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Having the discipline to wait for price setup to present itself
I would like to seek opinions on how you keep the patience and discipline to wait for price setups to present themselves.
I am swing trading and there are periods when the market moves sideways for days or when the market is violatile and difficult to read which can carry on for days too. During such times, I am prone to either enter half baked setups which fulfill just 1 or 2 but not most of my entry rules or enter on low probability setups.
I know the importance of patience and discipline of waiting for a setup to form. The problem is when I am supposed to wait and watch, i get this feeling that i am not doing anything and am not progressing towards my goal of being able to trade well consistently. I feel that i am "wasting time" and "not doing anything meaningful".
Then I make these rash trades, regret it and record my mistake. I could then control my thoughts and wait for price setups to form. But after some time, when the sideways or violatile period appears again, the thoughts and emotions of "wasting time" and "not doing anything meaningful" appear again and get stronger and stronger. It repeats.
Hence, i would like to seek opinions on how forumers here cope with staying on the sidelines and maintain their discipline to wait for a setup to present itself.
I am of course perfect and would never do such a thing but I know a friend of a friend that did that and this is what he told me......
I thinnk most if not all people have done this same thing. What it comes down to is how much you value your money.
If the money your trading with means little or nothing you will be more likely to piss it away on risky/questionable trades.
If your money has value to you you will wait for the higher probability stuff and not throw it away in between setups on crappy stuff.
If nothing else maybe you could set a goal to see how many winning trades or see how high you can get your "win" percentage up to....in doing that you will at least be reluctant to take those gamble trades.
You need some way to motivate yourself into waitng....(sounds odd...motivate/waiting....you know what I mean)
If none of that helps you do a crossword puzzle or something to fight the boredom and in the back of your head tell yourself your making money by not losing it.....
Remember capitol preservation is key in this business.
The right thing to do is practice patience and wait for it to turn green before you start moving again.
It is normal to you because you've been taught to do it, and you've been doing it all your life.
Sure, you can ignore the red light and drive through it. It is risky. It may work many times in your favor (saving you time), but every now and then it will be costly (car crash, expensive repairs, or your life).
With trading many things are counter-intuitive. Trading often involves doing the what is uncomfortable, taking risks that others will not take. Not taking the safe bet. etc. And then it also often involves being wrong. A lot. Many times being wrong more than you are right, in fact.
This is counter-intuitive and very difficult for most people to grasp. First, most people make the mistake of assuming risk is a bad thing. Risk is part of life, the degree of risk or the probability of the outcome you are taking a risk on is what is important. There is a risk lightning may strike you dead as you read this post, but I don't think many of you are running out to build underground shelters. There is a risk you will choke on your dinner and die, but I imagine most of you are going to eat anyway.
With trading you need to take risks. But you need to be able to gauge smart risks from dumb risks. And you need to be totally comfortable with being wrong. A lot. This is something that takes a long time to master, as you have to basically re-train your mind and thought process to do what it normally tries to avoid.
If you are swing trading I would have thought it would be easier than day trading but maybe that is not case. I know that feeling only too well with regard to having the feeling of not doing anything and not doing something meaningful. After all trading is the most boring thing in the world, and what do we do when we are bored, look for excitement. But we don’t trade for excitement, that is what casinos are for on a Friday or Saturday night, not that I go to casino’s as I do not have an edge so would probably only go to observe human behaviour.
I think a way around this, and this what I have found for myself, is to find something else to do that forces you to learn something else that is of more importance than trading, something that can challenge you, give you a sense of accomplishment and fulfillment. So now trading is secondary, something that you only do when you have time, you may miss your setup but now you don’t care you know it will come around again and you are not bothered because the brain has other fish to fry, now you are the master of trading not trading the master of you. You are now trading on your own terms, i.e. when you have time not when time has you. Essentially you are not caring, you do not really give a **** so the anxiety goes, the fear goes, you become relaxed and carefree and look forward to the process of trading with a much clearer and sharper perspective.
Think about it, if we constantly thinking I have to do this, I have to reach this goal, and I better not mess up and lose, and better execute perfectly every time. Well then you have lost before you have even begun. This activity increases our stress levels and makes us become more anxious, which is another word for fear anyway. Have you noticed the difference when you have done something when you just do not care about the outcome, have you noticed the is the feeling compared to when you did really care? It is different is it not? You feel different and then as a consequence you act different. You cannot feel stressed and act confident at the same time.
Do not try and control your thoughts but watch them, become the observer, the watcher. Then learn to be the architect, then the master will emerge.
Sage advice . Trading IS a business and if you run your business without guarding your capital relentlessly then frankly you will lose it all . Use a successful business as a model for yourself . Does Mcdonalds hand you an order before you ask for it ? Does your bank hand you a wad of cash before you hand the teller your withdrawal slip ? No , they dont , they wait until its time to act and they function in a state of preparedness having a pretty good idea of what to expect . Thats the beauty of swing trading anyway , its a game of waiting for the market to come to you .
Out of interest what is your time frame, the longer your time frame should alleviate a lot of stress. If you are trading off a weekly chart then you should be only scanning for opportunities say on the weekend to trade for the Monday. On that time frame you place your trade and leave and go do something else with your life. Come back the following week, look for another setup if it's not there close your charting platform and go do some thing else until the following week.
