Do you think there is a similarity between sim trading and not having enough skin in the game?
Just a novice 3 year trader here looking for some insight on this topic. While reviewing my trades I have noticed that one of my issues is multiple re-entries on my key setups. I am trying to work on not re-entering after I am stopped out to get rid of the old "death by a thousand cuts" technique.
With that being said, I can't help but wonder if trading 1 lot micros (MES/MNQ) is mentally allowing me to take too many risks - similar to sim trading? Would possibly stepping up to 2 lots improve my patience and tendency to over-trade? Or would this be a recipe for disaster?
Any and all opinions welcome, and thanks in advance.
Can you help answer these questions from other members on futures io?
It probably will depend on how real the skin you have in the game seems to you.
So if the risk level is too low for you to care, then probably yes. It would be kind of like sim.
If the risk is real to you, then probably no.
For instance, for some people, pure "risk-free" sim can make them sweaty and trembling. So there is a risk psychologically for them. (Not an actual risk of course, but the point is whether the trade you make is serious enough to you that it gets your attention.)
Many traders will probably find that MES etc. are pretty real to them, and engage their attention very well. On the other hand, if you had enough money, trading multiple lots of ES might seem small enough that you wouldn't be concerned whether you lost or not.
In addition, I don't know that "skin in the game" is always the most important thing. If you have determined that you reenter too often after being stopped out, then maybe that's what you need to work on, more that your risk size. It might be something else, like fear of missing out (a popular favorite), or plain old impulsiveness (another one) or not having a set of rules that you take seriously (yet another), or quite a few other things. (Yes, I know them pretty well, too. Some are old friends.)
I would look at the particular things that come into play when you have an unprofitable trade that you think you could have done better, and be guided by what you find. Maybe increasing your "skin" will help, but if you haven't addressed other aspects of the trade, you may just end up increasing your losses.
Everything is individual, and I'm not saying I can know what is best for you, or anyone else. But these are my thoughts, off the top of my head.
If you dig further, you probably will find an answer you can use to go forward. Then dig for the next one, and the next one, etc.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
The following 5 users say Thank You to bobwest for this post:
Thank you for the very insightful reply. While multiple lots on the ES is way out of my comfort zone, I was thinking maybe bridging the gap between 1 MES and 1 ES would be a nice middle ground to garner emotion, yet aid in having some reluctancy to jump back in.
This is the biggest takeaway from your reply and what I need to reinforce. My initial thought was a mindset of "a high tide rises all ships", as increasing risk could lead to an increase in capital preservation - but that can't happen if I have ships that are still under construction.
The following 2 users say Thank You to kframewayne for this post:
Focus on your set-ups. If you keep getting stopped out the problem may be with your strategy, not wth the position size.
If you cannot make money with Sim, you probably won't make money just because you have skin in the game.
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
The following 3 users say Thank You to deaddog for this post:
I was having this same thought since the beginning of Feb but then I realized the market has changed a bit and those entry setups I used to take need an extra point to point and a half. Scaling in killed me. I trade pullacks to days levels. Now I'll look doe a but 1.25 points away from the day level. I miss it, I miss it..whatever. Better than being stopped out and then watch it go my way
The following user says Thank You to cv123 for this post:
It reminds me of Poker. I never liked playing Poker with nothing at stake, it never felt real to me and I would just go all in or make risky bets. But when money is involved now I am a different player. I feel the same way in Trading. When the micro futures contracts came out it was a blessing for me, because now I could risk a little and even if I lose I wasn't losing as much as when I traded non Micro's. Actually micro contracts helped me a lot psychologically, and I started seeing some level of success. Without micro there was too much at stake and I couldn't concentrate of the trade because of massive fears of losing a lot of money. With micro, I am more in control and at ease because I know I won't lose my house or car if I lose. Just knowing this alone has improved my trading. I do use some paid indicators that I do find useful as well, but for me the psychological factor is at least 50% of the battle.
Some are old friends.)