I am coming to terms with an undeniable truth. I have not shown that I can consistently manage my own trades to the point where I am maximizing my opportunities. I suffer from a horrible case of premature evacuation.
I have spent the better part of the last 4 years crafting my own methodology. It's an amalgam of:
1. Market Auction Theory (I use Volume Profile instead of Market Profile)
5. Volume Analysis
95% of the time I only trade when my setup is present. Can't even begin to tell you how long it took to develop that kind of patience though. I hope to turn that number it into 100%. I've seen my setup hundreds if not thousands of times. I know how it's supposed to behave and my stops/targets are always pre-identified. The problem then begins once I've entered the trade. For example, I've conducted 12 trades in the last 4 months using my method and have not stuck out my targets for any of them. I've always done 1 of 2 things:
A: Impatiently cast failure on the trade before my stop gets hit, often trying to get out with as little loss as possible
B: Sell for quick profits before my target has been acquired
It's almost like a broken record at this point ..... a nasty, ingrained behavior that is preventing me from accomplishing everything I've ever wanted to in trading. I should note that I trade for a living. I commonly view trading through the lense that I've got 20 days a month to hit my numbers. That often creeps into my head the longer a position takes. The "when" is the only variable I do not know how to account for.
I feel like too often I'm taking into account non-chart related reasons for not sticking out trades. How do I break this habit? Does it just boil down to the old adage "set it and forget it" and finally take that leap of faith? All I know is because of my excessive micro-management of trades I end up working harder, not smarter. It's ironic because I'm so proud of this setup I trade and i know it provides me an edge. So why don't I trade like it?
I had two trades recently that were prime examples of my issue. The first occurred the Monday right before Thanksgiving. I took a trade in TQNT at 7.55 with an 8.30 target. I sold at 7.80 on Tuesday because I knew I wouldn't have access to trading Wednesday thru Friday. Suffice to say it went on to hit my target roughly 8 days after entry.
Then there was my WLT trade this week. I entered on Tuesday at 14.69 .... target was 15.80, stop at 14.00. After I bought in, got a nice pop but they sold it off hard. I held into Wednesday when it popped again at the open really nicely (exceeding the previous day's high) and I thought I was getting my move, but it proceeded to sell off hard again (went as low as 14.42). Seeing it sell off the intraday highs like that for 2 straight days left me frustrated and unwilling to let my stop play out in case I was wrong.
I pre-emptively front ran my stop and sold for a piddly -4 tick loss at 14.65. Low and behold on Thursday it finally made it's move ...... I ended up chasing back into the stock at 15.00. It gets kind of comical though. I decided to take profit towards the EOD at 15.40 (even though target was 15.80) because I wasn't sure if I was going to have access to trading on Friday ..... and in typical fashion it hit my target today. LOL
Is the only cure to this problem to back the hell off and finally let my stops/targets play out?
Last edited by Rock Sexton; December 7th, 2013 at 12:07 PM.
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It is ironic that I should be attempting to answer this topic, because just months ago I was doing the same things as you.
However there comes a 'click' moment in the journey of every trader and mine happened then.
And really, you've answered your own question, like I had to.
YES, the answer is to allow the trade to take out either your target or trade.
The mechanics of implementing this can be really tough, however since it is one thing to say are going to do it and another actually doing it.
One innovative way I've found (because I simply am unable to walk away) is to pull out the mouse and place it here, in a timed safe (with remote access to the PC disabled) so that I am unable to close the trade even when I want to:
Your problem is a common one, and I think it all boils down to CONFIDENCE.
You say you have an edge with your system. Do you think your edge is just your entry setup? Sounds like it to me, since you obey 95% of entry setup signals. That is a good degree of confidence.
BUT, you have no confidence in your exits, since you violate the rules most of the time.
Get confidence in your exits, either in your current ones or in some completely new ones. How do you get confidence? For me, it would entail some in-depth analysis of your present exits, along with some alternatives. Once you actually believe that your exit is good - deep down belief - then you should have enough confidence to start to using it, and then when it is successful, you'll gain even more confidence.
Ask any elite athlete, and they will tell you that they believe they will succeed. They have confidence in their abilities. Right now, for whatever reason, you have no confidence in your exit strategy. Focus on getting confidence.
If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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One of the problems is my mindset when I haven't gotten immediate results in the trade. My mind wanders off into the "Well what if this is one of the losers?" Then I start comparing it with how far into the trading month it is and if I'm already in a hole or up. Again, just layering non-chart concerns one after another.
Amazing how far we have to go to break such a habit. Whatever it takes though right?
Last edited by Rock Sexton; December 7th, 2013 at 12:50 AM.
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It's funny you mention the "C" word .... i.e. "confidence". It's one of the very things I'm lacking in life right now and it tends to seap over into my trading. This journey in trading isn't just about building a career and being successful, it's about finding my confidence.
I definitely don't show the same confidence in the exit as I do the entry. It's crazy because my exit signals are derived from the same source with every trade. I know where they're going to be. There's just something about that "what if" factor and my lack of confidence that takes control of the wheel once I get into the green. What if this is one that gets reversed? What if I happen to be wrong about the target? Once that train of thought starts, sometimes it gets really hard to shut it up. In many cases I say "well this is decent money" and there will always be other trades so I should just take the profit.
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1. The Time Based Economy: You live in this world mentally. You think in terms of time; time til end of month, time it takes to find a trade, time it takes for the trade to work or not work...time, time time....you get paid for time.
2. The Results Economy: This is the world traders actually live in. You get paid for results not time: If it takes 1 day to make your monthly nut or all 20, its irrelevant: Results are NOT time dependent. So move from the time based economy to the results economy and I think you will start to see your results start to come into line with what you know your system can produce.
Lastly, the market does not care one bit about your monthly numbers. If you plan on making it as a trader, you need to stop caring about it as well and just focus on trading correctly, the monthly nut will take care of itself.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
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