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Coping with discomfort


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Coping with discomfort

  #1 (permalink)
 
rahulgopi's Avatar
 rahulgopi 
milpitas, ca, usa
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Managing discomfort is key to successful trading. Successful traders observe these discomforts and do not react to them while most other traders will try to eliminate them (instant gratification) by impulsive action.
For e.g
1) entering a trade outside the plan to get rid of the discomfort from the fear of missing out
2) take profits early to avoid the discomfort from fear of loosing the small profits
3) hesitate to enter trades to avoid the discomfort from the fear of loss by getting stopped out
etc etc.

Here are few examples of discomfort patterns I faced during trading. Observing these discomfort patterns provide subtle insights into your trading. I am calling the archetype that is responsible for this "discomfort pattern" as Orphan. Things like these should be part of the "psychological trading plan"

1) Discomfort : As an anticipated trade approaches, Orphan points out the wide risk just before entering a trade and seeks to avoid the trade. Discomfort of fear of loosing capital and getting stopped out is felt.

Action: This is felt as we evaluate the potential stop required. Take 3 deep breaths as the trade is forming to minimize the effect of orphan. Repeat in a loud voice the concern of Orphan. Soothe the orphan by focusing on the RR (risk –reward ratio ) of this trade. Most of the time orphan only focus on the size of the stop required. Focusing the attention on the profit targets and potential reward soothes the Orphan.

2) Discomfort : Once a trade is entered and the trade is in +ve, Orphan will find reasons to exit the trade. Orphan will focus on the overhead resistance or all the signals that point against being in that trade. Discomfort of fear of loosing the profit and fear of turning a “winning trade” into a “loosing trade” is felt.

Action: This discomfort is felt as soon as Orphan sees $$ on the table. Remove all the areas where P/L is displayed. Continue deep breathing while in a trade. Consult the “exit” checklist to evaluate market strength. Limit orders are placed on the targets, sooth the orphan with objective evaluation of the market.

3) Discomfort: Orphan pushes to take trades outside the plan. The thought associated with this pattern is “It is just few points, try this trade”. Discomfort of the fear of missing out is felt when this happens.

Action: These are the trades outside the plan that need to be discarded. From the discomfort pattern, these are trades that result usually in a loss. As the setup forms, continue deep breathing. Observe the “it is just few points thought” as it arises. Soothe the orphan with objective evaluation of the market.

From the “discomfort patterns” the ones that occasionally warrant impulsive behavior is protecting profit. Perform the below steps to avoid impulsive behavior

1) As the trade forms, clearly define stop and profit targets. As the trade is anticipated few minutes before it is formed, profit targets should be marked on the chart. Talk Orphan thru the targets as all strategies we use have clear profit targets defined based on market volatility and conditions. This will soothe the Orphan and avoid booking profits before the target is hit.

2) Trading to avoid loss will result in break even trading results at the best. Soothe the Orphan using the “probability affirmation”.

3) Our duty and responsibility as a trader is to Win Big and Loose small by flawlessly executing all the trades that form as per the plan.

Discomfort patterns proved to be a valuable tool in my trading. Observe the discomfort patterns as they arise and soothe the orphan in that process thru deep breathing and Objective evaluation of the market.

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  #3 (permalink)
 
lemons's Avatar
 lemons 
Tallinn, Estonia
 
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rahulgopi View Post

1) entering a trade outside the plan to get rid of the discomfort from the fear of missing out
2) take profits early to avoid the discomfort from fear of loosing the small profits
3) hesitate to enter trades to avoid the discomfort from the fear of loss by getting stopped out
etc etc.

Are you reading " Trade Mindfully " by Cary Dayton or you came on the same idea ?

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  #4 (permalink)
 
rahulgopi's Avatar
 rahulgopi 
milpitas, ca, usa
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lemons View Post
Are you reading " Trade Mindfully " by Cary Dayton or you came on the same idea ?

I worked with Rande Howell regarding archetypes. I started classifying the "discomfort patterns" after listening to Dr Andrew Menaker.


