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Trading psych - Lose focus during losses
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Trading psych - Lose focus during losses

  #11 (permalink)
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Quoting 
At the time, I had this thing where every trade had to work out.

Too true, Krav! This is, in fact, one of the things I have the hardest time with. If I am stopped out all I can think is "oh great, now I have to make a winning trade just to get back to breakeven and it'll eat into my profits" and it plays with my mindset. If I'm stopped out twice, then it's worse - "oh great, since I have a 2:1 SL:TP ratio, now I have to make a fully winning trade just to break even, and THEN make ANOTHER winning trade just to make any money!" If I get stopped out 3 times... well, you can imagine that is even harder for me to take. And so on. Then I start scalping and overtrading like you would not believe. Sometimes it works, most times it doesn't.

Of course, it's all just ego. I find it interesting that you can read and understand a basic fact and yet the mind will have enormous difficulty actually accepting it when it happens. For example, I have read umpteen times that losing trades are a part of this process and that nobody on planet earth can make 100% winning trades. I get it. I understand it. I know it. I believe it. And yet when I experience a losing trade in real time, I still have difficulty truly accepting it. My ego doesn't want to accept it.


Quoting 
This, but for me, it was very hard to do in the beginning because I wanted to "see" what would happen if I traded this way instead of that way.

Yep I am definitely guilty of this, Massive. In the heat of the moment I may observe price doing something that looks oh so good (usually a burst of momentum) and I want to get in and out quickly, make that fast profit and begone. Well we all know what usually happens - I buy or sell right at a pullback moment and then lose the trade. Discipline really is a b**ch sometimes! Of course, this plays havoc with my win/loss statistics. Very difficult to achieve consistency when you don't patiently stick to your rules and wait for your edge to be present. Bad habit!

Here's the ironic part: I choose to day trade specifically because I seek to avoid gambling, and yet I find myself "gambling" with my trades when emotion / greed takes over. I'm not a fan of investing because it generally doesn't seem to involve much (if any) strategic thinking; so much of it is out of your control that it really does seem like gambling to me. And yet I find myself gambling on lousy fast trades that play hell with my focus and my confidence. A truly surprising and regrettable personality trait I have uncovered via this process. "Oh no I'm not a gambler I'm much too smart for that... except just this once... oops... and again... and again...".

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  #12 (permalink)
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I'm a beginner trader who loses at trading but here is my comment anyway.

Normally, when we try "really hard" at something, we can succeed, or at least we end up with better results than if we didn't try as hard. However, with trading, when we try "really hard" we often just end up going even further in the wrong direction until we hit a wall of some kind. In that case, I think we are trying "really hard" at the wrong thing. We are looking at the end result, which is to make money, but to make money, we can't just simply try "really hard" to make money...so to get the prize you have to take your eye off the prize and focus on the method.

People are normally hard wired to keep their eye on the prize and drive toward that prize with their eye on the prize until they grab it...but with trading we need to forget about the prize and focus on the method...especially since there is so much random price action. So I suggest you mark your buy and sell points on a chart at the end of each day, and make a comment on each one. For example, you can make a note on the chart about a buy you made, like for example..."good buy point, got in near the bottom of the trading range"...and if you sold for a loss, you might make a note like..."good sell decision, got out here for a small loss when the price went below what looked like support". So now, even if you have a losing trade, you can look back at your results and feel good about your trading decisions...or if you look back and your note says that you held on to a losing trade for too long, that is something you can work on to correct the next time.

Of course the end result is we want to make money, but to be effective we need to take our eyes off the prize, so that we don't feel as bad about losing money or feel too great about making money on any one day. Instead, we need to feel bad about making the wrong decisions and feel good about making the right decisions, whether or not the decisions resulted in making or losing money on that day. So to direct our effort and focus into making good decisions, we should have a record of our trades which we can look over and strive to improve on.

