NexusFi: Find Your Edge


Home Menu

 





When was the last time your emotions influenced a trading decision?


Discussion in Psychology and Money Management

Updated
      Top Posters
    1. looks_one mokodo with 5 posts (1 thanks)
    2. looks_two nevadan with 5 posts (9 thanks)
    3. looks_3 teamtc247 with 4 posts (3 thanks)
    4. looks_4 lsubeano with 2 posts (4 thanks)
      Best Posters
    1. looks_one switchtrading with 7 thanks per post
    2. looks_two iqgod with 5 thanks per post
    3. looks_3 lsubeano with 2 thanks per post
    4. looks_4 nevadan with 1.8 thanks per post
    1. trending_up 4,336 views
    2. thumb_up 39 thanks given
    3. group 10 followers
    1. forum 27 posts
    2. attach_file 2 attachments




 
Search this Thread

When was the last time your emotions influenced a trading decision?

  #11 (permalink)
 
teamtc247's Avatar
 teamtc247 
Fairburn, Georgia
 
Experience: None
Posts: 980 since Dec 2012
Thanks Given: 644
Thanks Received: 1,116


ratfink View Post
One good indication for me that I am on the right side of a trade that hasn't moved yet is that I feel really uncomfortable instead of complacent - why is it that the best trades are the hardest to sit on?

I can totally relate to this.

For me it's everyday, everyday.... Emotions are good though. It's impossible to trade without emotions. Fear and anger is my primary emotion. Typically I feel calm before it's time to enter, then it becomes time, my chest gets tight and I stop breathing and I take my finger of the mouse and sit back in the chair and get angry lol. That's the the moment my head is the clearest but the emotions kick in. That's the time I should react when I get that feeling. Then I turn angry for a minute and then I say well at least your can read the chart, good job, good job.

Process oriented goals #1.
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
Exit Strategy
NinjaTrader
Deepmoney LLM
Elite Quantitative GenAI/LLM
Futures True Range Report
The Elite Circle
ZombieSqueeze
Platforms and Indicators
NexusFi Journal Challenge - April 2024
Feedback and Announcements
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
39 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
The Program
18 thanks
GFIs1 1 DAX trade per day journal
18 thanks
  #12 (permalink)
 
mokodo's Avatar
 mokodo 
Bridgwater, UK
 
Experience: Beginner
Platform: Ninjatrader
Broker: MB Trading
Trading: Forex
Posts: 385 since Jun 2011
Thanks Given: 525
Thanks Received: 348

teamtc247 thanks for adding to this thread and for your honesty. I really enjoyed your post.

know thyself
Visit my NexusFi Trade Journal Started this thread Reply With Quote
  #13 (permalink)
 switchtrading 
Netherlands
 
Experience: Master
Platform: Sierra Chart + jigsaw
Broker: S5
Trading: Rates
Posts: 79 since Mar 2012
Thanks Given: 23
Thanks Received: 144


The moment i focused more on process rather than performance,things changed remarkably for me.
The more i focus on process the less emotional i become.You could describe it as being stone cold.I do what needs to be done.

Emotions will present themselves as soon as you start rationalizing,analyzing and performance tracking etc while you are trying to trade.

You should be focused on market feedback and reacting to that.Anything outside of this will allow emotions in.
How many times do you think Michael Schumacher would have been world champion if he was thinking about other things that were irrelevant while trying to drive a race car?

