Well, it's a daily loss limit... The MAX cumulative loss limit is $4,500, so I would have had $2,100 of risk capital left because I was up $600 before today started. But... mentally, I felt about like you said it. It wasn't the truth though. I wasn't THAT close to done for good yet.
Yeah, I started the day out with two trades with 3 lots, then went to 6, then to 12. Not a good idea to force it when you're missing.
Thanks, I like the target shooting analogy.
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I think you are too smart to really have thought that last trade was a good risk. The "stop for the day" option was a guaranteed loss of less than $3000 (and being able to fight another day), while the reward for a winning trade was maybe a $2,000 losing day, and the risk for a losing trade was getting knocked out of the Combine. Again, you are way too smart to think that trading that last trade was a wise decision.
At the risk of being blunt, I'll throw out some possible reasons, all of which I have dealt with or experienced at some point. Maybe you have considered these, maybe not...
1) Lack of confidence. You don't have complete confidence in your trading strategy, meaning that deep down you do not think you can pass the Combine with your current strategy. Admitting this would mean a lot of work, of course, because you'd have to develop another technique/strategy. It is easier to fail for an unrelated reason (exceeding DLL, for example).
2) Fear of Success. After your last blowout you mentioned that you did not think you ever truly succeeded at anything in your life. So, in your mind, that is who you are - it is how you define yourself. Passing the Combine - a HUGE accomplishment - will force you to change that view of yourself. Maybe, deep down, you are not ready for what that entails. Maybe you are happy with the way things are right now.
3) Sympathy from others. You have the most popular thread on futures.io (formerly BMT) right now, and many people can't wait to see what you post, and are ready to offer lots of condolences and sympathy to you. That's got to feel good, having lots of people trying to cheer you up. Maybe that outweighs the pain of failing the Combine.
I hope this helps. I think once you figure it out, you'll pass the next with flying colors. The raw trading ability is there.
If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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I have followed your threads for quite some time, as far back as your TF trading.. and first of all I say thanks for all of your openness and sharing. I have picked up some valuable items.
I do not want to sound critical, but I noticed back in your TF days you would increase size when you were down ; many times by multiples of 2 or 4. You did this today as well. Why do you do this? Does your trading plan allow for this? This may be indicative of revenge trading and failure to accept losses for a trade, a series of trades , or the day. When I add size like this, it is truly a reaction to my failure to accept a loss.
I have been very fortunate to have had one of the best mentors available in trading and she has told me time and time again that if I cannot be profitable trading a single contract, I have no business trading multiples. The self mastery and precision needed in a trading plan that trades a single contract will be the foundation needed to be a successful trader. Sometimes the mess of masking my weaknesses with varying contract size and scaling in and out makes it hard to really define the deficiencies in my trading plan and my skill set.
I offer this only as advice that has helped me. Best of luck!
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Third one sounds like one of the most important things you've said so far. Why? Simple, because you are gambling and not trading. Trading is about calculated risk with an edge and quitting when the edge is not present.
You did none of this today. And then in a later post, you mentioned adding size while you were losing. Basically doubling down.
All classic gambling issues.
Merritt, you have the makings of a great trader......but this issue must be dealt with. Plain and simple.
I would suggest seeking out one of the excellent trading shrinks available. Not cheap but worth it if they can help you deal with it.
Sorry to be so harsh, but I just had a heart attack and don't feel like spinning stuff to make it sound better....do it now before its really to late.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
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You mentioned almost jokingly/sarcastically about seeing a psychologist. I think it is clear to you and everyone following your thread that you know how to trade. You've been doing it for a long time and clearly have a good read on the market. Your downfall is psychological. Sure there are other issues, but they all come back to your mindset.
Some of the best traders in the world use trading psychologists. Funds and prop firms have them. Dr Brett Steenbarger, arguably one of the best trading psychologists in the world was snapped up to consult exclusively for a fund. I am sure there are countless others. Psychology in trading is huge. You know you can trade. Perhaps turn your focus elsewhere.
Taking that last trade was bad risk management and clearly didn't follow any sort of trading plan. That much is clear. But behind all of that, is a psychological reason.
A few observations / questions:
- You increase size after losing trades (gambling). Does your trading plan allow for this? What does your trading plan say about position sizing?
- Do you have your setups documented? It seems as though sometimes your setups are more based on feel. (I may of course be completely wrong)
- You are an active trader, no problem. But it appears as if you border on over trading. Perhaps limit yourself to X number of trades a day. If you know that you can only take X trades a day, you will wait for the best opportunities.
Thanks for the thread. We're all learning along with you.
You donít trade the markets; you only trade your beliefs about the markets.
- Van K Tharp
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For my next combine (will start soon) there will be no discussion of entries or exits. I will not even post a chart showing entries or exits. If it's a big success, and someone wants to know how I traded to succeed, I will be more than happy to post charts and talk about entries/exits after the combine is done.
As a side note. You can bet your ass I will succeed.
I will post my rules here before I start the next combine.
Each day I will give an update, a gauge of performance, based solely on those rules and how I followed them.
Taking myself off the mound when I'm getting homers jacked off my pitches left and right is something I have to learn to do much better. Gotta go ice the shoulder and prep for next game. My mentality HAS BEEN, "Oh yeah? Is that all you got? Let's play for double, no triple, the stakes."
A rules/guideline system post to follow when I get it laid out.
Last edited by indextrader7; April 18th, 2013 at 04:05 PM.
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