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  #5 (permalink)
 Itchymoku 
Philadelphia
 
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rahulgopi View Post
I worked with Rande Howell regarding archetypes. I started classifying the "discomfort patterns" after listening to Dr Andrew Menaker.


It's funny how a lot of experienced traders have similar voices. I could swear I've heard this same guy in a webinar somewhere, but I don't recall the name Dr. Menaker.

Although the host sounds a bit like the oiltradingacademy guy

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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  #6 (permalink)
BlueRoo
Brisbane, Queensland, Australia
 
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Great approach in associating the discomfort with a persona "the orphan"...

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  #7 (permalink)
 courier12 
Mumbai India
 
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Great post! Thanks for sharing. Got some very good insights.

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  #8 (permalink)
sidsdch
NEW DELHI + INDIA
 
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Good effort Rahulgopi.

Thanks

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  #9 (permalink)
 
xplorer's Avatar
 xplorer 
London UK
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rahulgopi View Post
Managing discomfort is key to successful trading. Successful traders observe these discomforts and do not react to them while most other traders will try to eliminate them (instant gratification) by impulsive action.
For e.g
1) entering a trade outside the plan to get rid of the discomfort from the fear of missing out
2) take profits early to avoid the discomfort from fear of loosing the small profits
3) hesitate to enter trades to avoid the discomfort from the fear of loss by getting stopped out
etc etc.

Here are few examples of discomfort patterns I faced during trading. Observing these discomfort patterns provide subtle insights into your trading. I am calling the archetype that is responsible for this "discomfort pattern" as Orphan. Things like these should be part of the "psychological trading plan"

1) Discomfort : As an anticipated trade approaches, Orphan points out the wide risk just before entering a trade and seeks to avoid the trade. Discomfort of fear of loosing capital and getting stopped out is felt.

Action: This is felt as we evaluate the potential stop required. Take 3 deep breaths as the trade is forming to minimize the effect of orphan. Repeat in a loud voice the concern of Orphan. Soothe the orphan by focusing on the RR (risk –reward ratio ) of this trade. Most of the time orphan only focus on the size of the stop required. Focusing the attention on the profit targets and potential reward soothes the Orphan.

2) Discomfort : Once a trade is entered and the trade is in +ve, Orphan will find reasons to exit the trade. Orphan will focus on the overhead resistance or all the signals that point against being in that trade. Discomfort of fear of loosing the profit and fear of turning a “winning trade” into a “loosing trade” is felt.

Action: This discomfort is felt as soon as Orphan sees $$ on the table. Remove all the areas where P/L is displayed. Continue deep breathing while in a trade. Consult the “exit” checklist to evaluate market strength. Limit orders are placed on the targets, sooth the orphan with objective evaluation of the market.

3) Discomfort: Orphan pushes to take trades outside the plan. The thought associated with this pattern is “It is just few points, try this trade”. Discomfort of the fear of missing out is felt when this happens.

Action: These are the trades outside the plan that need to be discarded. From the discomfort pattern, these are trades that result usually in a loss. As the setup forms, continue deep breathing. Observe the “it is just few points thought” as it arises. Soothe the orphan with objective evaluation of the market.

From the “discomfort patterns” the ones that occasionally warrant impulsive behavior is protecting profit. Perform the below steps to avoid impulsive behavior

1) As the trade forms, clearly define stop and profit targets. As the trade is anticipated few minutes before it is formed, profit targets should be marked on the chart. Talk Orphan thru the targets as all strategies we use have clear profit targets defined based on market volatility and conditions. This will soothe the Orphan and avoid booking profits before the target is hit.

2) Trading to avoid loss will result in break even trading results at the best. Soothe the Orphan using the “probability affirmation”.

3) Our duty and responsibility as a trader is to Win Big and Loose small by flawlessly executing all the trades that form as per the plan.

Discomfort patterns proved to be a valuable tool in my trading. Observe the discomfort patterns as they arise and soothe the orphan in that process thru deep breathing and Objective evaluation of the market.

Can we sum this up as "You need to learn to become comfortable in being uncomfortable"?

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Last Updated on March 22, 2016


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