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Zen & the Art of The Small Account

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  #151 (permalink)
 Big Mike 
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aztrader9 View Post
I just executed poorly today due to fear. I recognize it for what it is and understand I will need to battle that out over the next few days.

Hi Az,

Thanks for posting today. Any specific plans/reactions -- future preparation, etc -- regarding the above statement? Do you feel it was just jitters from being cash again?

Mike

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  #152 (permalink)
 Gary 
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aztrader9 View Post
...I just executed poorly today due to fear...

Hey Brian,

It is good to see you make your post today with some details on what happened.

I am sure you already asked yourself this question, but what is the root cause of that fear you had today?

Ask yourself before you take the trade or start for the day even, what is the worse possible outcome? Are you okay with that outcome / will life continue on? Of course it will, and while you won't be 'jumping for joy' if you have a down day, you will have followed your rules and lived to trade another day. Face your fear. What does it feel like to have a down day and then get back up again? It should feel good to know you can get up again, and then next time it comes up, you know you are capable of getting up again, and thus that fear should start to lose hold on you. Play out the worse case scenario for a trade, a bad day, a week in your head. How do you react? Take the positive out of every day. What you did right is just as important as where you went wrong.

I would recommend you do a market replay and go back and take the trades which lined up with your rules that you didn't take live. Be sure it matches your rules 100% though. Take note of how you feel, how you are sitting, and anything else you might be doing just prior, during, and after the trade. You might even do the act of recording the trade information as you would normally. Remember that. Force yourself to act similarly during your next live trade. It may be something like forcing yourself to place your feet flat on the floor, sit up straight, quit tapping your fingers on your desk, take a deep breath, etc. Remind yourself of what you are capable of, what your statistics tell you your trades will do for you over the course of an average day. This will help you to keep your heart rate at more of a normal pace / allow you to better get in and stay in the zone that you need to be in. I would really recommend you also track your average MAE on your trades. This will help you determine better where your stop should be based on your trading edge. How many times does it move XX ticks against you, but still turn out to be a winner? How many times does it move XX beyond your stop and then turn around?

I look at it this way, for my fear to no longer be a factor, my confidence has to be greater than the fear. How do I do that? By staring at my statistics, reminding myself of what I did right/wrong in previous trades/days, market replaying the areas I made a mistake and really making an effort to ingrain everything I was doing/feeling when I followed my rules properly. The more you do these things, the less effort you will have to make to follow your rules. As my good buddy @George often reminds me, get to where you KNOW, not believe, but KNOW that you will be profitable over time when following your rules. Once you know, the effort will be considerably less to follow your rules. Right now, many of us believe that we are good traders, believe we have an edge, believe we will be profitable over time, and so there is still a struggle there. With enough time and work, we will KNOW, and trading will become boring, but very profitable.

Have a good evening,
Gary

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  #153 (permalink)
 PandaWarrior 
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Big Mike View Post
Hi Az,

Thanks for posting today. Any specific plans/reactions -- future preparation, etc -- regarding the above statement? Do you feel it was just jitters from being cash again?

Mike

I do think it was just first day jitters. By the end of my trading hours, I was out of sync though. I could feel it as I waited for another set up after the long run up. I was impatient though and wanted a trade, so I forced it, by that time the jitters were over and I just wanted a good trade. I knew it was a bad trade and so I tried to manage it to profitability and got out without being killed. The last trade was almost legit, I was just early and took almost a full hit. The trade I had been waiting for, set up just after my stop but by then, I was done.

So my real struggle this morning was not the jitters or the bad entries, it was wanting desperately to break my max three losses in row and stop trading. I KNEW the short setting up would pay. It was a classic second mouse gets the cheese play. I also knew it would make me profitable for the day, it was a lay down trade. As hard as it was, I stopped trading. In seconds the trade paid enough to get me break even on the day and a few more seconds and I would have been profitable.

I told myself if I broke the three losses in a row rule, I would break other rules as well. While this may or may not be true and a more seasoned trader could probably take the trade and work themselves to profitability, I elected to follow the rules. What is the consensus from all of you in regards to this rule in light of the perfect set up? I am curious. Is rule keeping more important than profit? Short run or long run consequences? Please give me your input.

