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1. Build 300K reserve for trading (Otherwise, I will continue to erode my confidence and pocket book)
2. Get more screen time (I get about 2 hours per day minimum, so that puts me at 13 years on the 10K hours!)
3. Stop forcing the market (#3 & #4 are collaborative)
4. Start letting go!
It took me a long time to realize what I truly like about the markets: It's the psychological interpretations of market moves, learning and furthering risk management techniques and the tranquility you must have on losing day.
What I consider achievement today is whether I have listened to my rules and followed the plan.
No one should get into "depression" on a losing day. A losing day is a losing battle, but you can still win the war.
Only when you lose you learn and question your methodology and how you reacted.
Mike, I think the issues that you have described are associated when one focuses on money, not the plan or the challenge. When you make money your aim and stat counting "imaginary" dollars, you become impatient, you trade capital you should not, and you start to "cheat" and ignore your own rules to make your money back.
This is the one mistake we have all committed in one form or another and learned from.
This year I wish to further and examine some of the methodologies described here by some futures.io (formerly BMT) members.
Matt
Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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1. Exercise more patience in waiting for my prime setup. I have been a little anxious to get in early. This has cost me in terms of heat as well as over trading a bit.
2. Exercise more patience once I am in the right trade. The patience is to hold the trade to my targets. This has cost me big time these last few weeks. I've made dozens of excellent trades only to exit at BE or a very small target when my original target of 20, 30 or more ticks was hit had I just held the trade.
A third and somewhat less important item is sizing. When I am in the right trade, I want to be able to take advantage of it with more than one contract.....however, I feel this is the least important item as the first two need to be addressed first. I will look for places to add size but I suspect that will only once or twice a day.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
I spent a lot of evening/weekend time during the last 2 months, reading the futures.io (formerly BMT) forums on Price Action and Trade Psychology. I have to say, that the futures.io (formerly BMT) forums on these topics are among the very best I've found on the web. I've picked up a lot of helpful hints....some of which I have already put to use in my trading....and other which I intend to use in 2011 to make my trading better. Mike's journey to an 'indicator-less' chart was fascinating....and helpful.
I admit to having initial mental resistance to the idea that trade psychology mattered more than the trade setup, but I am slowly coming around to that same idea. I've seen 3 fellow traders (beginners like me) drop away in the last year, not because their trade setups were bad, but because they never managed to get their minds "in the game" on a regular basis.
Ride every wave like it`s the big wave, a target that is so big that it would only happen once in a year, only a manual stop trail.
When the market moves it will be in my favor.
Great post! For me the following are the biggest for this year
1) Stick to my system. Time and again, I overrule my signal that seems to cut down on the profits or end up in loss. I really need to work on this. The problem for me is that, while I am willing to take losses, I tend to close my winners early. Need to work more on this
2) Expand trading into Forex (or atleast try it during early 2011 in sim mode and see if it is profitable).
Mike touched on training needed and the 10K hours effort involed. Ironically, learning to trade is a stressful exercise and yet, it is not perceivable to anyone other than the seeker! Compare sitting in front of PC for hours vs taking Taekwondo lessons. So setting the house in order requires greater appreciation from near and dear.
