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Friday was a large psychological setback for me. I completely lost control of my actions and did not trade the plan.
Let's get right into the trades.
Trade 1: Outside my trade plan
-Price double bottomed which automatically disqualifies trend continuation trades per my rules.
-I took this one anyway and with two contracts. Why?
-I realized my error and closed one contract.
-I failed to admit my error to myself and held on to the second contract all the way up to full stop out.
0%
Trade 2: Breakdown trend continuation
BIG Picture view here:
Closer view of action here:
-No significant corrections.
-Price moving rapidly with momentum.
-Sideways consolidation followed by a further break lower.
-Target of white line.
100% adherence
Trades 3-8:
There is no explanation for these trades. Instead I will discuss why I entered them from an emotional standpoint.
-Upon winning a huge trade I was flushed with confidence and overly greedy.
-I thought to myself. "This is your second largest win ever. Just make another win and this will be your biggest day ever."
-I guessed that we would continue down to my next target without an adequate retracement first. (emotions interfering with analysis.)
-I entered the first two trades with some focus.
-I then lost all control and started trading the breakouts in both directions, losing every single trade and giving back my entire profit in eight bloody minutes.
-My greed and confidence quickly transformed into despair and desperation to make back the lost profits.
0% * 6
Trade 9:
-To round off a terrible day, I decided to take this trade after my trading hours were over.
-There was a platform error that twitched my DOM as I was placing my order and placed it 1 tick too high.
-This resulted in me getting filled short at the absolute lowest price of the swing, before the breakdown setup even occurred.
-When an error occurs, it is best to close the trade immediately.
-I had entered a state of complete detachment from reality at this point and just saw this as another opportunity to make it all back.
-Agonized over this trade for much too long and eventually just took the reduced stop out as I had to get ready for my night-job.
0%
Results:
1 win (+2.3R)
8 losses
-1.17R
Self-Eval:
11% adherence to rules.
Thoughts:
I need to get a handle on my own psychology. I can not become a professional trader if I allow myself to lose control. I leave for a week long vacation tomorrow. Great time to take a breather from trading and enjoy time with my family and friends. I will spend some time thinking about how to address the psychological issues that are holding back the progress of my trading career.
I see myself as a disciplined person. As such, my inability to maintain discipline while trading bothers me on a fundamental level. My girlfriend presented a point yesterday that I had not thought of before. All of my previous and current applications of discipline have an emotional component. Trading is the only activity that requires a static, or at least controllable emotional state at all times. For example, when I exercise I use my emotions to fuel my discipline with positive/negative self-talk and achieving an intense focus on the task at hand. Practicing and performing music is a discipline that is intrinsically connected to emotion. Trading is very unnatural and I believe that is why many people underestimate the importance of mastering psychology. I surely did.
I wish you all a successful week. I will be back for the last couple trading days of July.
This is the most important thing in this post, in my view.
We spend time working on a method, but without correct execution we might as well not have one, and execution requires having your mind working well. As you noted, there can be problems with that.
Trading is unnatural, not only because of the need for emotional detachment, but also because it comes with its own built-in emotionality that is dead wrong. For instance, you can drive a car or operate machinery with little emotion (at least, I hope so ), and you learn how to early. Because of the large potential for gain or loss, trading seems to entice us into an emotional mindset that can make us temporarily crazy, either with greed or fear (or both together). We don't seem to be wired up to cope with this well.
We are always going to be emotional beings, but we do have these self-destructive emotional swings in trading. It's as if you were driving your car and then got consumed with road rage or thrill-seeking. Not going to work out too well.
So once you've got a working method, you've got an essential piece but not the most important one.
I read a whole lot of journals. I even have one (it's in the Elite section.) This is the most common issue that traders struggle with and try to work through. You are absolutely not alone.
Good. Let your mind settle, get some perspective, recognize that the way you play the game works well in the main -- when you execute correctly -- and that you have some work ahead of you. This is a worthwhile discovery.
Enjoy your time off, and good luck when you're back.
Almost everyone goes through this kind of experience at one point or another in their trading career. The beautiful thing is, if you're resilient and willing to put in true effort towards overcoming these kind of borderline-traumatic mistakes, you can not only get far in trading, but you can get far in other facets of your life. In case you are beating yourself up over this- don't. Treat every experience like this as a lesson. This sounds cliche, but it's the growth mindset (Carol Dweck) that successful trading requires.
I like to think of my trading like this at this point: If I make a mistake while trading, that means that something inside of me isn't conducive to quality trading YET (via I'm accepting my limitations to become impartial to overcome them). The opposing view is to dwell in an emotional state, while clinging to my own supposed sufficiency of being able to trade profitably as I am now. This doesn't apply to and isn't true for majority of traders, including myself obviously, but it doesn't damage my confidence either. That kind of belief becomes a reality after sustained effort through pains like this over time. Basically what I'm saying is, whenever you make a mistake that really gets to you, remember that that mistake was bound to happen because it was "ingrained" in you so to speak, and it wasn't able to be addressed until the mistake happens. You have to make mistakes in order to grow.
