I remember that day almost exactly eight years ago when I first logged into a trading platform and experienced the thrill of making 'easy money'. A whole new world had opened...
... fast forward to now and I have overcome many bad habits - going from a reckless gunslinger, compulsive gambler who would bet the house on stocks, who would shimmer with excitement when trading and brood in dark despair during weekends when the markets were closed (more so because I'd usually lost a lot of money) to a disciplined, knowledgeable, curious, calm, composed and self-introspective state which can finally be called 'trader'.
How did I achieve this?
1. I set definite goals. My goal earlier was: Making money, quick quick, big big! Now the goal is: focus on the process of pragmatically doing things correctly, instrospect and assume responsibility.
2. I fortified my commitment: Earlier bad things would 'happen' to me. In reality I was compulsive, irresponsible, trading all over the place, and was too lazy to do hard work. Losing money gave me lot of commitment and motivation to study my mistakes, in an honest and open way - but such motivation dos not last long and another hole could be dug very easily and mindlessly. Journaling here meant I was corrected very quickly, and could no longer pull wool over my eyes. In short, by being accountable, I have my priorities right.
3. I took action and stayed in the now. Earlier I sought trading as a means to make money. My relationship with money was not healthy. A losing trade was a threat and winning trades were all lifestyle changers. Both made me miserable in a way. Now I make decisions differently - there are no urges and temptations and guilt and regret in my decisions. I execute in the now, using the information to the left of the chart and putting faith in my abilities. I also realize that giving is more important than taking.
4. I monitored and tracked my thinking. Earlier patterns are embedded in me and still plague me such as I feel I know how to avoid losing, how to win with surety, the illusion that I will succeed even if I make random shots, or that God will protect me. I still struggle in this area. Because these patterns sometimes seemed to work they still exert their influence over me. However I now identify them and track them and am able to classify them. Sometimes I can act on them in real time. Sometime not so much.
5. Healthy Perspectives. Earlier it used to be just me me me. When a habit gets out of control, the person who acts in not usually the only one who suffers. Now that I know the power of love and the value of relationships, I have become somewhat immune to compulsion and do not have fits of anger, mood swings, euphoria of large winnings or belief in magic. I analyze my trading, discard what isn't working, summarize what is working and keep strengthening it.
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I do remember this feeling. I used to be a gambler, I havent done it more than 3-4 years from now, but I do remember in the begining I loved this kind of trading. The worst side was that, after 2-3 trial of loosing, to spotting the perfect trade, the market turned, and I didnt had the guts to hit the button, because the position was worster than I had before. And than ofc the market is shooting like a star, and I am not in, but I have 2 looser already.
I made the following things to change this:
- I am using a bigger StopLoss. Not because to in the trade earlier, but to having a safty feeling, if I hitting the button a bit late. Today trade is a great example, I am using 10tick SL, so it looks great, even if a missed a bit the turn
- Ofc I love to trade in before, but the question is why do we take this trade? The answer is usually because we are at the right level right? So my observation is here, I am only considering to hitting without comfirmation (any kind of reversal pattern) is the following:
- We are at a perfect level (not a good level, a perfect level!)
- The picture has to look awsome. Meanig, if the next candel is a reversal, than, it will be a perfect picture, what I would trade anyway. Mentally I am preparing, myself for a loss, and I repeat myself, if it is not working, than I will not hesitate to make a trade later, with a worser position, but I stop cherrypicking
- And last but not for least, I love to see the trade at the perfect time. Yes time. If it is at the perfect time, for example after market open at 9:45, than I love to trade a reversal trade
With these observetation, I do not overcommit myself, to not to take the trade with my feeling, but I have other kind of comfirmation factors, which is not price action. If you intrested in, I can find some example, but the meaning behind, I would not be angry on myself, to take some trade based on feelings
One very important thing is to allow yourself to ignore your weakness and not focus on them.
What I mean is as traders we must never put ourselves into a position of weakness - never allow things that pull your trigger to happen - simple way to put it is that never trade large size, never more stops, never have huge drawdown.
Dr.Steenbarger talks about this here:
By the time a person has tried to achieve something he has been through so many upheavals, failures, stress and priority changes that the lack of drive becomes the all-consuming factor that causes defeat.
Having gone through all of this, I do not aim for hail-Mary rides that erase my losses and make me 'whole' again (remember: I am still NET negative, considering the money I poured down the drain in the first few years).
