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The Bar Chartist: Safety First


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The Bar Chartist: Safety First

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  #1 (permalink)
TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received

Hello everybody. I'm The Bar Chartist and I'm a classic example of a consistently losing trader. The reason I lose is because I fail at Step One: risk control. I've had this problem since I started day trading about eight years ago. I'm not great at the other aspects of trading: finding opportunity, and assessing when it's most efficient to close a trade. But I am good enough at those things to make money. I have another career and trade 60-90 minutes in the morning, and I've doubled live accounts multiple times. I've had at least 10 funded accounts with T2T and E2T and OneUp. I have never, not once, lost an account because I slow bled consecutive losing days. I always blow accounts because I go on tilt.

I just blew a funded tryout this week. I'm up five days in a row, on cruise control. I have a profitable morning session, but I underperformed a bit and had a below average day for profits, so I come back in the afternoon, force a trade, start to tilt, hit my daily loss, keep going and blow up. I opened another tryout with APEX yesterday and had a winning day. A below average day, but a winning day. If I took the loss on Thursday I would've been up $1700 / per lot trading the ES, even with the dumb afternoon trading. What's better? Blowing an account, or having a winning week that is not meeting my expectations for profitability?

What's so dumb about this is that if I can't avoid tilt, then I will never get anywhere. Yes, I can hold my winners better. Yes, I can trust my analysis a bit more and take everything within my entry conditions. But there is no point even thinking about those things if I tilt. Tilting is the end of the game. I've quit and come back to trading multiple times, but it's always the same story. I'm wasting time and energy because I cannot simply see a number on the screen that means NO MORE TRADING and respect that number.

My average winning day is $750 / contract on the E-mini, so that is my max daily loss. The goal is to grow to a 3 lot trader on the ES, and have one to two losing days a week. That's the first destination where I will be making money that matters to me. My account with Apex is a 50K account. I like that because the max contract size will allow me to grow, but the ratio of drawdown to profit target is good. I can't trade the mini on that account, though, because I don't have enough drawdown, so here is how I'm thinking about this: at $75/contract I can trade a four lot on the micro. That puts my daily risk at $300, and it will take me about 10 days of profitability, net of losing days, to pass, which I can probably do in about a month.

The trailing drawdown will eat a maximum of 2 days of average profitability right off the total amount of risk capital I have, because it is possible that I will make my average daily profit, or even more, and then give it all back. If I'm up two times my average day, I always take that home with me. To be safe I'm assuming on an EOD basis I only have $1800 of drawdown to work with, which is six days of full stop outs.

The goal is to let go of results, consider it a win if I lose this tryout without tilting, and see what happens if I respect my risk parameters. All I'm going to do in this journal is post one image every day. I hope this keeps me accountable to others. Feel free to roast and ridicule me if I fail at this simple task: see a number on the screen that means NO MORE TRADING and walk away from the market.


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  #2 (permalink)
 ZviTradingCoach   is a Vendor
 
 
Posts: 29 since Dec 2020
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Loved a few very important things about your post:
1. Willing to face and own up to the problem (which I agree is a critical step, without which nothing else really matters)
2. Deciding to take specific action focused on killing this "demon", setting aside all other goals for the time being.

This being said, I would carefully take the liberty to suggest a few things (with the due notice that as I don't know you or your trading style these are generic suggestions - not a personally tailored plan to solve this issue). I trust this unsolicited advice will be taken positively and with good intention.

1. 750$ a day loss limit makes NO SENSE at the step you are at. It should be no more than half of your average winning day. I'll bet that if you look back at your history and add up the numbers, yo've done more damage falling from 350$ to 750$ over and over again, than you've had the gain of "miraculous comebacks" from losing days.
Keep in mind that the trading challenges' formal drawdown/limit rules aren't necessarily what is best for YOU right now.
Also, you should consider using this (or maybe a little more relaxed version, say 500$) as a TRAILING STOP on profits. Don't let a 700$ day fall to zero.

