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Trading is like...
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Trading is like...

  #1 (permalink)
Elite Member
Singapore
 
Futures Experience: Beginner
Platform: Ninjatrader
Broker/Data: DDT / Kinetick
Favorite Futures: 6E
 
Posts: 62 since Jun 2013
Thanks: 76 given, 84 received

Trading is like...

Hi guys, new to the forums and would like to get some thoughts on what trading is like for you. I am referring to the emotional and psychological aspects of you in the act of putting on a trade, managing a trade etc.

I am a very short term trader (or a scalper some might say), going for 6 ticks on the 6E. I do have a trading plan in place and have done my homework (research and data collection) and done my sim trading. But whenever I trade, I feel extremely tense and I am unable to continue after 3 hours of scalping.

Trading for me is like a newbie driving a car for the first time after getting his license for 3 hours straight on one of the busiest expressways. That is how I would put my experience trading.

How would you express your experience trading?

I know that (or rather hope that) over time, trading will eventually be a much less stressful activity for me and hope that I can reach that stage soon. Would appreciate tips from the more experienced traders on how they manage their emotions and keep the stress levels low, even as they trade size as per their account size.

Or is tension and stress merely part of the package of trading?

Thanks!

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  #2 (permalink)
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  #3 (permalink)
 Vendor: diversifyportfolio.com 
PTA, Gauteng
 
Futures Experience: Advanced
Platform: Self built + Sierra + TWS
Favorite Futures: Stocks and Options
 
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Hi strikebackfast, welcome to the forum

A feeling of anxiety when in a trade is definitely common. This is your hard earned money you're putting at risk. However the way you explain it, it does seem that you're overly anxious. The feeling should progressively diminish over time as you gain more experience and confidence in your trading. But I think for most people it will always be there to a certain extent.

You say you're scalping for 6 ticks. A few questions:
  • May I ask why you've chosen scalping as your preferred trading style?
  • How many ticks do you risk on a trade if you're only targeting 6? What R:R do you aim for?
  • Have you calculated your required expectancy in order to be profitable? The reason I ask is because generally scalpers need an extraordinarily high winning percentage to be profitable.
  • How many trades do you take during your 3 hours of trading?

Nothing wrong with scalping, but if you've done the numbers on the above questions, part of the reason why you feel so much stress trading may be because you feel a lot of pressure to be right. Every trade you put on has the added pressure of needing to be right. The nature of scalping is that you need to be right often! That adds pressure.

In your 3 hours of trading, can you honestly say you're waiting for the best trades to appear, or are you just taking whatever looks reasonable because you're a trader, and traders must trade. Hint: Trading well is about patience and discipline, it is not about being in the market. If you're taking less than ideal trades, this will add additional pressure on you.

You need to start reducing the pressure on yourself to be right, and start thinking in terms of probabilities and the next 100 trades, instead of caring so much about the outcome of the next trade. If you've researched your trading style, calculated your expectancy, and proved to yourself that you have an edge, then trust that the edge will play out over time. The key being: Over time. This shift in mind set is not easy. It is normal to want to be right. However in trading trying to be right every time is generally not the answer.

Good luck.

Diversification is the only free lunch
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  #4 (permalink)
Elite Member
Singapore
 
Futures Experience: Beginner
Platform: Ninjatrader
Broker/Data: DDT / Kinetick
Favorite Futures: 6E
 
Posts: 62 since Jun 2013
Thanks: 76 given, 84 received


DarkPoolTrading View Post
Hi strikebackfast, welcome to the forum

A feeling of anxiety when in a trade is definitely common. This is your hard earned money you're putting at risk. However the way you explain it, it does seem that you're overly anxious. The feeling should progressively diminish over time as you gain more experience and confidence in your trading. But I think for most people it will always be there to a certain extent.

You say you're scalping for 6 ticks. A few questions:
  • May I ask why you've chosen scalping as your preferred trading style?
  • How many ticks do you risk on a trade if you're only targeting 6? What R:R do you aim for?
  • Have you calculated your required expectancy in order to be profitable? The reason I ask is because generally scalpers need an extraordinarily high winning percentage to be profitable.
  • How many trades do you take during your 3 hours of trading?

Nothing wrong with scalping, but if you've done the numbers on the above questions, part of the reason why you feel so much stress trading may be because you feel a lot of pressure to be right. Every trade you put on has the added pressure of needing to be right. The nature of scalping is that you need to be right often! That adds pressure.

In your 3 hours of trading, can you honestly say you're waiting for the best trades to appear, or are you just taking whatever looks reasonable because you're a trader, and traders must trade. Hint: Trading well is about patience and discipline, it is not about being in the market. If you're taking less than ideal trades, this will add additional pressure on you.

