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.
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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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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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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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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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.
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.
To my mind, the prizes are:
3. Signal AND Confirmation signal.
4. Exit strategy.