The darkest hour is before dawn. PandaWarrior has put it correctly and I second PandaWarrior – all our struggles are inwardly bound, and rightly so. I think you are at the end of the path and well on your way to become a professional trader. The mindset is correct – risk is your primary concern, but that parameter of the dollar amount has an inner hold linked to other things that have happened in the past. Trading is a path to set us free. Fear is a learned emotion. We are naturally born fearless and free. A professional trader is aware of the markets, his place in the market and he risks till the point where he is either proved wrong by the market or reaches his planned target and unemotionally exits.
I have been following your struggles closely, at some points I humbly felt I could be of assistance and felt like writing something at that point. I only held back because I was grappling with my inner processes for elongated periods and have been in such varied states of mind during the self-discoveries (how my self-worth negative emotions ranged from self-hatred, world-hatred, society-hatred, capitalism-hatred, fear of money, fear of the power of money, fear of what money might do to my value system). It has been akin to living under a Banyan Tree like The Buddha and seeking Nirvana or the ultimate truths. In short I have been busy dissecting myself and not liking it, but it has all been very useful and has been a very profitable endeavor – in short many many emotions have been flushed and trading is possible from a higher state (though a lot of my conflicts are still existent – the depression (I was on pills too many many years ago, I pulled myself out of them and have kept myself alive and happy without a shrink), the solitude, the friendlessness, the need to be perfect that causes so much sorrow) that I will not yet describe in this post.
However, I have been reading the excellent book ‘Forex Price Action Scalping’ by Bob Volman and the position sizing method he has set forward to allow compounding without having to worry of a SUDDEN increase in position size is worthy of a mention.
If I have a $5000 capital to start with and given a leverage of 1:40, I can make or lose $10 per standard lot of EURUSD forex pair (for example) on one pip movement. If I risk 1% per trade, then the amount of lots I can buy (fractional lots are allowed in Forex, not so in the CL etc) is
5000 x 1 x 10/100 = 50,000 units
If 10 pips are made at the end of one day (i.e. $100) then this means that the capital is now $5100
Thus the new position size becomes
5100 x 1 x 10/100 = 51,000 units
If he loses 10 pips then the position size is decreased on the next day as
4900 x 1 x 10/100 = 49,000 units
This allows us to gradually increase (or decrease if needed) the position size and there is no need for a quantum leap from 1 lot to 2 lots. But this is in Forex. Maybe in futures a single lot plus some shares nearing the fractional part could be purchased (assuming the stocks mirror the price action on the future – I don’t know if any stock mirrors the CL out there).
But it would be worth exploring – note that this strategy would not be a compromise by any means. If you apply compounding, you would soon be trading many many lots using this method with the same mental pain threshold – in fact the increase would be so gradual that you may not realize that you are jumping from threshold to threshold but it would happen automatically.
The following 3 users say Thank You to iqgod for this post:
You've been through one difficult journey. However, after failing at my own first business and feeling like there was nothing left for me that I simply didn't have anymore to give, I realize that that pain, that anguish could push me to greatness. Without that pain I simply wouldn't have had the motivation, I simply would not have had the heart, I would not have done everything in my power to be successful. I haven't yet arrived at success. But everyday I persist because pain is temporary. It may last an hour, a month, or a year, or even a decade. But if I persist, if I put out my best every day, then eventually that pain will subside. If I quit, however; that pain will last forever.
I realize my posts may sound like whining, and maybe it is. Maybe I need a break for a week or two. I am flying up to Boston for a new deal on Monday, then back to Orlando probably Wednesday. Three cities in progress, all on expedited schedule is a lot to maintain while trading anyway, and the time off should give me some better perspective.
I am just ready to turn all of this hard work into something that makes it worthwhile. 1 contract trading is not what I got into this for. What seems to be in my way at this point, is me, and I see that it is, I tell myself what to do to change it, but then it does not happen, which shows I am very weak right now. Something deeper is in control. I am going to try some meditation and visualization, seeing myself trade the way I believe I should.
No equity damage, just personal issues, so this is not over yet.
I'm leaning towards A. It sounds like the most fun.
I may or may not trade like a man right now, but it's my account, and if I want to trade it wearing panties I will. But some day, I hope to grow out of them.
Having been on both sides, I would actually choose to be too scared than not scared enough, but need to get it dialed in a little better.
I appreciate the emotional support. I am on my own for the issues that have stiffled my confidence. Blowing it out here in poor english may allow me to condense to bullet points. I plan to re-read, try to single out some things and write out off-topic exercises that might help me gain back some trust in myself a little more. I used to do meditation, 20 years ago, with the intent being to just quiet the mind.
I am also thinking of typing what I believe are my strengths and weaknesses, or maybe hand writing them out, and posting on my monitors, reading daily before I start.
I realize 1 to 3 to 6 is a shift, but I am not necessarily trading at high leverage. Just feeling things out. My plan, which may seem odd, is that if I push a little harder, like with 6, then 2 will feel "right", and it is working that way. 2-4 feels a lot slower now than before. Kind of similar to weight training.
The herbal cleanse is on the backburner this weekend. It was really causing some freaky dreams and no sleep. I could start a whole new thread with some of the dreams I had. Maybe again next week.
I also had a killer workweek, 5x the typical "issues" to resolve, a surprise last minute project to coordinate in about 24 hours, my wife had some health concerns and I was stuck out of town... I used to say I would "get there or die trying". I am pushing my luck lately.
I plan to flush my kidneys with Sierra Nevada and my mind with something slightly different over what I have of a weekend. Still working as of 7:30pm. May go back out of town again Sunday, but hoping for Monday.
May not trade next week, or actually considering simming 6/9/12 contracts for a week to get a different perspective of wins and losses with no emotion. It has been a long time since I sim traded, at least 6 months. What I see occuring is if I am down $1000, I think differently about getting it back, and when I am up $1000, I think differently about holding out for more. Maybe holding sim trades and watching the results is the way to condition my mind.
I really am looking forward to us getting together. Besides the fun and conversation I am anticipating, I may also gain a witness as to whether I am as crazy as I sound sometimes. That could go either way of course...
The following user says Thank You to GaryD for this post:
Reading what I have written the past few days, I am not surprised I am having confidence issues. I don't know how I could not have some, and expecting myself to just snap out of is a little too much. But looking at it from a distance is interesting. Still embarassing, but it is over.