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How does one deal with greed?
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How does one deal with greed?

  #1 (permalink)
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How does one deal with greed?

Hi there

As the questions states, how do you deal with this?

I've been in situations where I'm up $200 or $400, but because of greed, it goes down to $20 or even a minus number

So, how do you get rid of this greed in trading, or is this part and parcel of trading? And no matter how many books/videos you watch, you'll ALWAYS face greed all the time and make the same mistake?

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  #2 (permalink)
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Quit

Reach your daily goal and quit.

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  #3 (permalink)
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But do you not get tempted to get a few more points? if you take the ES today, yes you could of made your target in the morning session, but at the end, you could of made HUGE bucks. So you wouldnt get tempted in make more money?

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  #4 (permalink)
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the other solution is always trade multi contracts.

close 1/2 after x points, bring stop to entry and then trail stop with the trade

This way you pocket some profit and dont need to deal as much with fear and greed

right or wrong that is my way

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  #5 (permalink)
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The hardest part of trading is the emotional factor. That is why it always looks so easy to make money in hindsight (what I call the hindsight 20/20 indicator), because the signals/triggers are easy, the hard part is controlling yourself and following your own rules.

Consistency is king. Create a new thread in the Journal section, describe your setup (signal/trigger -- dont have to give it away, just describe what it looks like on a chart), describe your rules, and then see if you can post once per day at the end of the day and see if you can follow your rules for one week.

If you can consistently make $100 a day for a week, then move the goal to $200 a day for two weeks, so on and so forth.

Measure yourself on your ability to follow your rules, and not on whether or not the day was profitable. Allow yourself to only adjust your rules once per week, like on the weekend. Then M-F you must follow those rules and you cannot change them. This will help keep changes gradual instead of you changing everything just because of one day or worse, one trade.

By measuring yourself on your execution of your own rules, you will then learn if those rules work or not and if the problem is you, or the rules. I can say without a doubt, most trader will find the rules are pretty good but they themselves suck at following the rules.

That is why new indicators and new settings aren't going to help. It's all about you, your mental focus, your ability to follow your rules, your ability to leave emotion at the door. In a trading book I read once (sorry, can't remember name) there was a paragraph about how this guy was watching his mentor trade. Day after day, he would watch him trade (ie: sit across the room from him). He could never tell if his mentor was up $10,000 or down $10,000. Why? Because the mentor controlled himself and didn't let it influence his decisions. He knew he had a solid trading plan and that he would come out ahead if he simply followed it.

Mike

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Last edited by Big Mike; September 23rd, 2009 at 07:19 PM. Reason: type-o
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  #6 (permalink)
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Very nicely written Mike.

Yes, going ahead with your system is very important, but dont traders get tempted in ... "ok, I know I shouldnt, but I'll do it, because ..." - Im sure there's 101 traders here that do this?

Or are you so diciplied you never think of trading for the rest of the day. If you do, maaan, lots of respect to you guys.

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  #7 (permalink)
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tellytub View Post
Yes, going ahead with your system is very important, but dont traders get tempted in ... "ok, I know I shouldnt, but I'll do it, because ..." - Im sure there's 101 traders here that do this?

Or are you so diciplied you never think of trading for the rest of the day. If you do, maaan, lots of respect to you guys.

I think the only traders tempted by this are the ones losing money. Because they want to "make it up" and come out ahead. You cannot do that. It will not work.

Successful traders make their trades and stop for the day and go enjoy life. They don't over trade. Sure they spend a great deal of time working on their setup and their rules, but they don't over trade.

How many times do you have a couple of bad trades, then you catch a "break" and have a winner that is flying. You move your profit target "because man this thing is really moving, I'm going to make up for those last two trades on this single trade because it looks so good". It would have hit your original target (based on your original rules) and you would now have recouped say 50% of your losses for the day. But, hell no, you break the rules, follow your emotions, and what ends up happening? You end up giving back all those profits and barely get out of that big trade with anything, or worse, with a loss.

I cannot possibly emphasize enough: find a way to control your emotions. Find a way to follow your rules. If you cannot do these, you will not succeed at trading.

You can have an indicator that shouts "buy" and "sell" at you and it is damn near perfect. But guess what, "hmm this one doesn't look real good, I'm going to pass". That one ends up being a winner. So two more signals come up "ok, I am not going to let these go, I need to follow my rules". Two losers. "Ok, wtf argh I can't win for losing, the world is out to get me".

No, the world is not out to get you. Goldman is not out to get you on the ES. That is what happens when you are inconsistent. That is what happens when you don't follow your rules.

You are in control of your own destiny. Trading is simple, but also one of the most difficult things you can ever do in your life. Do not confuse simple with easy.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #8 (permalink)
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really like what you wrote here:

"there was a paragraph about how this guy was watching his mentor trade. Day after day, he would watch him trade (ie: sit across the room from him). He could never tell if his mentor was up $10,000 or down $10,000. Why? Because the mentor controlled himself and didn't let it influence his decisions. He knew he had a solid trading plan and that he would come out ahead if simply followed it."

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  #9 (permalink)
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tellytub View Post
But do you not get tempted to get a few more points? if you take the ES today, yes you could of made your target in the morning session, but at the end, you could of made HUGE bucks. So you wouldnt get tempted in make more money?

Yes, I do get tempted but....... once I saw what consistency does it's really not that tempting.

Just run a tally of a reasonable daily goal......add contracts as account size justifies, do this every month, see how that looks at the end of one year. I'm not that tempted.

Another approach is....if you're up in the morning put a max loss in place so you still reach your goal.

Jeff

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  #10 (permalink)
Big game hunter
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Jeffs right



Jeff Castille View Post
Reach your daily goal and quit.

I agree . The Idea is to make profit , not take chances . Having a minimum profit and maximum loss target for yourself is critical . If I'm down 12 ES ticks ( gross ) I quit real money or better yet go do something else and come back to review after lunch or dinner . If I'm up 12 ES ticks minimum I quit real money and watch or trade in sim . I can get 5 winning days to every 2 losing days doing that . It is really , really hard to quit after being down those 12 ticks but the chance of me recovering from it are slim to none and I've blown up my account more than once trying .

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