My plan for tomorrow is to just execute the edge I know I have. My stats say I make $35 every time I pull the trigger. That means if I execute even decently well, over time, I will be profitable. The $35 would be even higher were it not for the revenge trading episode and a few dumb mistakes over the previous month. So in time, I think I can raise the expectancy factor a bit with better trade selection and reducing the larger draw downs due to over trading or revenge trading.

I think I will try @ Gary's suggestion to replay today and take the entries as I should have this morning.......

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #154 (permalink)
 PandaWarrior 
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Gary View Post
Hey Brian,

It is good to see you make your post today with some details on what happened.

I am sure you already asked yourself this question, but what is the root cause of that fear you had today?

Ask yourself before you take the trade or start for the day even, what is the worse possible outcome? Are you okay with that outcome / will life continue on? Of course it will, and while you won't be 'jumping for joy' if you have a down day, you will have followed your rules and lived to trade another day. Face your fear. What does it feel like to have a down day and then get back up again? It should feel good to know you can get up again, and then next time it comes up, you know you are capable of getting up again, and thus that fear should start to lose hold on you. Play out the worse case scenario for a trade, a bad day, a week in your head. How do you react? Take the positive out of every day. What you did right is just as important as where you went wrong.

I would recommend you do a market replay and go back and take the trades which lined up with your rules that you didn't take live. Be sure it matches your rules 100% though. Take note of how you feel, how you are sitting, and anything else you might be doing just prior, during, and after the trade. You might even do the act of recording the trade information as you would normally. Remember that. Force yourself to act similarly during your next live trade. It may be something like forcing yourself to place your feet flat on the floor, sit up straight, quit tapping your fingers on your desk, take a deep breath, etc. Remind yourself of what you are capable of, what your statistics tell you your trades will do for you over the course of an average day. This will help you to keep your heart rate at more of a normal pace / allow you to better get in and stay in the zone that you need to be in. I would really recommend you also track your average MAE on your trades. This will help you determine better where your stop should be based on your trading edge. How many times does it move XX ticks against you, but still turn out to be a winner? How many times does it move XX beyond your stop and then turn around?

I look at it this way, for my fear to no longer be a factor, my confidence has to be greater than the fear. How do I do that? By staring at my statistics, reminding myself of what I did right/wrong in previous trades/days, market replaying the areas I made a mistake and really making an effort to ingrain everything I was doing/feeling when I followed my rules properly. The more you do these things, the less effort you will have to make to follow your rules. As my good buddy @ George often reminds me, get to where you KNOW, not believe, but KNOW that you will be profitable over time when following your rules. Once you know, the effort will be considerably less to follow your rules. Right now, many of us believe that we are good traders, believe we have an edge, believe we will be profitable over time, and so there is still a struggle there. With enough time and work, we will KNOW, and trading will become boring, but very profitable.

Have a good evening,
Gary

Thanks @Gary for the advice and well wishes. As last month developed, I became comfortable with the worse case scenario on a daily basis. That is, I have three in a row and I have to sit the rest of the day out watching good trades go by. I am also ok with the dollar loss of three in a row. I managed to keep the losses smaller than they otherwise would have been and I am happy with that aspect of the trade management. Given the poor entries, how I ended up is better than it could have been.

I think the issue I am most disappointed over is the failure to follow rules, especially given the early perfect set ups I was given. I know my method has an edge even though I did not execute it perfectly last month, it still performed very well in my opinion. I pass on MANY set ups that were legit rule based entries, I took others that were not so perfectly set up and even had a horrible revenge trading day and I still managed to make money on sim last month. So I KNOW my method has the edge I need and I KNOW I trust it because it is built around two things I believe in.

So tonight, I'll just put the past behind me AFTER I do a market replay.

My MAE and MFE are pretty bad today since none of the trades actually had any real MFE. But in general, my MAE and MFE are pretty favorable. MAE is about 8 and MFE is about 27. So in general, those are pretty decent. My normal stop goes in at 8 ticks and I adjust it to where it needs to be per the rules, that usually works out to around 10-13. Sometimes up to 15, at that point, I usually don't take the trade as that is a tad outside my comfort zone. I am ok with 10-12 most of the time and if its a really good set up, I'll live with the 13.

Lastly, being totally honest here, I felt quite a bit of pressure to perform today for the "crowd" that has been following this thread. This is entirely self inflicted pressure as no one on the forum has in any way pressured me. But perhaps performance anxiety stepped in and caused this. I was aware of it at the time, I even mentioned it to my trading buddy and we had a bit of a laugh about it. Its funny because I've never even met anyone on the forum personally so why should I care what any of them think. This is crazy I know but it was there today. Its also funny because I have spoken in front of as many as a 1000 people with little or no stage fright. I've spoken before the CEO of the company I used to work for and did just fine. Why this is so different I can't even imagine right now.