Lots of valuable advice here and they ring true. Thank you
To Trafford, the daily charts is my main timeframe together with references to the weekly chart.
One is the way i see my trading capital. I am probably treating it too lightly as i keep on thinking that it is a "tuition fee" and it can be afforded to be lost. I forgot about capital preservation and survival.
The other is that i have also slipped into an excitment seeking mode while the market is going sideways and not presenting any setups. I have to address these weaknesses.
Its going to be hard and i may make these mistakes again but i work towards making the intervals between this mistake longer and longer until it hopefully goes away.
I have tried the distraction method (i.e., playing a game or guitar, crossword, or anything that takes your attention away from your market) but I find it leaves me out of tune with the instrument I'm trading. I find it superior to maintain attention and focus but to work on my patience. I remind myself that it is difficult to wait and the market pays you to wait - as Mike said. The market will pay you to do the difficult things that others are unwilling or unable to do.
I found the following advice long ago and do not know the source so I cannot properly credit its author. However, I found it useful and still do - it is a vignette about patience:
* Learn to be inactive. Inactivity will help you not to take losing trades. You must be inactive when there is no reason not to be. But you must always be alert and ready to act.
You have to learn to allow patience and serenity dominate over anxiety and frantic activity. A good trader is patient. He is an observer, controls his emotions and composure. But he is always ready to act as soon as an opportunity comes by.
* Don’t get mad if there is no good signal. The signal will come.
* If you have not had a good signal in two hours or two days, keep waiting until it arrives. You should not do any trades out of ‘boredom’ or ‘to win something’. You must learn patience and self control until the right moment arrives.
“There is interaction if there is a call for it, no interaction if there is no call for it” Yangshan.
We should always be prepared, be ready to act, when the signal we have been waiting for arrives.
* Don’t feel like a martyr for waiting. It may seem like an innocent sentiment, but it is a trap that can push you to do unjustified trades. You must feel neutral.
* Recognize patience as a central pillar of your strategy. Think of patience as a central part of your strategy and don’t give it a secondary or lesser role. Elevate it on the list of what you consider important. And don’t be put off when it does not seem to be working. It is working… Beneath the surface it is working.
“Time opens every door to him who waits.” Chinese proverb.
* Don’t fall into the ‘now trap’. There is a great attraction to immediacy; it is a very seductive lure. Many of the problems in trading occur through this love affair with the ‘now’; impatience, trying to hurry up the trades. Traders want to win now. Results must happen now, right in this trade. We put too much importance to the present chart, we allow ourselves to imagine marginal trades as good trades, and good trades as excellent, as long as we can satisfy our need to trade NOW!
* The waiting can be longer than it appears. Traders know that they will win over the long term if they only take the best trades, but they become impatient with the lack of activity. They forget that the long term can be LONG. Taking only the best trades can be frustrating. They don’t show up as often as we would like, and even if they come, there is no guarantee they will become winners. Anger and irritability can arise. Emotions can be severely tested. This is where Zen comes in.
* Don’t defend patience too strongly. One little known error is that it is possible to try too strongly to have patience. Patience must be something soft, natural. We should not make a great emotional effort; it is not about strength of commitment. It is more of a gentler thing, a letting go. Some traders when trying to have patience keep loading up their emotions with every bar that develops in front of them, like steam pressure, until they explode. They feel that all their PATIENCE has not been rewarded. We should feel the same on the last bar of the day as we felt on the first. We should feel neutral. Patience must have calm and tranquility.
* Start trading conservatively, but don’t forget to stay conservative. It is easy to start the day trading conservatively, focused and concentrated. But as the market unfolds we can be carried away by its changes in rhythm, and all of a sudden we find ourselves doing trades we should not, we buy and sell for any reason and common sense goes out of the window. We sometimes have to adapt to the market pace precisely to know and identify such changes, but in general we should avoid getting carried away. Not because it is moving faster or slower we should trade more or less. Catch yourself when you start losing control and tell yourself to go back to conservative trading. The important thing is not who possesses control and discipline at the start of the day, but who possesses it at the start, the middle, the end and all the points throughout.
* Stick to the best trades. One common method to trade conservative is to trade only the best signals, those who offer the best chances of success. If we do this, the future will be a little less random, unpredictable and murky.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
The reason that you lack "discipline" is because your mind is at war with reality:
1. Your mind tells you, "The time you spend trading has no value unless you are making money"
2. Reality tells you, "The current market conditions are not the best for making money" or even worse, "you are losing money right now"
With these two beliefs diametrically opposed it is impossible to impartially observe the actions of the market aka reality. Since you are unable to be an impartial witness to the market you are unable to make good decisions. This is where most traders lose "discipline" and go "on tilt".
The market should have gone up 100 ticks. But it didn't so nobody cares.
Those bastards took out my stop loss, next time I won't use a stop. Next time the market doesn't reverse and wipes out your account.
The market isn't going anywhere. I'll just jump in here and grab a few ticks. The market goes against you
I'll keep adding. This isn't a real move. I just need to get my money back. Nope not happening
If only I coulda, woulda, shoulda. But you didn't
I've been patient the market owes me money. But the market doesn't care about you one way or the other.
Reality is not going to change. Your mind must conform to reality. Only the reality of this very moment of the market matters. Not what you wish, hope, dream, fear, or otherwise project. All these other elements are fantasy and will lead to nothing but your unending unhappiness.
