I agree that that is one of the factors that differentiates the successful traders from the failed ones. If trader has those issues, in my opinion, his method is not complete. There are number of well presented plans and topics in this forum that discuss trading plans and issues of over trading.
I guess maybe some people ignore that fact that there must be 2 plans. One at planning you working day, and second one is how to manage each individual trade. The last is mechanical and happens as preparation for each individual trade, the first one has to occur before you start trading every day. Eventually both of those things do become mechanical.
Trading is emotionally charged, and i am personally adrenaline junky, and to be honest there is nothing in this world that will get my adrenaline going as markets can. But severity of not planning and not controlling greed it is very high. Just to describe i will put personal story in here:
Two years ago i had a winning strike and made close to 3000 pips in a week trading only EUR/USD and GBP/USD spot. Anyone trading spot markets knows that that number is extreme. After that week i was so hype would not believe it. Beautiful house came on the market across the road and auction was week later. So i got this fixation in my head that i want to buy that house for cash to surprise my wife. I did surprise her alright, but not in positive way.
I ignored all of the rules, first one was i calculated that i need 600 pips per day as per previous week, no logic what so ever, but i've done this week so should not be a problem, and if i increase the leverage on my account i'd be able to risk $$$ per pip so at the end of the week house will be mine.
Well market turned around and gone into corrective cycle, no big moves, choppy, etc.... got hit ones, twice, started chasing, ignored the exhaustion, i was trading that week for 18 hours a day..... The end result was that i have managed to loose all of the profits from previous week and quite a bit more.... It felt as i was under a spell o something, fx-anonymous......
Lesson learnt never again i did the same thing....
Out of all this, learn to have boundaries around the length of trading (number of hours on front of the screen), maximum points per day when your optimizam and feeling of untouchable kicks in you get out, loosing boundary, as you will start revenge trading and loose more.....
Keep in mind, i'd rather not do even single trade and make no pips on any given day then loose 100 or more pips. Sit back and honestly ask your self and analyze your behavior to establish those daily boundaries. Put them in place and adhere to those. Unfortunatelly, rules are simple, there is no quantum physics involved here, it is all in your head to learn your weaknesses, note down the boundaries and adhere to those. If you do not do that, market will punish you by taking your hard earned dollars, simple as that. If you get butterflies in the stomach when you neter the trade, stop, you are to anxious and you will not be able to manage the trade. If you are frustrated, get out go for a walk, punch a bag, do something but get away from a chart, as each candle will push your emotions to the next level, till you dont eventually break and make mistake = loose money. I mentioned it before, after the fact everyone is a wizard, do not pay attention to what you could have made, ignore that and be happy with what you got.... Everyday that i do not loose money in the markets is a winner, remember that.....
And then with time you WILL become success and all this will make sense and you will laugh and say how simple it was.... Understand that markets are faster than anything else in our life, you must make decisions very quickly (especially if you day trade) If you trade without the plan for most of the situations, you will trade on emotional basis and you will be inconsistent and you will loose money. Planning for known situations ahead and having decisions made before the hand, enables you to react correctly when situation eventuates, practising this will enable you to control:
and impatience of not being in a trade
Please, plan and then execute your day, and plan and then execute each trade, only way to consistence and profitability....
Markets are logical and
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The theory of ,,, Setting daily goal never made much logical sense to me, or is this one of those number theory deals. Seems to me u either got a winning methodology or u dont.. Yes every day isn't going to be a winner but if I only go for $xxxx,, am I not fooling myself since we all know the market can take it back 5x faster then u can win and mr market does not care about my daily goal.. For every guru who only trades a few hours a day,, there is one that is in there all the time....
a daily goal but that alone is seldom the reason to cut off trading activity. I agree with the idea that you have a winning method or you don't...that you can trade or you can't. I usually have other things that I'd like to move on to, things that trading well allows me to do. I do think that new traders or that guys struggling with consistency could benefit from hitting a daily number and then reviewing each trade and set-up. I think that helps with confidence. I also think that many of the daily goals are anemic... based on a products trading range and the leverage that is typically applied.
I wonder, what is the metric that guys who have daily goals use to determine those goals?
In suggesting to someone to have a daily goal, my thought would be to create a daily routine that builds confidence based on initially small but consistent success. When guys bank ten days in a row they will figure to expand their idea of success and hopefully keep the consistency due to increased confidence. Is that a bad approach, or built on faulty premiss? DB
In a perfect world discretionary traders could execute their edge consistently without any fear or greed. The reality is that for most of us these are major factors in our overall edge. Few people argue against having a daily stop but having an upside stop is also useful for the same reason. The greater the variance the greater the chance that our inner ape comes out to play.
There probably isn't any one size fits all metric. A good indicator for a daily stop is an amount big enough that you feel you've traded well and small enough not to trigger your yacht fantasies
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Setting daily goals is a personal thing. For me it was necessary but I knew other hugely successful traders who did not set daily goals. If you're trading totally algorithmically with no discretion probably a daily goal is not necessary.
The daily goal I set for myself in the pit was to try to earn an amount that could easily be obtained without taking high risk trades. If I accomplished that goal by 7:45 am, great! If it took until 2:00 pm, so be it. Having an easily attained daily goal allowed me to focus on only taking low risk set ups. I went from being an inconsistent and marginally profitable trader to going 6 1/2 years without a losing month, while gradually increasing my size from 5 lots to 500 lots (five year US treasury note futures).
"You don't need a weatherman to know which way the wind blows..."
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