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Showing results for tags 'trading discipline'.
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Trading is a microcosm of life. It often exposes our biggest weaknesses and then slaps us silly with a rather large halibut just to really rub it in. But for those who are willing to listen it doesn't have to all be bad. Traders who are able to accept their own mortal failings and adapt, not only become better off financially for it but usually become better people too. If you deal with things quickly, maturely and comprehensively by planning and self-awareness, you stand a much better chance of mastering your weaknesses and adapting to future (not futures) markets. If you don't, making the same mistake over and over can be pretty darn costly not only to your account but to your emotions too. :doh: :crap: :puke: :bang head: :thumbs down: :coffee: :sleep: is how the emotional roller-coaster goes if you don't address your weaknesses and that ain't great at the best of times. Personally, I know I used to over trade. Not that I was necessarily trading too much, but too long. If I didn't make money early on, I would trade and trade through chop and nothing markets. But I was so engrossed in the markets that I never stopped to think what I was doing. What it did to me was drain me and leave me in a mesmerized state so that when the move did happen, I was usually late to get on it. Ultimately I just stopped trading when it was slow. I'm not sure what clicked exactly on that one though, but it did teach me that there's a time for everything and not to get too obsessed with trading when conditions aren't right. If only I'd known then what I know now, right? I wouldn't have wasted so much time. But to know how to fix a problem you have to what you're doing of course. What does that come back to? Journalling. I didn't do this at that time, so it took me a while to really figure it out. I realise that it probably sounds like I should have noticed, but when you get locked into the market to try to make money (especially make money back), events become blurred in retrospect. Anyway, I'd like anyone to share any of their personal failings so others might see something which helps them too. Kind of a trading AA maybe. If some of the TL vets want to pitch in I'm absolutely positive that seeing that all traders have weaknesses would be a great help to newer traders (and those who are still disinclined to journal).
This means that if there was a positive action by trader A to a market scenario, trader B will also show a reciprocal market response. If trader A’s market response to a scenario is negative, trader B will equally respond negatively if put in a similar situation. It states that when faced with a situation which gives virtually little options to choose from, the trader’s market response to another trader will depend on how the other trader’s response was to an earlier move made by the trader.
Have you ever wondered what most traders consider their top trading rule? The one that with all their might they stick to with nothing but stubbornness, discipline and commitment? This is just the question Traders Laboratory (TL) member "RXS005" put to our community and the answers were fascinating. Here's the Top 10 that were provided, and you'll clearly profit more if you put these into place in your trading. Skill level doesn't matter, whether a beginner or experienced, there's some real trading gems here. The Top 10, in no particular order: 1. "RXS005" had this to say: Never Trade before news ( I have been whipsawed several times and it hurts!) I Wait for all the news to be baked in and let the markets show me the direction. 2. "Tikitrader" said: Stick with the plan and trade whats displayed ignore the urge to create before it too late. 3. "AgeKay" had this to offer: NEVER average down. You only learn this the hard way. 4. "METrades" picked up on one we've all done: #1 Rule: Cut your losses quickly. Once a trade turns against you, kill that emotional thread that says, "It'll come back". You may look at cutting losses, as losing money, but actually, it's a strategy. It's proper management, that will "save" you money, and a piece of mind, in the longer run. 5. Pre-Market Routine and Preparation of Thyself and System (both) was pointed out by "Minoo" he went onto state "As per myself, the above is more of a Process or Good Habit. In my book, If my mind knows of a Rule it inadvertently wonders off to break it." (MMS notes: I think this is a good point -- you need to know yourself and if you don't, you're about to find out everything you ever wanted to know - the good, the bad and the ugly when you trade.) "TheDude" likewise felt that following trade rules could be overrated Tying to find a 'rule', 'set-up', whatever to give that elusive edge is a hiding to disaster. The market cycle is always changing and to expect a rule to apply all the time and generate serious coin just ain't going to happen. 6. "Amswak" felt METrades was onto something and agreed that Never rationalize a loss. The moment you say "It'll come back," you've probably already gone too far. 7. "emg" kept it simple: here is my rule #1. control emotion. Simple but very challenging. 