2. Accept and own up to the fact that there is NO EXCUSE for breaking "black and white" rules such as max daily loss. EVER. under NO circumstances. Choose to be that type of person person (from your post it seems part of you wants to go down this path, but part of you still doubts your ability to do this).
Forget your history. It is irrelevant. In this respect, You are trading your first ever account, and blowing an account is just plain stupid and irresponsible and you wouldn't ever even go near it. Daily limits and stops are to be treated as sacred and just start afresh.

3. Accept that you are nowhere near being funded for the time being. Let go of that. Forget about profits. You say on one hand that the only goal is to not tilt, and at the same time continue to calculate when you can finally win the challenge and start making money. You can't be split on both goals at the same time. In your case, after so many years, it's best to focus on the problem first. Run a month without ever breaking the 350$ loss level daily, engrain that habit and then start trying to win again. Your post suggests that you may actually know what you are doint on the win side - so focus on killing the tilting and then get back to the regular game. Treat it like a drill.

4. And now for the real work: The key is to be very attentive to what happens when you get near the 250$ mark (="about to run out of bullets"). Every time you get near that point, that's when pressure rises and that's when you can grow (like a muscle growing under stress). Be observant to your inner talk at that point. A whole bunch of issues may surface, including your history. Calm yourself. Remind yourself how many bullets you still have left in your magazine of risk capital (you may even use real "bullets" on your desk, instead of p/l. say your typical loss is 100$, have 4 pawns on your desk. remove one every time you lose - when they are gone you are out. There are plenty of techniques to employ here, but the important thing to understand - every time you hit this point it will require active self-work on your behalf to improve.

Remember: only by repeatedly going through this "tough point", overcoming yourself and ceasing trading for the day, over and over, will you start changing. So these "hit the limits" events are actually the most productive events you will encounter over the next month. every victory brings you a little closer.

Good luck tackling this issue!

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  #3 (permalink)
TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received


The daily loss limit is chosen with good data. If I cut it in half I will not improve my profitability. Based on stats on the amount of heat I take on the day, and how frequently I trade badly enough to hit the full stop out, every week I should have on average three straight-forward winning days, one stop out day, and one day when I take heat in the range of that half-day number but then fight my way out. Two half-sized stop outs are the same as one full sized stop out, only I'm losing the profit on the fight back days, which is why if I continue to trade in my long standing pattern Zvi's advice will degrade my results (no offense taken Zvi).

Since I know all of this, if I then go and make my daily stop out number too small, all I'm doing is increasing my temptation to break the rule, because in the back of my head I know my bottom line will improve if I try to fight my way out. On the other hand, if I hit a $75 / micro loss, which is 15 points, then based on my history I'm clearly trading badly and need to quit before I do serious damage. This is the same principle as putting your individual trade stop at a genuine invalidation point. It's not based on arbitrary math, like a fixed point stop, but an understanding of the real conditions of my trading. $37.5 / micro does not invalidate the day. $75 / micro definitely does. This is also why in the long run I want to vary my daily stop with my recent trade data. My average winning day does shift with market volatility, and so my stop should as well. Also, the better I get at this, the smaller my daily stop could in theory get, but again my trading stats will show me. I'm good at tracking these things and making rational decisions when the market isn't open and I'm not raging out because I'm having a losing day.

That's why the much more important point is this: every time I've gone tilt - literally every time - there is a small window of conscious control where I hit the number, realize for a brief second that the rule exists and I have to stop, and then like a toddler I keep clicking the buttons. The only point of this journal is to put the extra structure in place to act correctly in that tiny window of opportunity. That is the only thing I care about right now. I don't need anything to distract me from the one issue: make the right decision in my little window of opportunity, so I'm not making my risk management plan any more complicated than that. I need to beat this for good or else I'm permanently screwed as a trader. After a big sample of no tilt trading I'll see if my stats stay consistent, get better, or get worse. This will show me how integral having bad risk management is to my current belief in my profitability. My hypothesis is that the non-tilt days will stay the same, because I've pushed the boulder up hill and then let it crush me so many times that I'm confident in my ability to push it up hill. But again, I want this journal to be minimal. I just need to make the days-without-tilt number go up. That needs to be my only score. And I need you guys to roast and humiliate me if I don't. It's integral that you roast and humiliate me, because clearly doing this in pure isolation isn't working. Don't softball me. Don't encourage me. Don't give me advice.