It's a good thing to try "really hard" at trading, but the effort has to be directed at our trading decisions, not on whether we have made money or not on any particular day. If you do this for awhile, you might find that before each trading decision, your decision to buy or sell or to do nothing will start to be less influenced by how much money you think you might make, and more influenced by how you think this decision will look on your trading record. Even for the times you made money, your note might say somthing like..."got lucky with this one...took too much risk and was stressed out for awhile..try not to do that again"

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  #13 (permalink)
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w00dmann View Post
Hi everybody, I have a problem that I'm pretty sure is common for a lot of traders - namely, difficulty taking a loss. When I take a trade that loses, I have a tendency to lose focus very quickly. My mindset changes from making money to making up the loss; I become stubborn about whatever direction I am trading; and worst of all, I get tunnel vision and begin missing obvious cues, the classic one being slow / choppy price action that I really shouldn't trade at all, yet there I be, trying to make up that loss... (ya, right).

I have a 2:1 risk/reward ratio, so if I lose 2 trades in a row, then all I can think is "even if I make a perfect 3rd trade, I'm still at scratch". Losing 3 trades and I am in danger of revenge trading. Bad stuff. It takes a lot to "let go" after numerous losing trades.

I absolutely, positively must come up with a strategy to keep myself in the right mindset, not lose focus, and/or know when to fold 'em. Otherwise my steady gains can be eaten up by 1 or 2 days of losses. The way I see it, the keys are:

1) Quickly regaining mental balance (or best of all, not losing it in the first place!)
2) Remaining disciplined to ensure I only trade when my edge is present
3) Removing as much stress as possible from trading - eg. changing my mindset about trading
4) Being able to take a loss gracefully, and if necessary, quit the day with a loss with no emotional baggage

Your thoughts / comments / advice are as always, appreciated. Thanks!


Your low reward:risk ratio forces you to be right most of the time or you end up in the red.

Look at it this way.

To trade to break even with a reward:risk of 0.5 as yours will mean you need to win 66.66 % . That's a very high number and not easily attainable.

What has really turned things around for myself personally is to have my winners be twice as big as my losers or bigger.

If I have 2 losing trades in a row I know if the next is a winner I'll be back at break-even. And if I have a winner I know it will take 2 consecutive losing trading to end back at break-even.

It's a completely different mindset ,but for me this has been a game changer.

I've been scalp trading for years with little to no success with even worse risk/reward ratios than yours. I haven't seen anyone consistently be profitable doing it. And neither was I..


You can use this formula to calculate what win pct you need to be break-even :


WP = 100 / ( reward:risk +1 )

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  #14 (permalink)
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Thanks cejstrup, actually what your post made clear was that I didn't explain my r:r correctly. I have the same r:r as you (winners are aiming to be 2x the size of losers) I reversed the numbers in my original post.

Still find it hard tho'.

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  #15 (permalink)
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w00dmann View Post
Thanks cejstrup, actually what your post made clear was that I didn't explain my r:r correctly. I have the same r:r as you (winners are aiming to be 2x the size of losers) I reversed the numbers in my original post.

Still find it hard tho'.

OK, glad to hear that

Then you only need to win 33.33 % . What's your winning percentage ?

I've also put a hard limit on my number of trades . Maybe something you could try as well.

This way I know the maximum risk on a day. And I've set it so I can get back to break-even with one winner.

My worst streak was 8 losing trades in a row. They were spread out over 5 days. But I've also had 6 winning trades in a row and they more than make up for the 8 losers

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  #16 (permalink)
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Massive l View Post
This, but for me, it was very hard to do in the beginning because I wanted to "see"
what would happen if I traded this way instead of that way. That hurt me but it also
helped me fine tune my method. You don't want to try new entry/exit
strategies on the fly. A lot of traders do this out of compulsion and wanting to WIN. So they throw money around and they lose lose lose. Keep it very specific. In my opinion, as a discretionary trader, you shouldn't be getting multiple
entry signals a day unless they are on related instruments. e.g. I had a long entry in the Euro and also
several other currencies at the same time. There was some correlation happening there and a potential
turning point for those currencies that happen to be aligned on that specific time frame (4hr).
Practice self-control and patience.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

I have that image saved to my desktop now... Brilliant. We always want the path of least resistance.

