to craft a strategy that doesn't rely on 2-tick scalping profits but rather looking for support/resistance ranges and making trades that might go for a few hours rather than a few seconds or minutes. So far, I've done pretty well by sitting down every night and analyizing the day's trading ranges, picking support/resistance and reviewing how I traded and trying to see where I missed opportunities and where I made stupid trades. Then I use those ranges the next day if trading is still in that area, or if the market gaps up or down I develop new ranges on the fly as it develops. Still so far so good, I seem to do OK at defining the ranges and making sense of the price action. But here's the big problem: I can't get myself to trade when I SHOULD, I wait and then second-guess, and when I finally commit it's too late and I can't get in at a decent entry, so then I either pass up or I get in anyway later at a price I don't like and the trade either doesn't pay off much or goes south because I get out early. When I get out early, I see later that if I had stayed in with my original plan, it would have paid off most of the time. How do I get myself to stick to a plan???

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  #3 (permalink)
Helsinki, Finland
 
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Sprinter, welcome to 'traders league'! Yes, it's quite a transition from stocks to futures and especially from SIM to real $ trading. First off, it looks you have a method or system which is supposed to be profitable. It's important to realize, though, that market is different every day and you might get frustraded to see your plan is tougher to follow in the real battle than with paper money. However, I would encourage you to follow your plan, no matter what. Allow some room for error and kinda expect some drawdown at the beginning. Make sure you have such a set of rules you can follow trade in trade out. Also include a 'rule' where you allow yourself not to trade at all if certain conditions persist. Set max daily loss limit (realistic) and don't compromise that. You may lose a battle but want to win the war! It's not about any single trade, not even a day, but your weekly results that matter. Trust your method and your trading plan's results. Have faith on yourself. Trade only 1 contract until you've doubled your account before even thinking about more exposure. Build a foundation first, think how well you execute your plan. Pay attention to limit your downside, the profits will come as a result of you following your plan.

OK, enough, LOL. Let trading be fun, listen some music, but also pay attention what you do and think. You are as good as your plan, so focus on it, and master it.

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  #4 (permalink)
Omaha, Nebraska
 
 
Posts: 3 since Nov 2011
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Thanks, your thoughts are appreciated. Today would be a great example of "throw the plan out the window"! After setting up my ranges and watching the overnight action and then the morning run-up from the euro debt deal and then the uncertain action at the open followed by another run-up and then sideways action, needless to say the plan I had laid out was no good! I made a decent trade early right before the big run-up on the debt deal (didn't get in on that, had already exited my trade at that point with a 3 point profit). Then I got sort of "flustered" by the big run-up and felt like I was missing out and got into it on a whim late and stupidly went long right as it was cresting out, then put a stop on and got hit, which wiped out most of my profit. Then I watched it go back up after it stopped me out (of course) and bought back in on the next retreat only to give it go sideways and then take another dip, debated putting a stop on or letting it run, put a stop on which got hit, and then (of course) it eventually went back up and then had a big run at cash close that I totally missed out on. So summary of the day: I made one trade according to my plan, made a profit, then gave it all back by making stupid impulsive moves on a day when my plan was not well-suited so I was "winging it". I think the right answer was to take my inital profit and then take the day off, but I couldn't get myself to do it with the lure of the big move! I know.... SUCKER!

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  #5 (permalink)
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sprinter View Post
Thanks, your thoughts are appreciated. Today would be a great example of "throw the plan out the window"! After setting up my ranges and watching the overnight action and then the morning run-up from the euro debt deal and then the uncertain action at the open followed by another run-up and then sideways action, needless to say the plan I had laid out was no good! I made a decent trade early right before the big run-up on the debt deal (didn't get in on that, had already exited my trade at that point with a 3 point profit). Then I got sort of "flustered" by the big run-up and felt like I was missing out and got into it on a whim late and stupidly went long right as it was cresting out, then put a stop on and got hit, which wiped out most of my profit. Then I watched it go back up after it stopped me out (of course) and bought back in on the next retreat only to give it go sideways and then take another dip, debated putting a stop on or letting it run, put a stop on which got hit, and then (of course) it eventually went back up and then had a big run at cash close that I totally missed out on. So summary of the day: I made one trade according to my plan, made a profit, then gave it all back by making stupid impulsive moves on a day when my plan was not well-suited so I was "winging it". I think the right answer was to take my inital profit and then take the day off, but I couldn't get myself to do it with the lure of the big move! I know.... SUCKER!

Congratulations on the journal. It can really help you identify your problem areas.

Now some observations.

1. You MUST always trade with a stop. Doing what you did today will blow your account really fast without a predetermined place on the chart where you are WRONG about the trade. If you don't accept being wrong, you will be right all the way to a busted account.

2. The original question you asked about why you can't seem to take a trade where you know you should is pretty simple. you don't trust yourself or your analysis. There is only one cure for this: Screen time and lots of it. More importantly, its screen time with only ONE set up. No changing your indicators every time something doesn't go your way or what you currently have produces a bad trade. Accept that will happen sometimes every day and just focus on being better and better at reading price action. The truth is this: If you dont trust yourself, you'll ALWAYS hesitate. This is just inexperience. Some traders have it because they are afraid of losing the rent money, others have had a run of bad luck and are afraid to pull the trigger but mostly its due to simply not really owning your set up and not trusting your price action reading skills.

