Stress free trading
|April 25th, 2010, 12:42 AM||#1 (permalink)|
Futures Experience: Intermediate
Favorite Futures: fx
Posts: 20 since Mar 2010
Thanks: 13 given, 11 received
Stress free trading
This is a great site and I wanted to contribute so I am going to tell everyone here what I wish someone would have told me. Or maybe they did and I just couldn't hear them. In any case for anyone still struggling this cliches can change your life substantially.
1. Manage Risk First.
For my personal psychology I have found that trading risk is critical. I would much rather not have to worry about being right as much. When you trade 1:2 RR trades or better, you don't fear the losers anywhere near as much.
2. Plan the trade, trade the plan.
I also have found that trading a plan is critical. If you do not know what it is you are doing until you are pulling that trigger it is much more difficult to think on your feet.
Because of the above factors I am more of a daily/4hr chart type of guy.
Many people argue against that kind of trading and say but you can make so much more day-trading, at which point I have to ask how much they are actually making.
3. Accept Your Risk
The most important thing in this for me is understanding that their is no guarantees. This is more than fine print from your broker, this is a fact of life. Most, if not all of us of us who seriously try to become traders are very determined people and we tend to be the types that subscribe to a self determination philosophy. Which has it's place but we must realize that the only thing we really have control over is our actions and the way we respond to life. Their is no guarantee the failure of 2003 is not the grail of 2009. In this game we trade risk. We determine probabilities, we do all that we can to get to the point that we can trust in those numbers and then we just have to trade the plan.
Once we commit to a trade or a plan we must stay committed. Ride the trade until it fails and ride the plan until it fails and never risk more on either of them than you are prepared to loose.
It is that simple.
4. See the big picture
We humans have a natural recency bias which can serve us to some extent but we need to be able to keep the big picture in mind. Play with some Monte Carlo data sets and understand the type of loosing streaks that are possible. Define your risk and accept it.
I know many people are into this because they like the rush and their seems to be a consensus that emotional attachment to the game is necessary. I personally disagree and think it is a great way to burn out.
Maybe it is different for some of you because you are so gifted, but for those of you who are on the roller coaster of agony and ecstasy implementing these ideas is a great way to change your trip up.
I hope this helps.