The real trick is finding a way to stop thinking about things that bring emotion in.
I cured this by becoming more active.To the point now where i am tracking my market tic-for-tic.
I am so wired in to reading what's going on i forget the other things that trigger emotion.
If you put one trade on per day then you have a hell of a lot of time on your hands to think about the last loser you had,or what a #@!* month you have had,or how you will recover the losses next month,or the fact you have had three losers in a row.
You want to leave no mental space for anything negative and the only way you'll do this is by being process focused.

rgds

Reply With Quote
  #14 (permalink)
Rock Sexton
Scottsdale
 
Posts: 120 since Feb 2012
Thanks Given: 33
Thanks Received: 96


nevadan View Post
One of the requirements to successful trades is the ability to enter the trade and see it to the end--win or lose. If the premise of the trade is valid it doesn't matter if it is a winner or a loser. There will always be losing trades. It is just the nature of the beast. Not staying in the trade precludes winning eventually on a trade that goes underwater,-- and most are for some period of time, you can't pick the exact point to enter any trade, just an area-- as long as the trade stays within the parameters set before it is entered. Proper risk/reward analysis means the losers are outpaced by the winners for a net profitable trader.

I'm going to disagree with part of your premise and try to touch upon my own little experience as of late with emotions.

Sure, if a trader really wants to put their method to the test they can let it either A: hit the target or B: get stopped out. The thing is we cannot control the sequence in which A or B play out, but we can take precaution to lessen the risk associated with them. As long as you're not scalping into really tight windows, one should consider scaling out and moving the stop to break even. If they don't want to move it to B/E than they should make sure the scale out would cover what the total $-loss it would be if one stopped out. This helps to provide insurance in case of error, conditions changing, etc, etc. It allows one to profit in the short term and leave them the ability to let their winners run.

It's not an easy concept to mentally accept as many of us tend to focus first on the total possible profits if we hold the whole position for the target. I know I've been criminally guilty of this as of late and I can't even tell you how many of my own trades I've mismanaged because of it. Instances where I had viable scale out points which would've provided me both with profit and insurance against loss. It's actually gotten me quite irate because all it takes is a slight adjustment and not being so "expectant".

Reply With Quote
Thanked by:
  #15 (permalink)
 nevadan 
Reno Nevada USA
 
Experience: Advanced
Platform: NinjaTrader
Trading: currency futures
Posts: 9 since Mar 2014
Thanks Given: 1
Thanks Received: 14


Rock Sexton View Post
I'm going to disagree with part of your premise and try to touch upon my own little experience as of late with emotions.

Sure, if a trader really wants to put their method to the test they can let it either A: hit the target or B: get stopped out. The thing is we cannot control the sequence in which A or B play out, but we can take precaution to lessen the risk associated with them. As long as you're not scalping into really tight windows, one should consider scaling out and moving the stop to break even. If they don't want to move it to B/E than they should make sure the scale out would cover what the total $-loss it would be if one stopped out. This helps to provide insurance in case of error, conditions changing, etc, etc. It allows one to profit in the short term and leave them the ability to let their winners run.

It's not an easy concept to mentally accept as many of us tend to focus first on the total possible profits if we hold the whole position for the target. I know I've been criminally guilty of this as of late and I can't even tell you how many of my own trades I've mismanaged because of it. Instances where I had viable scale out points which would've provided me both with profit and insurance against loss. It's actually gotten me quite irate because all it takes is a slight adjustment and not being so "expectant".

Exactly right Rock,
Trade management is the second set of emotions that have to be dealt with. I was addressing more the concerns of trade entry in the previous comments where what would have been a good trade was abandoned too soon due to anxiety during the period before the markets moved in the expected direction. Second guessing the entry and bailing out to soon is just the beginning of the emotional battle. Once a trade goes green then the battle is whether to take the money and run or squeeze it for more. Being too greedy many times sees a profit evaporate, especially for the small trader who has to trade small positions and may not have the luxury of scaling out. I trade futures only so taking partial profits and reducing leverage risk is an essential element of good trade management.

Reply With Quote
  #16 (permalink)
 
teamtc247's Avatar
 teamtc247 
Fairburn, Georgia
 
Experience: None
Posts: 980 since Dec 2012
Thanks Given: 644
Thanks Received: 1,116


nevadan View Post
Exactly right Rock,
Trade management is the second set of emotions that have to be dealt with. I was addressing more the concerns of trade entry in the previous comments where what would have been a good trade was abandoned too soon due to anxiety during the period before the markets moved in the expected direction. Second guessing the entry and bailing out to soon is just the beginning of the emotional battle. Once a trade goes green then the battle is whether to take the money and run or squeeze it for more. Being too greedy many times sees a profit evaporate, especially for the small trader who has to trade small positions and may not have the luxury of scaling out. I trade futures only so taking partial profits and reducing leverage risk is an essential element of good trade management.

