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Pepperdog

Looking for Help.

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Greetings all. First time poster here so first off, thanks to everyone for this great site and forum. I wasn't quite sure where to turn for some advice, but here goes...

 

I've recently taken the plunge and began live trading the eminis with real money. I opened a "starter account" after many months of watching, sim/paper and replay trading with increasing success, and eventually very good results after countless hours of screen time. I do not follow a mechanical system, but trade based on price action, support and resistance levels, price pattern recognition, and a bit of intuitive feel.

 

But now, with real money on the line, I find myself often hesitating and second guessing what I am seeing live. Often not taking signals only to see what would have been perfectly good, even great trades, pass me by. I can't quite figure out why I have this fear of pulling the trigger. So far I am up about 10% after around 30 trading days but that is little consolation considering what could have been if I were able to consistently pull the trigger. I am looking for a way, exercise, something to help me get past this. Or any advice anyone can give.

 

Right now, these are what I see holding me back:

 

1. Undercapitalized, though I could properly fund my account from other sources. I consider this my "learning account" but I have this incredible fear of losing and blowing up that I choose to stand aside usually.

 

2. Trying to daytrade the eminis while working full time. This is a major problem. Since my work is totally unrelated to the markets, I am not able to devote the focus necessary to be successful in the short time frames I have been watching/trading - I trade using 10k volume for entries/exits and usually 4000-5000 tick for setups/direction on the ES. I am not comfortable holding positions overnight in this market (I have swing traded in the past with moderate success), and not yet prepared to quit my day job but plan to eventually.

 

3. Increasing frustration with my inability to pull the trigger. Seeing what would have been after the fact, which has been causing me a lot of grief with such huge moves lately and countless setups which I just watched pass me by. I always seem to have this silly little voice inside that says "what if it reverses on you?"

 

Maybe the only way I will get through this is just take the plunge, go full time, quit the day job and devote 100% of my focus to trading the charts and setups as they appear and find out if my winners will far exceed my losers (I am confident this would be the outcome). By nature I am very risk averse, so I am having a problem with leaving the workforce and the "guaranteed" income it provides until I am fully prepared. But I also have a relentless and consuming desire to put myself to the test and really find out if I can do this.

 

Should I just go back to paper trading until I can no longer resist? Should I just take the plunge, quit the job, and throw caution to the wind...give it 6, 8, 12 months and see how it goes? Why do I fear pulling the trigger, and how do I get past this? I think this is something inside of me, conditioning, to favor security over uncertainty (i.e. risk averse).

 

Why can't I figure this out?!? It would seem that fear and greed is getting the best of me!

 

Completely frustrated,

J

 

P.S. Thanks for reading!

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J,

Seems like you got a lot going on there while trading a highly leveraged instrument.

 

IMO to make any serious money at this, you have to treat it as your job, not a hobby or something to do in between meetings. I think you'll burn through your test account rather quickly but it will only prove that trying trade leveraged instruments while working full time is not easy. It will not show you anything about your system or way of trading.

 

This is an incredibly difficult business and I would not attempt to do it while working full time.

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Thanks Brownsfan, and of course you are absolutely correct. In hindsight my original post seems pretty silly.

 

To think anyone can be consistently profitable while stealing a few moments here and there between meetings while working full time is rediculous. Maybe someone has done it, but I'm finding this is a major problem for me and my style of trading. To be consistently profitable will require far more focus, patiently waiting for the correct, high probability trades to appear.

 

SO I think it may be best to take a step back from the hobbyist trading of the eminis for a bit. I've been working on a trading/business plan which I will continue to develop in the meantime. The good news is that I am still fairly young, have no immediate family depending on me, few debts, and plenty of money in the bank to survive if I had to. I also have an opportunity coming to live virtually rent free which is when I will make this hobby a full time business.

 

My current trading plan is still fairly simple, can anyone point me towards some examples of robust trading / business plans?

 

Thanks,

J

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If you cant handle your emotions now then think of the pressure trading fulltime?

The need to make a profit everymonth or else your in the poorhouse. I would stick to your day job and just keep going the way your are.

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My real demon with trading real money was I would not pull the trigger because I hesitated or doubted what I was seeing. This is classic problem. In short, I had no confidence in my setups or myself. As a result profits would run away and then I would chase. Bad move.

 

I can't over emphasize the need to get a grip on your emotions. For me, trading mechanically was the ticket. Get a copy of Trading in the Zone. Read it and perform the exercise.

 

Like you, I have a day job. I only can trade a few times per week but this can be a blessing. You are forced to pick the best setups. If you lose you don't sit all day in front of the screen fighting the markets to get your money back. In fact, make a rule. One loss and I'm done. I did that for months and that probably saved my account more than I know. Again, you are up to bat a few times a week, you swing, and you either hit a single or get struck out. You then have plenty of time to contemplate and review. If your system has an edge it will appear over time. As you are well aware, it is the trader who is often the weakest link in the trading game chain.

 

Oh, you don't have to go full time, yet. Hell, you made 10%. Good job!

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Hi and welcome Pepperdog,

maybe you can ask AbeSmith in this thead. He´s got a psychology degree so he might be able to help you better to overcome your problem. I admit I am facing the same problems and am working on them too (who doesn´t!)...it´s really one hell of a mind game! Usually the subconscious blocks us in order to protect us from doing something stupid. Maybe you have to find that thing out and work a little more on it to overcome that blockage.

I also highly recommend The nature of risk by Mamis. Its not so much about the psychological aspect, but really goes into the topic what risk actually is and which types we face. Really well written and by the writing style and contents it is in a totally different league than most stuff out there!

Cheers,

Flojo

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But now, with real money on the line, I find myself often hesitating and second guessing what I am seeing live. Often not taking signals only to see what would have been perfectly good, even great trades, pass me by. tion considering what could have been if I were able to consistently pull the trig I can't quite figure out why I have this fear of pulling the trigger.

 

You have a fear of pulling the trigger because you don't really have a battle tested certainty that you have an edge. As you say, your entries are partly intuitive, and this has injected enough fuzziness into the situation to make you lose that sense of certainty. Some people have sufficient (some might say irrational) faith in themselves to simply "go with their gut," but you sound like you need more proof.

 

This is how I got through a similar problem (I had no problem entering, but would fudge my stops and lose too much money). I created strict setups with hard stops and backtested them 2 years back, chart by chart, bar by bar, and compiled all of the stats in spreadsheets. After that, I knew with a reasonable degree of certainty that I had statistical edge. After that, following the plan was much easier.

 

Coincidentally, Steenbarger said that you have to know you have an edge before any psychological work is relevant. You need to know your edge, and then trust your edge.

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Excellent replies everyone. Thanks for the insight, suggestions and food for thought.

 

Either I can continue to "fly by the seat of my pants" with no defined edge, constant doubt and hesitation, or go through the exercise of relentless backtesting until I can quantify what my edge is. I never really gave enough thought to how important that would be when real money was on the line. Paper trading has always been so easy for me, but I guess that is just the way it is.

 

So with that said, I believe the very first item in my trading business plan is now "Quantify your edge by any means necessary before going full time."

 

Jay

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Exactly Jay...

 

As Dr Brett says...the pro's are preoccupied with finding setups and strategies and deifining these then proving them , whereas the Amateurs are preoccupied with the Psychology of themselves and/or of the market...

 

All the Best

 

john

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