If I am aware that my success in trading is linked mostly to me, then I will tend to take responsibility for errors, work on my temperament, and all of those things which can improve my execution and thus my success and bottom line.
However, in reading some of Steenbarger's great book "Daily Trading Coach" and after making a list of a couple of exercises, I am left with the thought: am I making this too much about me?
After some recent bad days, I was very focused on what I did wrong, where I needed to improve, what I did well, and my mental state, etc. After some recent good days (and during those days), I was not at all concerned with my psychology, taking my "emotional temperature," breathing, or any of that. Even through the losing trades on those good days, I never really turned my attention to myself and what I needed to continue doing well or do differently; I was just focused on my market.
Someone here at futures.io (formerly BMT) has a signature from Steenbarger that says something like: 'Let trading be about markets and trading, not about you' (paraphrased). I wonder if perhaps I have let myself stray from what should be the focal point: trading, and my market. During some great win streaks earlier this year, I remember reviewing trades and correcting some things, but it wasn't focusing on self that got me into those win streaks; it was just trading well, killing it, and keeping almost singularly focused on competing in the market.
Obviously there is a balance here; but I'm not talking about shifting blame or responsibility to an external entity like a market. Obviously, there is a need to focus on how we do and how our gray matter is operating. But I'm wondering if we get too sidetracked by focusing too much on ourselves, when we should turn away from the mirror and "look up for the ball." What do you think?
Last edited by josh; December 10th, 2012 at 10:09 PM.
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Every loss causes me to reevaluate the trade, the system and myself--in that order. If the trade was executed properly then I review the system in light of the market at the time of the entry to determine whether the cause was due to either of the following:
1. whether there is some arcane aspect of the system I did not appreciate until the loss brought it to my attention; or,
2. if it's a shortcoming of the system worth improving.
In the first case I conclude I need better awareness of the market and the system and start studying charts (yet again). In the 2nd case I do a cost-benefit analysis of redesigning the system.
If the trade was not executed properly (I made a mistake) then it IS all about me and I'm in for a self-inflicted whuppin.
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I find the more complicated traders make things, the more difficult it is to execute on their system "correctly".
So I would encourage you to keep things as simple as possible so it is easy to know when you screwed up vs when you did things correctly, and then you only make it about you when you screw up.
It is my opinion that this is most difficult when you are scalping for very small gains and you are constantly switching market directions. That is far too erratic for me and I just call it noise. I would encourage people to instead take several steps back, trade bigger time frames, less trades, same or less risk, and things will generally become much more clear.
Personally, I take a couple trades a day per market at most. Lately, with combination of holidays and a busy schedule, it's been even less. I just put the trade on and then wait for the result. I don't spend any time analyzing what I did wrong or right because it's all just a matter of habit now, trade goes on, and I either was right or wrong about the direction.
If you are scalper though, I don't think it will work.
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I think many people fall into the trap of "my last trade/day was a loser, so something is wrong or could be improved." That is probably the worst thing you can do - taking any action, or making any kind of change or decision, based on one or two trades, or one or two trading days.
Appreciate and embrace the uncertainty - you could have a great system, the markets could perform just as planned, you could be mentally "in the zone" - and you can still lose! It doesn't necessarily mean anything is broken, it is just the laws of probability sometimes not being in your favor.
Ratchet down your review/analysis to every week or every month. You'll have a lot more data with which to make an informed decision if something is indeed wrong. And you'll bypass a lot of trading "noise," rather than trying to analyze it.
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Agree. There are apparently commercial scalping systems out there but I haven't tried any.
In my own experience I can abandon my system (more or less) and scalp with good success when in hindsight the market has been trending or is in a dedicated range for a long period of time but most importantly only when in the mood, which is rare. I'm sure my broker appreciates the commissions.
The bottom line IMO is if you are making money at the moment the best way you know how there is no reason for introspection. The best trading is exactly like riding a bicycle as @Redneck says, having become intuitive rather than analytic as someone said in a webinar on futures.io (formerly BMT) (was it Manesh Patel? Can't remember).
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Josh, you are right on with this topic. I've been experiencing this the last 2 weeks and I can see it in my journal. the way I am explained it to myself is that I have become 'that guy' who talks about his mental state during the day more than I talk about my trading decisions. I want to become that guy who talks solely about his trading decisions and market reading and only mentions his mental state once in awhile.
a large part of this for me is lowering my trade frequency, getting better at taking losses, and holding my good trades for a longer time. I'm interested to see where this discussion goes.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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