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  #17 (permalink)
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w00dmann View Post
Hi everybody, I have a problem that I'm pretty sure is common for a lot of traders - namely, difficulty taking a loss. When I take a trade that loses, I have a tendency to lose focus very quickly. My mindset changes from making money to making up the loss; I become stubborn about whatever direction I am trading; and worst of all, I get tunnel vision and begin missing obvious cues, the classic one being slow / choppy price action that I really shouldn't trade at all, yet there I be, trying to make up that loss... (ya, right).

I have a 2:1 risk/reward ratio, so if I lose 2 trades in a row, then all I can think is "even if I make a perfect 3rd trade, I'm still at scratch". Losing 3 trades and I am in danger of revenge trading. Bad stuff. It takes a lot to "let go" after numerous losing trades.

I absolutely, positively must come up with a strategy to keep myself in the right mindset, not lose focus, and/or know when to fold 'em. Otherwise my steady gains can be eaten up by 1 or 2 days of losses. The way I see it, the keys are:

1) Quickly regaining mental balance (or best of all, not losing it in the first place!)
2) Remaining disciplined to ensure I only trade when my edge is present
3) Removing as much stress as possible from trading - eg. changing my mindset about trading
4) Being able to take a loss gracefully, and if necessary, quit the day with a loss with no emotional baggage

Your thoughts / comments / advice are as always, appreciated. Thanks!


I used to struggle with the same thing. The exact same thing!

The way I have dealt with this is by conditioning my mind to the situation. I use visualization techniques to envision the loss and I try to achieve the same mental and physical sensation that I have when I lose a trade.

Once I bring myself to that state of mind, I go through an exercise that I know will help me remain calm during that situation. It involves deep breathing and reading quotes from trading in the zone to constantly remind myself to think of trading in probability and that losing is a part of the game.

Using visualization is a strategy that peak performance athletes use. It's also used by Navy SEAL, and Green Beret.

By putting yourself in that situation with high repetition your mind and your nervous system adapts to that situation given that you use the same stress management repeatedly. As you keep practicing this you will notice how you deal with it differently.

Another thing that helps me out is that as I'm trading I'm constantly reminding myself mentally about trading being a game of probability. Immersing my mind with the mindset that I need to adopt. We become what we think. Lastly one thing that gives me confidence to not worry about the losses is that I know my strategy has a profitable consistent edge so I know that I will recoup the losses. You have to believe 100% in your system.

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  #18 (permalink)
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IF market is really slow and choppy, leave. Or do something else and set alerts. I think self-awareness is very important. If you realise you are losing focus, get up and leave. Once I was down maybe $100 for the day, I was thinking ok just let me make this back. I knew I was out of focus because I was just leaving orders and not really paying attention to market (which was slow and choppy). But I was stubborn. I got crushed and lost another $700, all in market chop. I also don't trade premarket (at least now, during summertime chop) because again, no movement. You gotta realise, some days there will be only scraps to take, and other days there will be a banquet where you will make many multiples of what you could on those slow days.

Understanding yourself is just as important as understanding markets.
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  #19 (permalink)
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IronicMan View Post
We are looking at the end result, which is to make money..

If you chase money, you will lose it.

Some statements (some apparently from Warren Buffet) :

1. Chase experience, then money chases you.
2. Markets transfer money from the impatient to the patient.
3. You cannot impose your will on the market, allow the market to come to you.
4. It is easy to make money in the markets, the hard part is keeping it.



IronicMan View Post
People are normally hard wired to keep their eye on the prize..

To my mind, the prizes are:

1. Knowledge
2. Patience.
3. Signal AND Confirmation signal.
4. Exit strategy.

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