So no distant goals for me: my focus is on achieving small wins with some level of consistency.
It is energizing and sustains me. One day I will be setting bigger goals; that day will be when I truly get into positive territory.
Here is what Dr. Steenbarger has to say on his esteemed blog:
I have already identified my problems in an earlier post, in the next post I will share my trading screen snapshots to celebrate my successes and analyze my failures and look upon them as a tool to improve.
If you like this journal please click the link below and hit the thanks button on that post:
It was a Saturday morning. The trader was breathing in the scents of a fading summer before starting his weekly review.
A stream of thoughts appeared out of nowhere. He had put in thousands of hours into this, perhaps more than 10,000 hours if he could've had them counted correctly. But real money still eluded him. All he had to show was that his capital had now stopped eroding (There was that painful day when he had been forced to sit down write out his trading plan...), and here and there he made small profits barely enough to cough out the rent. That's why he still held on to his day job. He knew he had potential, but... the results were plain - he was not living out his potential.
A gentle tug at his swivel chair jolted him out of his reverie. He peered down to find his two daughters teamed-up with serious looks on their faces, well serious enough for their 9 and 5 years!
They burst out in unison: "Sara wants to know why we are not rich!". That was the younger one naming the elder one as the culprit of this little scene.
He considered, but questioned: "Why do you feel we aren't rich?"
They both ad the answer ready,the one which caused them to have visited him in the first place. "Because once you had said that when we would be rich you and mom would not have to work ever again. You would stay at home, play with us and take us to Disneyland, beaches, and many other places. But all you both do is work work and work away day and night. So we know we aren't rich yet."
He knew he was cornered - a child can do this with a straight line what years of self-delusion can hide. He thought hard in stunned silence, thought after thought after thought hitting him, painful realizations parading before him.
His answer came out slowly: "Well, there have been times when we could've been together vacationing, and there have been times when I felt I could finally be at home, but we are still not rich because I sometimes make these mistakes...." his voice trailed off.
The little voices persisted: "What mistakes did you make, father?"
He already had them flashing before his eyes so answered easily: "Well sometimes I bought things that were going down, and did not sell them before they went down further. Sometimes I bought more of those things when they were even further down... I made these mistakes many times."
They looked at each other, wide-eyed now. "But you always say went you help us with the homework: never repeat the same mistake again! Find a new one! So why did you do that?"
What can an adult do against the flawless logic of two kids?
.... PART 2 FOLLOWS (recounted from the future, dated 18th October, 2015) ...
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He stood by the patio of his South Mumbai bungalow located at on of the most expensive residential streets in the world, gazing contentedly at the grey Arabian Sea sipping tea and looking forward to finalizing the Phantom at Rolls-Royce Worli.
He recollected - it was the same day on the calendar last year when he had that conversation with his daughters that had set the course for all of his trading from that moment onwards.
He knew that finally he did not have any excuses to not do things that he should be doing.
He decided that he would take every valid trade that his system was confirming without hesitation and would hold the position till the target was reached or until the conditions indicated that the trend had changed.
He decided that he would be courageous enough to achieve his dream.
Every single day he visualized the enormous benefits of being a successful trader. He envisioned the bungalow, the Rolls Royce and the sea view. He visualized the free time which was truly free to spend with his daughters, further hobbies, and the causes which his wife could now dedicate herself to selflessly without worrying about her kids future. He mused how earlier he had put on a cloak of frugality to cover up his shortcomings - not that he wasn't frugal now (he did not give lavish parties or splurge on showing off, except his childhood dream of a South Bombay house and a Rolls!), but he could generate wealth and distribute it better than anyone else in his residence.
His fear of losing no longer held him back and he did not cut his profits until his target was reached. He no longer hesitated on trade entries because he had gently conquered that same fear. He now played to win, and put odds in his favor. He took the 'I' of his life and dedicated his trading to achieving his and his family's dreams. He simply played his part as a great trader and started becoming profitable, consistent.
He increased size slowly, and his scalping methods allowed him the luxury of using scaling in a very wise manner.
His life became more meaningful as he grew in his own stature. His self-worth was made up on principles and not his net-worth. He would not be afraid to jump in into a trend again if logic so demanded it. The fear of the market was replaced by respect and his method became a map that propelled him on to greater heights of confidence and account balance.
And his humility was evident in his demeanor.
"I owe my success to my two sweet daughters." he would say whenever questioned about his good fortune!
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