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The following 3 users say Thank You to Big Mike for this post:
Another break even week. Frustrating to say the least...better than losing I suppose but still.....
I haven't posted in a couple of days for a few reasons....1. My dad is back in the hospital with some serious kidney stones. One of them is 8 millimeters and the other 14 millimeters....essentially marble sized stones.....surgery today, recovery next couple of days. 2. I've been doing some minor "coaching" for a couple other traders. Maybe coaching is the wrong word...discussing trading, some life issues, etc....I enjoy it, I've been through the coaching process before, it was good for me and I've often thought about doing something like this on a more formal basis for money....haven't really crossed that bridge yet but I do enjoy it immensely.
This weekend, I had the opportunity to attend a "motivational" seminar by Tony Robbin's former national sales trainer. The event was small so the presentation was pretty intimate. Basically it was a "how to find your passion, what you need to do to change your life" type presentation. We've all been to these and essentially I had planned on not going, but a friend of mine said I should go and my wife thought I should go as well so I went. I got in for free due to a relationship I have with one of the presenters so thats always good.
The presenter had us do a mission statement, write down limiting beliefs, etc....all standard motivational seminar type stuff. Good but not earth shattering. However, as I was writing this stuff down, I realized the one thing that could change my life for the better with regards to trading was this.....more patience. I've gotten better at not over trading....however, looking back over the last few weeks, I've come to realize something, I'm trading to much. Not picking my locations as well as I might. And once in the trade, I've become more and more impatient for some reason to have the trade run its course.
So in the section where the speaker asked us to write down the actions we needed to take immediately to change our live's, I wrote this: "My action I must take immediately is this; focus on taking LESS action."In trading, more action does not equal more and better results. In fact, the opposite is often true. More action often leads to fewer and worse results. So my action list reads; Take no action until action is demanded by the chart. Once action is taken, take no further action until it is once again demanded by the chart. The reason for this? I realized I am an instant gratification person. I want results right now. I get bogged down in the noise of the day and don't often see the bigger picture until its too late.
This hits home for me because over the last few weeks, I've often seen my ideas in terms of trade targets play out only to have either lost money or made a fraction of what was available within the context of that trade idea.
I did some market replay last weekend. First time in a long time I've done this: I essentially wanted to see if I went with my initial trade idea and just let it play out, trailing stops behind obvious swings, how would it have looked? The result was really mind blowing. Substantially more than I've made in a week before. So I tried it this last week and emotionally was unable to even really get started on it. In fact, the plan I came up with over the weekend was forgotten by the first trade on Monday. I revisited it on Monday afternoon promising to try again on Tuesday....once again, failure almost immediately. And so it went through the week.
My impatience is the reason I think for this failure. I'm not willing it seems as Jim Rogers says to, " Wait until I see money lying in the corner and just go pick it up".
Next week, my trading plan will basically revolve around two things, wait to trade and wait to get paid....as @Gary says in his signature line. No more than 3 or 4 trades per day, pick targets based on structure and projections and let the trades play out.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
The following 22 users say Thank You to PandaWarrior for this post:
I think our impatience as day traders comes from the disconnect between testing ideas and then applying the resulting trade plan in real time. When testing (whether via computer-based backtesting, scrolling through a static chart, or running a market replay), we get fast results. When I do a statistical analysis of a trade idea, I can scroll through a static chart for a full day's session and collect the data well under an hour. When I tested market replay with Ninja, I think I was trading at 4x speed.
Then suddenly we're sitting at the hard right edge and it's totally different. It might take 5 minutes for a juicy setup to appear, it might take 45 minutes, it might only happen once or twice all day.
During testing we can know in seconds whether or not a trade reached target or stopped out. In real time price might inch its way to target, bouncing between "green" and "red" for what seems like an eternity before finally breaking solidly our way. This leads to impatience and over trading.
I recall so many times where I impatiently closed a trade break even, only to re-enter at a worse price, close again b/e, re-enter, and so on until I had 4 or 5 one-tick profits as price slowly traveled from my entry to my intended target.
Studying Bob Volman, Lance Beggs, or Al Brooks (with the help of an interpreter, lol), gives insight into the concepts of "double pressure", and "trapped traders". These are those price patterns where if price then does A, move B is likely to be fast and powerful. Learning to ignore the mediocre stuff and patiently wait for these setups is difficult but immensely rewarding.
Another thing helpful to me was to literally program myself to fear that feeling of "fear of missing out" (FOMO). That feeling for me is like a poisonous snake; I instinctively pull my hand away from the mouse when I experience it. Trades I've put on in reaction to fear of missing out on a move, whether it's based on chasing into a terrible entry price because I hesitated to enter properly, or jumping the gun and getting in before a valid signal appears, have very negative expectancy for me. As a very experienced trader once told me, "No worries, another boat will come along."
The following 13 users say Thank You to rubyslippage for this post:
I know you do enjoy and will enjoy the coaching thing, possibly even formally, but don't forget to put a fair value on your time as well. That is something which, at times, was not easy for me.
How do you put a value on something you can never have enough of, something which can not be bought or gained thru hard work, and something which you can never really know how much you have left? --- Now, can you have more 'free' time? Sure, but in it's purest form, time is limited, and deserves our thoughts and respect. You can only make a choice every day to take advantage of it, while you have it, be thankful for every minute of it, and hopefully live and learn without regrets as it passes by. Time has a tremendous value to me, and must be treated as such.
I went thru the same thing you did with over trading, and while changing my beliefs on the value of my time, was able to commit to trade only a few hours in the morning. What happened? I ended up with less time in front of my charts, and making the same number of ticks. It required some adjustments, but nothing you can't do with some 'adjustments' to your thinking.
It looks like you have come to another major point in your trading career, the understanding and realization that you CAN wait for your A+ setups, as often or as little as they may come, and take advantage of them when they do. This confidence along with your experience will allow you to spend as little or as much time as you want, and, if I know you, will end in better than expected results.
You mention 2 things which are holding you back from being that 'super trader' you are already picturing in your head:
1) Impatience, which can result in over trading, or really, taking less than your top 1-3 or "slam dunk" setups.
2) Another form of impatience, which is not letting your original idea play out.
You have the experience to know what results will most likely look like if you wait for those top setups, and ultimately, let them play out with the idea that you have in your head at the time you take the trade. Maybe you focus on the first part this week, just waiting for those really nice setups, and getting in, without hesitation, taking note when you are in the zone, and really feeling the difference, the confidence knowing that you are only taking the best setups. Feels great!
Reverse engineer that 'perfect trader' in your head. How many hours a day does he trade? How often do his best setups come? How does he stay in the zone, and remain focused intra-trade to ensure he lets price tell him when to best exit? How does he no longer feel pressured to enter a trade or exit a trade prematurely? And, maybe more importantly, why is he trading? What does he do with all of his extra time now that he is not trading as much? What new projects, goals, and life experiences are now waiting for him, now that he has a little more time and his eyes are opened to these new opportunities? What new memories will he make with his family/friends because he has reduced or eliminated so much pressure, and has all of this 'new' free time? What does all of this feel like?
BTW, I am glad you noticed! - As consistently profitable traders.. "We get paid to wait, and we wait to get paid."
I look forward to seeing your results and progress in the near future.
Have a great week,
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