If you want to help me, stand by ready to roast and humiliate me like the idiot that I am on one of the next ten days or so if I don't respect the stop out number.

APEX updates the account balance on their website overnight, so I'll post my image the morning after every trading day. Starting next week I will post my image for Friday's trading on the following Monday morning. This will also be good because I will do it before market open, to remind myself that I am in permanent recovery from an addiction to impulsive behavior and to take a few extra moments to focus on my only goal: to take advantage of the tiny window of self awareness should I hit my stop out number.

Apparently I can't post the image in the message, but it is attached.

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  #4 (permalink)
 ZviTradingCoach   is a Vendor
 
 
Posts: 29 since Dec 2020
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Thumbs up on your justification of the 75$/micro daily loss.
I completely agree with your reasoning. It's a lot more data-based than most traders', and your point of "75$ I'm tilting, 35$ not yet so 75$ it is" is indeed the correct reasoning.

My best tip would be to start preparing mentally for the potential need to stop around 50$/micro, so that 75$ stopping is easier to swallow. This should also be a warning sign that "maybe I'm starting to tilt". Notice how this "starting to tilt" feels in your body, and relax yourself when that happens.

Good luck!

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  #5 (permalink)
TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received

I had a stop out day yesterday. And I did it. I stopped trading. I did have a split second where I thought: "I've got ten bucks to my stop, I can just trade one micro." See how sick addiction is? But I didn't do it. I just walked away, escaping your roasting and ridicule.

What is interesting is that I felt almost as terrible all day yesterday as a day when I blow up. I hate losing to begin with, but I think I've also conditioned myself to the reality that a losing day is a total catastrophe, which shows how much I've screwed up my trading psychology. If your only losing days are these huge, major setback, account wrecking days, then yeah, that kind of makes sense. That might be why I push the losing days until they get out of hand. Taking bigger size, bigger stops, doubling, quadrupling, octupling down to try to erase the loss. It's a self fulfilling prophecy. If you trade like that, the only losing days you are going to have are going to be days that erase weeks or months of progress. Yesterday didn't even completely erase Monday. A rational person would see that as a good thing. The goal here is to be rational.

Now here's the key: can a good night's sleep and a fresh start today reset me? Normally I get psychologically reset by blowing up and then getting the emotional relief of a clean slate: resetting a funding trial, or waiting a few weeks and opening up another small account. That's the pattern that needs to break. I need to take the stop, save the account, and then trade well. On the other hand, I can't replace blowing up in one day with blowing up in slow motion over eight days. I cannot up my size, or press, or try to make it all back in one trade today. I'm going to trade very selectively in the morning, and then ideally come back for the report.

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 giftedmd 
Memphis, TN
 
Experience: Intermediate
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Posts: 6 since Jan 2019
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I can definitely relate to your struggle. I find that I can handle a loss much, especially if I followed by rules, more than a missed opportunity/not performing to my own expectations. Its the desire to be perfect and that urge to "make it back" when you are not is so powerful. You will force things when you know you shouldn't.
I have found the best thing is to have an accountability partner. Someone that knows your strategy well enough to know when you are doing the wrong thing. I used my wife for this for a bit. The next best thing I have found is getting in the habit of speaking while you are trading like you are explaining how to trade to someone. You can even record yourself. The act of putting your intentions out into the universe instead of being "sneaky" and keeping everything to yourself works well for me. The integrity to always do the right thing all the time is a skill that takes practice.
It really comes down to professionalism. If you want to be a professional trader, you must act the part. Doing the right thing at all times. What I do now is I get up every morning with a consistent routine, put on nice clothes like Im going to work and trade in a public space like Im going to work and pretend the people there are watching me (and a lot of the times they are).