I deal with this often. In the emotional aspect you have to dig deeper to why you are feeling the way you do. I know that sounds corny. This is something I've been working on for the last six weeks.

For instance when you enter a trade you should have an exit stop or target defined by your plan or methodology. I know this is obvious, you have to accept both outcomes you can always have a plan b and c.

What I've been having the hardest time with is pulling the trigger. This is not because I'm not confident in my methodology this is a deeper issue.

Touching back on exits, I don't hold to my exit because the deeper issue is coming out, trading from emotion. Not getting in when a valid setup presents itself, trading from emotion.

Now the solution I believe is trying to be mindful of the emotion and digging to that deeper issue. Is it uncertainty, being wrong, thinking that you yourself aren't good enough (being adequate)? The list goes on; it could be a magnitude of areas.

I think getting to a level to lessen the emotion is what everyone is looking for. Being able to maintain focus not trading from emotion, but being aware of the fact that emotion is biological and it comes before thought even if we're not conscious of the emotion.




Sent from my SCH-I545 using Tapatalk

Process oriented goals #1.
Visit my NexusFi Trade Journal Reply With Quote
  #17 (permalink)
 nevadan 
Reno Nevada USA
 
Experience: Advanced
Platform: NinjaTrader
Trading: currency futures
Posts: 9 since Mar 2014
Thanks Given: 1
Thanks Received: 14


teamtc247 View Post
I deal with this often. In the emotional aspect you have to dig deeper to why you are feeling the way you do. I know that sounds corny. This is something I've been working on for the last six weeks.

For instance when you enter a trade you should have an exit stop or target defined by your plan or methodology. I know this is obvious, you have to accept both outcomes you can always have a plan b and c.

What I've been having the hardest time with is pulling the trigger. This is not because I'm not confident in my methodology this is a deeper issue.

Touching back on exits, I don't hold to my exit because the deeper issue is coming out, trading from emotion. Not getting in when a valid setup presents itself, trading from emotion.

Now the solution I believe is trying to be mindful of the emotion and digging to that deeper issue. Is it uncertainty, being wrong, thinking that you yourself aren't good enough (being adequate)? The list goes on; it could be a magnitude of areas.

I think getting to a level to lessen the emotion is what everyone is looking for. Being able to maintain focus not trading from emotion, but being aware of the fact that emotion is biological and it comes before thought even if we're not conscious of the emotion.




Sent from my SCH-I545 using Tapatalk

I think you touched on a key point with the word uncertainty. Dealing with uncertainty is the root of the emotional conflict. Not being certain of the outcome introduces doubt and second guessing. Life is full of uncertainty. It is certain that we will all die at some point, yet we go on with life more or less confident that our dreams will come to pass. Trading is no different. You have to get on with it. Getting on with it actually increases the odds of success if the methodology being used is sound. If your method is sound and if you exercise good discipline the odds of success increase. The outcome of any particular trade is less important and should be viewed through the lens of it being just a subset of a larger whole. So being prepared with the idea that this trade may be a loser is acceptable in the context of it just being one of many, the outcome of which will be net positive. The hard part is actually getting to the point that you know in your mind that you can succeed. That is the elusive thing that every aspiring trader seeks, and every successful trader tries to keep.