You need to start reducing the pressure on yourself to be right, and start thinking in terms of probabilities and the next 100 trades, instead of caring so much about the outcome of the next trade. If you've researched your trading style, calculated your expectancy, and proved to yourself that you have an edge, then trust that the edge will play out over time. The key being: Over time. This shift in mind set is not easy. It is normal to want to be right. However in trading trying to be right every time is generally not the answer.

Good luck.

Hi Darkpool,
May I ask why you've chosen scalping as your preferred trading style?

I think it is more of an alignment with my personality that I chose to scalp. I am a person that does not like to sit in trades for long hours and would rather actively take steps to exploit my edge consistently rather than to place a trade and let the trade develop for hours sitting on my hands. Simply put, I am an "outie" than an "innie". I rather be in and out fast, exploiting small edges instead of holding trades for a long time.

How many ticks do you risk on a trade if you're only targeting 6? What R:R do you aim for?

My trade management style is based on my edge. My "catastrophic" loss is 7 ticks. The moment that I find that my edge disappears, I pull my target to break-even or lower, attempting to scratch the trade with any hint of a retracement. Based on a small sample size of 30 trades, I have hit my catastrophic loss 3 times. Based on back testing, it was about 8% of the time.

The rest of the time, I scratch my trade from 0 to -4 ticks.

Have you calculated your required expectancy in order to be profitable? The reason I ask is because generally scalpers need an extraordinarily high winning percentage to be profitable.

Yes I have calculated my expectancy needed. Net of comms, traded optimally with hindsight, my system produces around 2.4 expected ticks per trade. Currently live, with 30 trades as a really small sample size, I am on 1.5 ticks per trade. I have told myself that I would be happy with 1 tick per trade, given the nature of fills and lack of emotional control etc. Thus, to trade 100% optimally would be around 2.4 ticks per trade (70% win rate). I am now at 59%. And I will be modifying my trading plan the moment I allow myself to trade 2 lots. That is where I will hold 1 for a 12 tick profit target while taking 1 off at 6. Based on my testing, it appears to be +EV to do so. However, I hate to lose more than win, thus prefer to do a scale out for my exit, taking a high win % over a high R:R.

How many trades do you take during your 3 hours of trading?
I take an average of 8-10 trades in 3 hours.
But after that I am so tired that I am unable to trade the EU/NY overlap. And it does not help that the whole 3 hours are spent being very tense.

I think right now its a matter of transition. I am new to the live markets and know that I have a +EV system. However, due to my inexperience, my body and mind fails to adjust sufficiently to be relaxed and calm when trading. May I ask how long it took for you to achieve a "calm" whilst trading?

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  #5 (permalink)
 Vendor: diversifyportfolio.com 
PTA, Gauteng
 
Futures Experience: Advanced
Platform: Self built + Sierra + TWS
Favorite Futures: Stocks and Options
 
DarkPoolTrading's Avatar
 
Posts: 1,036 since May 2012
Thanks: 1,244 given, 1,304 received


strikebackfast View Post
I think right now its a matter of transition. I am new to the live markets and know that I have a +EV system. However, due to my inexperience, my body and mind fails to adjust sufficiently to be relaxed and calm when trading. May I ask how long it took for you to achieve a "calm" whilst trading?

lol, im not sure I would call myself calm, the nerves are definitely there whenever im in a trade. But im heading in the right direction. A few things which helped me personally:
  • I stopped trying to micro-manage trades and started going for larger targets
  • I've built up a lot of stats in my trading which give me confidence. I try not to care what the result of my next trade will be. My stats and edge will play out over time. I have also tried to embrace losses by thinking of them as adding to my stats and providing me with more data to work with. ie: look at losses in a positive light and learn from them
  • I only take good setups. I acknowledge that there will always be another trade around the corner. No need to take dodgy setups
  • I have tried to be as specific and mechanical in my trading plan as possible. I just execute my plan. The way I trade is too subjective to be coded, so I am definitely a discretionary trader. But I have very specific rules around all aspects of my trading. That adds confidence when placing a trade.

One last thought, im not sure if you're trading full or part time. But if you're trading full time then being under capitalized can add HUGE pressure and anxiety to your trading.

Diversification is the only free lunch
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  #6 (permalink)
Elite Member
Singapore
 
Futures Experience: Beginner
Platform: Ninjatrader
Broker/Data: DDT / Kinetick
Favorite Futures: 6E
 
Posts: 62 since Jun 2013
Thanks: 76 given, 84 received

Thanks darkpool, for the advice. Will take all these into account as I progress as a trader.

I think right now my lot sizing is conservative for the absolute risk I am taking (0.7%) per trade. However, I wish to use a Fixed Ratio System to scale up my account exponentially. Thus I need to work out my nerves with a single lot before I start to aggressively scale up my position sizing.

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