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Hammersaw
Raleigh North Carolina
 
 
Posts: 4 since Jan 2022
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TheBarChartist View Post
I had a stop out day yesterday. And I did it. I stopped trading. I did have a split second where I thought: "I've got ten bucks to my stop, I can just trade one micro." See how sick addiction is? But I didn't do it. I just walked away, escaping your roasting and ridicule.

What is interesting is that I felt almost as terrible all day yesterday as a day when I blow up. I hate losing to begin with, but I think I've also conditioned myself to the reality that a losing day is a total catastrophe, which shows how much I've screwed up my trading psychology. If your only losing days are these huge, major setback, account wrecking days, then yeah, that kind of makes sense. That might be why I push the losing days until they get out of hand. Taking bigger size, bigger stops, doubling, quadrupling, octupling down to try to erase the loss. It's a self fulfilling prophecy. If you trade like that, the only losing days you are going to have are going to be days that erase weeks or months of progress. Yesterday didn't even completely erase Monday. A rational person would see that as a good thing. The goal here is to be rational.

Now here's the key: can a good night's sleep and a fresh start today reset me? Normally I get psychologically reset by blowing up and then getting the emotional relief of a clean slate: resetting a funding trial, or waiting a few weeks and opening up another small account. That's the pattern that needs to break. I need to take the stop, save the account, and then trade well. On the other hand, I can't replace blowing up in one day with blowing up in slow motion over eight days. I cannot up my size, or press, or try to make it all back in one trade today. I'm going to trade very selectively in the morning, and then ideally come back for the report.

This is called "revenge trading."
Every day you start your day with the expectation that today will be a profitable day. That is the mistake you are making. Your plan accounts for down days because you are going to have down days. Your expectation that today will be profitable is unrealistic. You have already deviated " in your mind" from the plan and your trading hasn't even started yet. What you are doing is setting yourself up to break more rules in your plan by trying to win back losses that your plan has already accounted for. Now is when things inevitably will go tilt. Your plan isnt working (because you haven't followed its rules), your pissed off because that unrealistic expectation hasn't been met, and so "F-IT" You pull the pin on the hand grenade and just blow it all up.
Much easier to sweep up little pieces and start over than trying to figure out where you went wrong or how to fix it.
Its no wonder you have no confidence in your strategy. Your not following it long enough to know if it has a flaw that could lead to that slow death you are wondering about.

My advice?
I just know im going to get flamed...
Until you are confident enough to take the emotion out of the equation ( that comes with a successful track record) go into the day expecting to hit your day loss limit. Then if it happens, you wont be so reluctant to turn off the computer and just walk away.
Better still, and I am not trying to insult you, sort it out on a sim. They work.

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TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received


giftedmd View Post
I can definitely relate to your struggle. I find that I can handle a loss much, especially if I followed by rules, more than a missed opportunity/not performing to my own expectations. Its the desire to be perfect and that urge to "make it back" when you are not is so powerful. You will force things when you know you shouldn't.
I have found the best thing is to have an accountability partner. Someone that knows your strategy well enough to know when you are doing the wrong thing. I used my wife for this for a bit. The next best thing I have found is getting in the habit of speaking while you are trading like you are explaining how to trade to someone. You can even record yourself. The act of putting your intentions out into the universe instead of being "sneaky" and keeping everything to yourself works well for me. The integrity to always do the right thing all the time is a skill that takes practice.
It really comes down to professionalism. If you want to be a professional trader, you must act the part. Doing the right thing at all times. What I do now is I get up every morning with a consistent routine, put on nice clothes like Im going to work and trade in a public space like Im going to work and pretend the people there are watching me (and a lot of the times they are).