8. DO NO PREDICT (a.k.a. having a BIAS not based on what is actually happening) was what "Attila" had to say. 9. The most important thing is to love your money losing trades and your drawdowns as much as your winners and winning periods. If you can achieve that then fear can disappear and all the discipline issues become much much easier says "Kiwi" 10. Gabriel Baryard My number 1 rule is this, when trading never desire a win or a loss, simply desire an outcome. And, there were just so many great gems here's a few more bonus contributions to the #1 Rule to Trade By: wrbtrader: #1 rule for me is to "never ignore key market events" (e.g. international economic calendar, global events, breaking news and closing times of other key markets). tams: There is a lesson in every trade, especially the losing trades. You've got to embrace them to learn them. AgeKay: I've never learning anything from winning trades, it was always the losing trades that taught me a lesson. Siuya: On getting the head around losing trades, a great piece of advice is not to think about them in terms of individual losses but as part of a series of trades. Once you understand and accept that there will be losses, its a matter of reminding yourself with these losses there will be wins, and that is what you are after. Every business has them, from inventory losses, spoilage, drilling mines that dont work until you hit the mother load, reasearch and development. Its all a matter of 'tricking' yourself in how they are perceived. The full thread can be found here: http://www.traderslaboratory.com/for...rule-7891.html
It occupies a chapter in just about every trading book ever written. It's been preached by every lecturing market guru since the Aden Sisters danced to the music of the gold market. Go ahead and hire a personal trading coach and likely the second thing he or she will utter will be these chosen words (right after “Futures trading is speculative and only risk capital should be used.”)… and those words are, “Limit your losses and let your winners run”. OK. We've been told. But you didn't have to tell us. It makes perfect sense. “On a roll”… “Go with the flow”… “Ride the wave”… “Get out while the getting's good”… we've heard both sides of those golden words massaged in numerous different phrases. We get it. During my trading and coaching days, I would re-visit students that I trained weeks or months previously and low and behold I would discover that many of them were actually doing the opposite... letting their losses run and limiting their gains. After a while I wasn't surprised… I would go into a refresher visit EXPECTING to see “limit/run rule” repeatedly ignored. I would ask the students “Why?”... There were many different stories but one main theme… all the traders, in some way, had gotten out of emotional control. During their trainings, I had made sure that they did extensive back-testing on their systems and I did that because I knew that the more they tested and saw that their system would have been successful, the more they would TRUST in the system and have the strength the follow its signals, especially through rough periods. Apparently simply back-testing and seeing “would-have-been” results wasn't enough to keep these traders in emotional control. What I had been missing was that these traders were taking the losing PERSONALLY! These new traders had been seeing losing trades as reasons to let negative thoughts into their heads. A loss would mean that all the articles they read about “gambling” futures traders may be true. All the family accusations that they were crazy futures traders … well, that could have some merit! This kind of negative thinking (as well as other forms of futures-related negative thinking) makes it so you don't want to take a loss. If you take a loss, maybe your that much closer to that idiot futures trader that you've been accused of. So you enter a trade (after, say, coming off a losing trade)and it starts to go south. As the market heads for your stop, you start looking around at the news, or a chart of a “sister” commodity that's showing strength, searching for an excuse to make it OK to lift your stop. Found it. “Hello… Cancel Bean Ticket 4154.” Stop Canceled. If the market comes back, you'll be the smart guy or gal that made the right move and turned a loser into a winner. What you really just did, however, is turn a potential winner into a potential loser.. YOU. You may have had a winning trade, but you will lose in the end. It's not about YOU. It's about THE MARKET. If you don't take your emotions out of it, you don't have a shot. You must see yourself as a trader not someone who is becoming a trader. There's very little room for mistakes in your trading. Leverage makes sure of that. If you are going to play in the Big League, you have to do act and do what the Big Leaguers do… right from the beginning. Do all you practicing on the paper-trading playing field. Once you put your money up, you either do what your tested system tell you to do or pick a different profession. If you're not training mentally, you're not giving yourself the best chance laughing in the face of your relatives! My best, Norman Hallett Subconscious Training Corporation