3. Depending on your trading style, you may miss ALL of the big moves while you look to scalp out bits and pieces of other moves. If you are set up to capture large moves, you will be a very frustrated and disappointed trader if you wait all day for the move and then you chicken out of taking the trade. This will drive you to do desperate things and of course this leads to ADD or Account Deficit Disorder. A very common disease amongst traders. So be happy with what you earn. Don't chase trades, if you wimp out, write down in your handwritten journal, (you do have one right?) your emotions about wimping out, then demand the discipline of your self to wait out the move and set yourself up for the next one. Funny thing about this game, there is always a next one.

To your credit, you've started your journal in the correct thread. The psychology thread. This is where the game is won. Right between your ears.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #6 (permalink)
Omaha, Nebraska
 
 
Posts: 3 since Nov 2011
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Thank you! I think #2 is spot-on, that's what I've been doing is changing my thought process and the indicators I'm using on the fly rather than sticking with the indicators I used to DEVELOP the plan! I use a 15-min chart for my ranges and then a 5-min chart for confirmation of the EMA. But what I'm REALLY doing is flipping between the 5-min chart and a 2-min chart and a 1-min chart and a 1250 Tick chart all the time trying to gain shorter-term insight to reconfirm (i.e. second-guess) my trade, and then making poor decisions based upon that. Those short-term charts are skewing my perspective and making me second-guess my plan, even though I KNOW from post-analysis that the plan would have WORKED if I had stuck to it!

Yes, I do have a log that I keep of my trades, but I'm not documenting what my thought process was at the time, that would be a good idea for sure, I'll start doing that today!

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  #7 (permalink)
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sprinter View Post
Ok, this is my rambling newbie post, please bear with me! So I've done everything "wrong". I started with an undercapitalized account ($5000) and only sim-traded for a few weeks before going live daytrading the ES. My only prior related experience is basic stock and mutual fund portfolio management, never actively daytraded before. Sim-trading seemed easy, I only had 1 down day in 15 days. My strategy in sim was just playing the short-term price action, watching for trends on a 1 or 2-min chart and playing 2-6 tick gains with a 2-3 tick stop. Piece of cake, why does everyone say this is so hard?? So then I go live and (you already know the punchline.....) it's NOT the same as sim! Fills are much harder to get, and the mental edge I had in sim is GONE, now it's my own money and my aggressive trading style is not there any longer. So I take some time to study up on trading methodology and try to craft a strategy that doesn't rely on 2-tick scalping profits but rather looking for support/resistance ranges and making trades that might go for a few hours rather than a few seconds or minutes. So far, I've done pretty well by sitting down every night and analyizing the day's trading ranges, picking support/resistance and reviewing how I traded and trying to see where I missed opportunities and where I made stupid trades. Then I use those ranges the next day if trading is still in that area, or if the market gaps up or down I develop new ranges on the fly as it develops. Still so far so good, I seem to do OK at defining the ranges and making sense of the price action. But here's the big problem: I can't get myself to trade when I SHOULD, I wait and then second-guess, and when I finally commit it's too late and I can't get in at a decent entry, so then I either pass up or I get in anyway later at a price I don't like and the trade either doesn't pay off much or goes south because I get out early. When I get out early, I see later that if I had stayed in with my original plan, it would have paid off most of the time. How do I get myself to stick to a plan???


Above , where @PandaWarrior states that you dont trust either yourself or your system is dead on and if you focus on those issues theres one way I can suggest to solve it and put it to bed so you can make some money .

First , find a simple method in a market you relate to where you can ID some kind of profit patterns that repeat themselves and you can grab those patterns (the profit) without having to take a lot of heat relative to the profit potential . Easier said than done but SIMPLE method is key here . Then trade it live with real money but heres the rub - you have to be willing to lose the whole account . It has to be in a market where you can risk peanuts . Forex is the only market that comes to mind but ETFs or swinging stock trades with odd lots would be my 2nd choice . Point is that if you even think about the drawdown or losing even for a second you'll be going backwards and away from developing a trust in your decisions . ONLY think about managing the trade and your feelings and you'll be able to make wise choices and you'll be acting instead of reacting .

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  #8 (permalink)
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Here are my two cents:

What others have said is true: the hesitancy to pull the trigger may be related to a lack of confidence in your approach. If you can, I'd recommend seeing if you can identify a pattern or trading setup and then backtest it to see if it really has an edge - seeing how it performs historically can make all the difference in the world when it comes to pulling the trigger in real time.

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furytrader View Post
Here are my two cents:

What others have said is true: the hesitancy to pull the trigger may be related to a lack of confidence in your approach. If you can, I'd recommend seeing if you can identify a pattern or trading setup and then backtest it to see if it really has an edge - seeing how it performs historically can make all the difference in the world when it comes to pulling the trigger in real time.

And then forward test it live on sim for 100+ trades or a statistically relevant set, and make sure the forward test is in line with the backtest -- at least enough to proceed to cash.

Mike

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