I think this is great advice, and I want you to know that I'm not ignoring it. These are the things I'm going to need to do as I make whatever adjustments are next. I stopped out again yesterday. Right now my focus is to respect the daily loss limit and preserve this account for as long as I possibly can. If I stop out four days in a row, I will half my size to try to keep the account going. Four days would be a total outlier for me.

But again, I understand that my current pattern of profitable for a month, destroy it in a day, is an ecosystem of its own. I was hoping that I could cut the losing days and keep the winning days, but my psychology is so f-ed up that while I know I can have lots of profitable days, I don't know I can do that while respecting a daily loss.

If I can't turn the corner by posting my image, and I put up a good track record of taking the daily loss, then maybe I'll use this journal like an accountability partner.



Hammersaw View Post
This is called "revenge trading."
Every day you start your day with the expectation that today will be a profitable day. That is the mistake you are making. Your plan accounts for down days because you are going to have down days. Your expectation that today will be profitable is unrealistic. You have already deviated " in your mind" from the plan and your trading hasn't even started yet. What you are doing is setting yourself up to break more rules in your plan by trying to win back losses that your plan has already accounted for. Now is when things inevitably will go tilt. Your plan isnt working (because you haven't followed its rules), your pissed off because that unrealistic expectation hasn't been met, and so "F-IT" You pull the pin on the hand grenade and just blow it all up.
Much easier to sweep up little pieces and start over than trying to figure out where you went wrong or how to fix it.
Its no wonder you have no confidence in your strategy. Your not following it long enough to know if it has a flaw that could lead to that slow death you are wondering about.

My advice?
I just know im going to get flamed...
Until you are confident enough to take the emotion out of the equation ( that comes with a successful track record) go into the day expecting to hit your day loss limit. Then if it happens, you wont be so reluctant to turn off the computer and just walk away.
Better still, and I am not trying to insult you, sort it out on a sim. They work.

I'm not insulted (I'm going to stick with the tryout but I'm not insulted). I also think that this is in general good advice. I don't know how to maintain confidence without looking at the winning days and thinking: "in principle there is no reason why I can't win every day" while also not setting up an sense of entitlement to win every day that causes me to freak out when I lose. I need the confidence to be able to trade well. But I need the confidence to be checked by an understanding that I will lose. My idea was that if I could even lose a trial while managing risk, that would be a step forward.

And yeah, "revenge" trading is too light a word for it. It's like HATRED trading, or SUICIDE trading. It's this deep wellspring of rage at losing that causes me to want to destroy everything in my path.

BERSERKER TRADING.

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TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received

I'm probably not going to trade today because I have only about 20 minutes after the open before I need to get out the door. I might have time to take a look at the market in the afternoon. Yesterday was a slightly below average winning day, so this week ended up basically flat: two winning days and two losing days. I'm five days into a Safety First mentality now.

Also, I had a passed funding account hit 10 days this week. It was activated yesterday morning after the first trade on the 50K trial, and I used the trade copier to take a trade with one micro. I'm including both accounts on the Safety First image, because I don't want to be tempted to dick around with hitting the daily stop on the 50K and then switching to the other account in secret, which is the kind of thing an addict might do. The performance account is the $635 static draw account. At $75/lot daily loss I have eight days of daily loss, and if I manage to make some profit I will have even more drawdown to work with.

Normally I would go balls to the wall and try to make money immediately, but the Safety First mentality requires that I keep the account. If I ever have to halve the size on the 50K account, I will stop trading the performance account.

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TheBarChartist
San Francisco, CA
 
 
Posts: 9 since Apr 2015
Thanks: 3 given, 15 received


I can't get anything going on the PnL but I am embracing the fact that I pay APEX $180 a month for those two accounts as a form of personal therapy. Basically high ticked out of a big trade yesterday, and hit my stop, but I took it reasonably well. Slight agitation the rest of the day, but I wasn't an asshole to anyone because of it. I will continue to make the big red number go up.

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