Last week I had the best trading week of my life. I finally dug myself out of the hole I created and was positive for the year.
Guess what happened this week?
Lost. It. All.
Did I lose it because my system failed me?
I lost it all because I was overconfident and careless. I thought I knew what I was doing now. I thought I could just go on cruise control and let the money print itself. Wrong, wrong, wrong.
There are a million different systems and most of them will generate a profit depending on the trader. It's not the system that makes a difference, it's the piece of meat in between your ears that's going to make a difference. Your mind is the cause and solution to all your problems.
The more I trade the more I realize the importance of psychology in trading. This is a game of who can make the most money and KEEP IT. Yes you'll lose money sometimes because your system was wrong. But most times you'll lose money because of overconfidence, lack of confidence, cashing out too early, cashing out too late, hope, fear, greed, lack of patience, overtrading, and revenge trading. These are problems you will face using any system. These are the demons you must conquer in your mind.
Are others better at trading because they're better looking, smarter, or rich? Nope. None of those things determine a consistent and profitable trader. The answers we seek are in our mind, not in indicators.
Take literally any sport for example. What usually happens when you're winning by a lot? You think to yourself "ok i'm winning so now I can relax." You become careless and the next thing you know, the game is tied.
In tennis you know when the most common time for a player to serve a double fault? Right after they served an ace.
In gambling you know when you're most likely to tilt? Right after a big win
It's all the same.
So if you want to become a better trader what do you have to do? GO OVER YOUR FREAKING TRADES FOR THE DAY. Look at what your tendencies are. Look at why you lost money. Look at why you made money. This is a game where you need to master yourself, so you need to look at YOUR results. This will give you a personalized journal of what you are doing wrong and what you are doing right. Don't look to others for the answers. Just look within.
Am I a profitable trader? Not yet, but with every trade I'm learning. I finally feel like I'm on the right path. I know that I can be a successful trader if I can successfully conquer myself. I am alone on this journey. No one can save me but myself. No one can change me but myself.
Lastly I want to state that everything is related to everything. Your problems in school will reflect your problems in trading. Your problems at work will reflect your problems in trading. Your problems with your spouse will reflect your problems in trading. Your problems with addiction to drugs, tv, porn, video games whatever will reflect in your trading. If you want to become a successful trader, the one and only thing you need to change is YOU.
I feel like I've been walking in circles these past few years. The same problems keep popping up into my life over and over again. I get clean from drugs, then I think oh everything is fine now so I can party a little bit. Wrong. I finally get over that girl so I think oh I guess i can be friends with her now. Wrong. It's just the same shit over and over again and I'm tired of it. I've found that the same thing is happening in my trading. There are a few mistakes that I make over and over and over again. If I can fix my issues in my personal life, I know I can fix my issues with trading.
I feel like I hit an invisible ceiling in both my life and my trading account. There's this mental barrier that causes me to fuck things up when things are going good. This is all in my mind.
Trading isn't just about trading. It's personal development. I doubt there are successful traders with huge glaring issues in their life. They've learned to control their lives and their emotions, and that is why they succeed.
I firmly believe this is what makes trading so difficult. You're not playing against anyone except yourself.
I lost money today and it had nothing to do with my system. My main issues are over trading, lack of patience, and overconfidence. These are problems that I know I have and I know I need to fix if I want to make it in this business.
So, why did you lose (or make) money today? (Don't tell me it's cause your system failed you, it's because you failed you)
The following 13 users say Thank You to TennisOrDie for this post:
This works for me.
We all are different and there is small possibility that it may work for somebody else too.
12 of January I made decision enough is enough I can't go forward like this.
Its time for change.
Is started meditating every day. Only 5 minutes a day.
Also I wrote trading mantra that repeat approx 5 time in day
And I feel the change and its shows also in my trading.
Also co-workers have mentioned that I more relaxed than earlier.
Positve mental attitude ( repeat 3 time )
Market is always right
When market is going higher I wil go with flow and buy higher low
When market is going lower I will go with flow and short lower high
I let the trade go and marker do the work. Stop or target.
Postion size 1 contract
One entry per direction
I stop trading after 3 cosequitive losses.
I trust the system
I follow the system
I am disciplined trader
I am successful trader
The following 3 users say Thank You to lemons for this post:
I would politely point out that from a system design standpoint the system probably did fail you, since your confidence level should have nothing to do with whether or not a trade condition exists in the system to get you into a trade.
Furthermore, a good system might even have a hard breaker to prevent you from going on tilt, e.g. a broker shutoff requirement at X% down for the day. No risk manager at a firm would allow you to blow up 100% of the profits on the book, they would literally turn off your computer and send you home. That's a system.
Secondly, from a market structure stand point, I would also suggest that following a good week, a trade system (especially a trending based one) will probably under perform the week after a good week, simply because everyone that was in the trend is now probably taking profits and re-assessing the market fundamentals, so you would expect that system to have an off or slower week, unless you manually over rode the trade criteria and for example started trading with excess size in a consolidating market.
Bottom line, I think the more you are able to remove psychology and focus on the data that gives you the green/red light for a trade, then the quicker you'll hit consistency.
The following 2 users say Thank You to MacroNinja for this post:
Maybe it's just because my system is somewhat discretionary, but I think psychology is everything. The choices I make are tied to my state of mind, and the only thing I can do about that is find a state of mind where I consistently make good choices. So I get what the OP is saying. For me, anyway, this has been a personal journey, as well as a career choice. I didn't just want to become a trader, I wanted become a better version of myself, because I wasn't doing things that made me happy, and the way I did them didn't make me happy, either.
Question about discretionary system can you
Please explain to me an example of a discretionary
Trade/decisions you made. Because I don't really
Understand discretionary trading the way it's described
From what I understand discretion can be quantified onto
A system that can be repeated over and over making
It mechanical. Ie if toe ppl were told to clean a room
Using discretion, the choices they make on what is clean
Would come from what they have learned as a kid.
But can be quantified and copied over and over.
So how does phycology effect the rules of your discretionary
Basically it's just my own set of rules based on momentum and support and resistance that I use to determine expectancy and enter and exit. I'm not always right, sometimes it's fakeouts from the market that I fall for, but it all boils down to me. And I would like to think that given all that, I still do better than a computer, which would be completely mechanical and use equations if it took things like momentum into account, rather than just working off of, say, pullbacks. I don't really think this is a "system discussion," though.
The simplest way I can put it, is reading the tape and going from my gut, and using charts to determine levels, and just trying to feel the price. The DOM helps fine tune. I use market psychology to try to decide what the market will do, because the DOM doesn't say everything, just what the market has to go through in moving the price. I don't know that I can be more specific than that. What I know is that I make mistakes when I am not in my zone, and let fear or anxiety or greed take over. But when I am clear and present, I can take an entire move, rather than a chunk of it.
I tried to trade mechanically, and I didn't really like it. The indicators clouded my vision without my realizing it, I would sit there waiting for targets to be filled without a clear sense of my expectancy because I was leaning on the system. It wasn't unsuccessful, but it was harder, and it shut me out of good moves more often than not.
Psychology can be used to your aid in trading, I don't think trying to cut it out completely is wise. This is about being one with yourself, more than anything else. You can't put accountability on the system, otherwise you, yourself, may never work out. I hope that makes sense. I see it as this very zen thing. A balance. And taking the human equation out creates an imbalance. It might work for a while, but I think in the long term, unless you create a system as brilliant as Ed Seykota's, for instance, mechanical trading limits what you can achieve. Especially if you are just trading it emptily.
"Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible." - Ed Seykota