Reply With Quote
Thanked by:
  #18 (permalink)
 
teamtc247's Avatar
 teamtc247 
Fairburn, Georgia
 
Experience: None
Posts: 980 since Dec 2012
Thanks Given: 644
Thanks Received: 1,116


nevadan View Post
I think you touched on a key point with the word uncertainty. Dealing with uncertainty is the root of the emotional conflict. Not being certain of the outcome introduces doubt and second guessing. Life is full of uncertainty. It is certain that we will all die at some point, yet we go on with life more or less confident that our dreams will come to pass. Trading is no different. You have to get on with it. Getting on with it actually increases the odds of success if the methodology being used is sound. If your method is sound and if you exercise good discipline the odds of success increase. The outcome of any particular trade is less important and should be viewed through the lens of it being just a subset of a larger whole. So being prepared with the idea that this trade may be a loser is acceptable in the context of it just being one of many, the outcome of which will be net positive. The hard part is actually getting to the point that you know in your mind that you can succeed. That is the elusive thing that every aspiring trader seeks, and every successful trader tries to keep.



Thanks for the follow up on the uncertainty. Other than methodology being sound and seeing that you have an edge on the market and having good money management principles. How did you finally come to terms with that belief? What did you say to yourself?

Process oriented goals #1.
Visit my NexusFi Trade Journal Reply With Quote
  #19 (permalink)
 nevadan 
Reno Nevada USA
 
Experience: Advanced
Platform: NinjaTrader
Trading: currency futures
Posts: 9 since Mar 2014
Thanks Given: 1
Thanks Received: 14


teamtc247 View Post
Thanks for the follow up on the uncertainty. Other than methodology being sound and seeing that you have an edge on the market and having good money management principles. How did you finally come to terms with that belief? What did you say to yourself?

OK, here's the deal. Nothing breeds success like being successful. It's like there is a tipping point where until you figure it out you just can't seem to figure it out. Sounds like circular reasoning doesn't it? So what changed it for me? I had been trying to trade for years and dying the death of a thousand cuts. Each time I refreshed my account I would tell myself that this time it would be different, I just needed to persevere and I would eventually be consistently profitable. But I could never seem to quite get over that hump. The last time I blew out my account I was finally forced to sit back and ask myself if I was really going to be able to continue trying to trade. There was a couple of really dark days there but I simply had to answer that question to myself. After I regained some semblance of rational thought I always came back to the same two root causes for my failures.

1) I was under capitalized. I could be right about market direction but always got shaken out by getting my stops hit or losing faith in my position and bailing only to see the trade go ahead without me.

2) I had to find a way to trade the same amplitude as the markets seemed to want to move in. That means being able to be in the markets for greater ranges than just scalping.

Since I was bust anyway I decided to use the simulator provided by my brokerage (Ninja) and trade the $100k that the demo provides. The key to my success came over the next year that I didn't actually trade real money. It's like muscle memory. The more you repeat something successfully the more you can expect to duplicate that success.

So what did I change? First, I changed my philosophy from being a scalper to swing or even position trading (and got away from the stock indexes). I fought that idea for years, thinking it better to be flat at night to reduce my risk to overnight exposure. That seems like a prudent thing but it is actually counter productive. In my opinion using indicators and trying to day trade is a recipe for disaster. I guess there are people out there who can do it, but I'm not one of them. One other thing that really made a difference was coming to the conclusion that fundamental analysis makes a huge difference if you can come to understand what underlies the market you are trading and only trade setups that favor that direction. This requires a lot of work but it is really just due diligence. Since I trade currency futures that means I have to read central bankers. Boring as hell but necessary to try to figure out what they are going to do. Basic things like bad news out of Chinese manufacturing might mean less iron ore imports from Australia which could mean lower GDP there which might cause a drop in the AUD. What are they doing with interest rates there? What are the current crop of politicians trying to do to the economy? Any information that might help form an opinion about probable market direction.