I'm sure you know all of this, I just know it's great to get some support after these kind of events. Keep it up, we're all learning with you.
I would like to sincerely thank both of you for contributing such value to my journal. It is always nice to know that I am not alone in this crazy endeavor!
Vacation was fantastic. I haven’t taken a full week off from all types of work in over a year. Needless to say, a week of sitting on the beach instead of at the computer was very restorative.
I feel that I have a better perspective now, after a week of trading inactivity. I know what needs to be done to achieve success and I am ready to put in the work. With a solid trading system developed, the work ahead of me now is largely psychological.
These are my goals for the coming month:
-Treat trading as a job:
- Punch in on time. (30 minutes prior to market open.)
- Be prepared. (Make sure my charts are set up properly)
- Do high quality work. (Execute according to my trade plan.)
- Punch out on time. (If no open positions then close the platform at 12 noon. If open positions, then manage accordingly and then close platform.)
-Address my compulsions:
- I am going to begin meditating daily to improve my self-awareness and self-control.
- After every trade I will step away from my office and clear my head unless there is an obvious trade setting up.
-Embrace positivity:
- Mistakes are opportunities for improvement.
- A positive attitude will attract a positive result. (Law of attraction.)
My big goal is to trade for a living. In order to get there I need to treat trading as a business/job.
I currently work full-time in hospitality. If I make an error or a guest yells at me during my shift, it is very easy to shake it off and carry on with my job. I need to strive to get to the same level with my trading. Execute. Wait patiently. Execute the next setup.
I accept the road blocks ahead of me and am very excited for the process!
Glad you are feeling restored, you have set up a great plan.
You (and @Zachary Standley) inspired me to get back into meditation. I have a copy of "The Mind Illuminated" by John Yates and I really like it, I was on level "3" in the book for some time and got out of the habit, so I'll be starting over from scratch, but it is great stuff.
Break-even day today. Despite the lackluster result I did a good job executing on my plan. Today the market did not work great for my trading plan as there was little interaction with significant levels and also very little follow-through on moves.
My trailing system is set up to get out when conditions aren't great, but to stay in when conditions are good to capture the big moves. Today we had what looked like great conditions that ended up being small moves. Had I been more aggressive with my stop, I would have captured more of these moves BUT by doing this I would be giving up all potential for capturing large moves. I like my current trailing rules and am going to stick with them for now while accepting that days like today will happen!
Okay here we are: Trades 1 and 4 on YM and trades 2 and 3 on RTY.
Trade 1:
Trend Continuation Trade:
-Projection looked good.
-No significant levels for over 100 pts.
-Stop went where it was supposed to go
-Unfortunately stop was hit. Part of the business. NEXT.
100%
Trade 4: Countertrend Trade:
-YM reached a 1:1 on the larger swings.
-Perfect break of the swing low.
-Missed my entry.
-Nothing about the setup changed. Got filled 2 ticks worse than the original entry price.
-Trailed each swing high down.
-Was going to trail aggressively but then we get a massive increase in projection.
-Trailed my stop at the swing high and got stopped out to the tick.
-It sucks to get ticked out but it sucks more to break the rules and give ALL the gains back. In the moment you don't know what will happen next. This was executed according to my plan.
50% (because of missing the first entry.)
Here is a larger view of the RTY chart.
And in depth: Trade 2:
Trend Trade (breakdown):
-Momentum was acceptable but I probably could have passed on this trade.
-Tightened up my stop quickly probably because I knew subconsciously that I shouldn't be in this trade.
-Took a 2 tick stop which was a good move as price quickly moved against me.
50% No reason for the entry. Good job quickly self-correcting and exiting the trade. Trade 3:
Trend Trade (breakdown):
-Entered on the break of lows expecting a swift move lower to the target.
-Price meandered sideways and drifted lower.
-I can interpret this chart two ways. I can see projection decreasing and I can also see it increasing depending on which swing I am looking at.
-I was really expecting price to reach my target line drawn in white, and because of this trailed loosely on each swing high.
-Little better than a scratch.
100% Giving myself the benefit of the doubt since this one is such a bitch in hindsight.
Results:
2 wins
2 losses
break even
Self-Eval:
-I did a good job preparing myself to trade today. I completed my morning routine in a timely fashion and showed up to my office on time.
-I prepared my charts appropriately.
-I still need to work on controlling my impulses. Trade 2 was emotionally driven because I entered it only a few seconds after getting stopped out on my first trade. For the time being I am removing breakout and breakdown trades from my trade plan. I haven't researched them enough and don't have descriptive enough rules in place. Right now they are just acting as a gateway for my impulses to manifest in my trading.
-Today my accuracy to my plan was 75%.
-For the month of August I am adding a self-eval (accuracy) column to my spreadsheet so that I can track my performance based on adherence to my plan. I intend to have 100% accuracy in the month of August, but I know that it takes time to adopt new habits.
), and you learn how to early. Because of the large potential for gain or loss, trading seems to entice us into an emotional mindset that can make us temporarily crazy, either with greed or fear (or both together). We don't seem to be wired up to cope with this well.
I don't explain my charts. If you like to follow my trades, look for these lines.