Ok, so I am moving over to the market replay. I have never really had much success with this thing as it never seems to start where I expect it to so we will see. If I get it going correctly and actually take the trades, I'll post the market replay chart with trades marked.

Thanks again. Chime in with any thoughts on what I've written.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #155 (permalink)
 PandaWarrior 
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So market replay does not have stats in the summary tab. And the trade markers only plotted one of the trades.

But today was to easy. I remember each trade like it was seared into my memory. In fact, I remembered the exact tick to get in on and where to put the stops. It wasn't fair. I sped it up to make it harder, that just made it easier, I didn't have to wait so long for the trades to set up!

Maybe I'll do one from a few days back or perhaps an instrument I did not follow today.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #156 (permalink)
 gabga100 
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if you like this methodology , there is a book that might be useful .... just check the summary to see if it might interest you ( It costs only 7 bucks)

Amazon.com: How to Become a Stressfree Trader: The Accidental Discoveries of an Applied Behavioral Science Student (9780595275052): Jason Starzec, Mark Crisp: Books

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  #157 (permalink)
 Twiddle 
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Hi AZ,

I am not a trader as of yet so cannot offer any trading advice, but I do want to just caution against one thing.
Retroactively applying what was a good setup and what wasn't by looking at what happened to the price action after the trade.

You say you kept ignoring good setups, and instead went into bad setups. But is that only in retrospect? For you to not enter one, and enter another, at the time there must have been a reason?

Is it only in retrospect that you say "I ignored a perfect setup", because you see the result had you of entered?

If you look at the setups while cutting out the price action subsequent, is there a marked difference between them, that either complies or does not comply with your rules?

Perhaps you could screenshot the various setups of the trades you did not take , and the ones you did (just the chart of the price data up to the setup, not the subsequent data), and give them to a friend or another trader with a copy of your entry rules, and see if they also determine which were the good, and which were the bad setups? This might give you an objective standpoint to determine how your rules perform.

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 PandaWarrior 
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Twiddle View Post
Hi AZ,

I am not a trader as of yet so cannot offer any trading advice, but I do want to just caution against one thing.
Retroactively applying what was a good setup and what wasn't by looking at what happened to the price action after the trade.

You say you kept ignoring good setups, and instead went into bad setups. But is that only in retrospect? For you to not enter one, and enter another, at the time there must have been a reason?

Is it only in retrospect that you say "I ignored a perfect setup", because you see the result had you of entered?

If you look at the setups while cutting out the price action subsequent, is there a marked difference between them, that either complies or does not comply with your rules?

Perhaps you could screenshot the various setups of the trades you did not take , and the ones you did (just the chart of the price data up to the setup, not the subsequent data), and give them to a friend or another trader with a copy of your entry rules, and see if they also determine which were the good, and which were the bad setups? This might give you an objective standpoint to determine how your rules perform.

Twiddle, all good points. However, there is a distinct difference between trading perfect setups on sim and on cash. At this point, my entry rules are pretty clear, not all that subjective. One cannot determine if the set up was perfect or not until after the fact, one can only determine a set up based on previous patterns. The perfectness is revealed after the trade is over. You have to trust the set up based on hours of chart time.

Today, I had three classic set ups, but did not take the trade. For no other reason than trading cash is so much different than trading sim and I chickened out. Simple as that.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
Started this thread
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 Twiddle 
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aztrader9 View Post
Twiddle, all good points. However, there is a distinct difference between trading perfect setups on sim and on cash. At this point, my entry rules are pretty clear, not all that subjective. One cannot determine if the set up was perfect or not until after the fact, one can only determine a set up based on previous patterns. The perfectness is revealed after the trade is over. You have to trust the set up based on hours of chart time.

Today, I had three classic set ups, but did not take the trade. For no other reason than trading cash is so much different than trading sim and I chickened out. Simple as that.


Fair enough. First day, you would be strange if you didn't have some type of fear. Good lesson then, and not too much harm done.

 
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  #160 (permalink)
 Michael.H 
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Az trader, would you be willing to share your Excel spreadsheet for recording trades. Yours looks much cleaner :-)



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