Obviously this means a lot more exposure to risk if positions are open for days or weeks at a time. It is also obvious that a small account is probably not going to cut it. How much is enough? Personally I wouldn't even consider trading with less than $50k. It just requires that much cushion to outlast the noise in the market. Trade small and wait. A larger move with one contract will pay multiples of what you have to risk and if you can get on a trend and add to it..... Use small contracts if possible like QM (mini crude). It is liquid enough that slippage is not such a problem. Other mini and micro contracts offer low exposure but the spread is killer so it is hard to get good entries. You simply have to trade longer time frames to get a profit. And I really don't like trading the stock indexes. It is just to easy to get jerked out of your socks by some algo driven slam and even though they are classified as "mini's" they can have very large dollar moves even with one contract. Which is not to say that the currencies are immune to that but imo they are easier to predict.

The light came on for me about three years ago. That is a brief outline of how I approach trading now, but every one is different. What works for me my be wrong for you. You just have to figure it out for yourself. I will say this though, trying to trade just using price based indicators is not enough. There are a lot of really smart people out there with lots of money who can look at the popular indicators and know what you are thinking before you do. Why try to compete with them while placing yourself at a disadvantage to start with? Do the work. Learn about the markets you want to trade. I had many tens of thousands of dollars in accumulated losses over a lot of years before I finally faced up to some facts. Don't be like me. Start now to understand why things work. That understanding will always be imperfect but some knowledge is better than none.

So you might wonder why I've taken the time to write this during market hours. To be perfectly honest, all my positions are underwater at the moment. It sucks. I still have to deal with all the crap thoughts just like every one else, but I am able to wait because I think I will be right in the long run. One other thing is I don't trade anything when it is within two weeks of expiry. This gives me time to wait and gives the market a change to be nice to me. I've found that if I get on the wrong side of a trade and and the last trade date is looming the markets will press that trend into the expiry. Kick 'em while there down seems to be the idea. I don't like getting kicked so I like currencies early in the front month because they are three month contracts. Contracts that roll more frequently I try to get into the back months well before the front month ends.

I've been long CAD for several days now and it looks like I'm finally going to get green. It's been a drag and last night I finally learned that there are elections coming next month that have caused some uncertainty about the separatist movement in Quebec. Maybe, maybe not, but the CAD is at long term support and might get a good bounce here. Or not. I may reduce my size here and try to add back at .8875 if it dips again. At least that will give me a better average price to lose from if there is more downside from here.

Good luck and good trading

Reply With Quote
Thanked by:
  #20 (permalink)
 
teamtc247's Avatar
 teamtc247 
Fairburn, Georgia
 
Experience: None
Posts: 980 since Dec 2012
Thanks Given: 644
Thanks Received: 1,116



nevadan View Post
OK, here's the deal. Nothing breeds success like being successful. It's like there is a tipping point where until you figure it out you just can't seem to figure it out. Sounds like circular reasoning doesn't it? So what changed it for me? I had been trying to trade for years and dying the death of a thousand cuts. Each time I refreshed my account I would tell myself that this time it would be different, I just needed to persevere and I would eventually be consistently profitable. But I could never seem to quite get over that hump. The last time I blew out my account I was finally forced to sit back and ask myself if I was really going to be able to continue trying to trade. There was a couple of really dark days there but I simply had to answer that question to myself. After I regained some semblance of rational thought I always came back to the same two root causes for my failures.

1) I was under capitalized. I could be right about market direction but always got shaken out by getting my stops hit or losing faith in my position and bailing only to see the trade go ahead without me.

2) I had to find a way to trade the same amplitude as the markets seemed to want to move in. That means being able to be in the markets for greater ranges than just scalping.

Since I was bust anyway I decided to use the simulator provided by my brokerage (Ninja) and trade the $100k that the demo provides. The key to my success came over the next year that I didn't actually trade real money. It's like muscle memory. The more you repeat something successfully the more you can expect to duplicate that success.

So what did I change? First, I changed my philosophy from being a scalper to swing or even position trading (and got away from the stock indexes). I fought that idea for years, thinking it better to be flat at night to reduce my risk to overnight exposure. That seems like a prudent thing but it is actually counter productive. In my opinion using indicators and trying to day trade is a recipe for disaster. I guess there are people out there who can do it, but I'm not one of them. One other thing that really made a difference was coming to the conclusion that fundamental analysis makes a huge difference if you can come to understand what underlies the market you are trading and only trade setups that favor that direction. This requires a lot of work but it is really just due diligence. Since I trade currency futures that means I have to read central bankers. Boring as hell but necessary to try to figure out what they are going to do. Basic things like bad news out of Chinese manufacturing might mean less iron ore imports from Australia which could mean lower GDP there which might cause a drop in the AUD. What are they doing with interest rates there? What are the current crop of politicians trying to do to the economy? Any information that might help form an opinion about probable market direction.

Obviously this means a lot more exposure to risk if positions are open for days or weeks at a time. It is also obvious that a small account is probably not going to cut it. How much is enough? Personally I wouldn't even consider trading with less than $50k. It just requires that much cushion to outlast the noise in the market. Trade small and wait. A larger move with one contract will pay multiples of what you have to risk and if you can get on a trend and add to it..... Use small contracts if possible like QM (mini crude). It is liquid enough that slippage is not such a problem. Other mini and micro contracts offer low exposure but the spread is killer so it is hard to get good entries. You simply have to trade longer time frames to get a profit. And I really don't like trading the stock indexes. It is just to easy to get jerked out of your socks by some algo driven slam and even though they are classified as "mini's" they can have very large dollar moves even with one contract. Which is not to say that the currencies are immune to that but imo they are easier to predict.

The light came on for me about three years ago. That is a brief outline of how I approach trading now, but every one is different. What works for me my be wrong for you. You just have to figure it out for yourself. I will say this though, trying to trade just using price based indicators is not enough. There are a lot of really smart people out there with lots of money who can look at the popular indicators and know what you are thinking before you do. Why try to compete with them while placing yourself at a disadvantage to start with? Do the work. Learn about the markets you want to trade. I had many tens of thousands of dollars in accumulated losses over a lot of years before I finally faced up to some facts. Don't be like me. Start now to understand why things work. That understanding will always be imperfect but some knowledge is better than none.

So you might wonder why I've taken the time to write this during market hours. To be perfectly honest, all my positions are underwater at the moment. It sucks. I still have to deal with all the crap thoughts just like every one else, but I am able to wait because I think I will be right in the long run. One other thing is I don't trade anything when it is within two weeks of expiry. This gives me time to wait and gives the market a change to be nice to me. I've found that if I get on the wrong side of a trade and and the last trade date is looming the markets will press that trend into the expiry. Kick 'em while there down seems to be the idea. I don't like getting kicked so I like currencies early in the front month because they are three month contracts. Contracts that roll more frequently I try to get into the back months well before the front month ends.

I've been long CAD for several days now and it looks like I'm finally going to get green. It's been a drag and last night I finally learned that there are elections coming next month that have caused some uncertainty about the separatist movement in Quebec. Maybe, maybe not, but the CAD is at long term support and might get a good bounce here. Or not. I may reduce my size here and try to add back at .8875 if it dips again. At least that will give me a better average price to lose from if there is more downside from here.

Good luck and good trading

Thanks for sharing it's always nice hear a different perspective to the market. I've tried to to look at the fundamentals when I first started trading. It was very challenging for me and I felt overwhelmed, alot to consider. So now I still stick with the technical side of the house. Seeing poor numbers come out and seeing the market go the other way or doom and gloom info and the market continue to rally has kind turned me off to the fundamental side of the house. I think what's been holding me up is trying to pick the perfect price. I get set on a number and if it doesn't come to my level I pass on the trade, usually a point or two away. I'm going to pick a 2-5 point zone to get away from getting stuck on the actual number. I appreciate the response and like I said it's always nice to see if from another point of view. Happy trading!

Process oriented goals #1.
Visit my NexusFi Trade Journal Reply With Quote




Last Updated on June 24, 2014


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts