[ajhunter]

The title describes my trading experience. I currently seem to trade well for a month or two, making a set amount of money each day, and then one day I'll break all my rules -- take out stops, double-up losers, only counter-trend trade, completely refuse to be wrong -- and lose the equity that I had made.

This has to be psychological! I personally think that I have a version of "fear of losing" combined with "overconfidence for my skill level". When I have traded well I begin to gain confidence and thereby loosen my adherence to my rules. Instead of taking my early morning loss on what I clearly recognize as a bad trade, I presume that I can simply trade my way out of this "difficulty." Good Luck. Why would today be any different than yesterday or any of the other days and weeks that I have made my monetary goal? That's what I seem to be telling myself as I fight the trend, and then fight some more, and some more... and why not a curtain call as well.

Well that may be part of the problem right there -- misconstruing trading well with a monetary goal? Looks like I have to do a lot of investigating of my beliefs.

Just wondering if anyone has any techniques to avoid this mistake? Or, if anyone has overcome this problem? I guess in time the pain will become too great and I'll learn not to break my rules.

[MightyMouse]

Originally Posted by ajhunter »

The title describes my trading experience. I currently seem to trade well for a month or two, making a set amount of money each day, and then one day I'll break all my rules -- take out stops, double-up losers, only counter-trend trade, completely refuse to be wrong -- and lose the equity that I had made.

This has to be psychological! I personally think that I have a version of "fear of losing" combined with "overconfidence for my skill level". When I have traded well I begin to gain confidence and thereby loosen my adherence to my rules. Instead of taking my early morning loss on what I clearly recognize as a bad trade, I presume that I can simply trade my way out of this "difficulty." Good Luck. Why would today be any different than yesterday or any of the other days and weeks that I have made my monetary goal? That's what I seem to be telling myself as I fight the trend, and then fight some more, and some more... and why not a curtain call as well.

Well that may be part of the problem right there -- misconstruing trading well with a monetary goal? Looks like I have to do a lot of investigating of my beliefs.

Just wondering if anyone has any techniques to avoid this mistake? Or, if anyone has overcome this problem? I guess in time the pain will become too great and I'll learn not to break my rules.

Everyone has done that. I certainly have, but i don't now.

In my mind it is akin to playing rags when you on a streak in poker or playing on tilt after a big loss.

[Tradewinds]

It's not all psychological. I think it's helpful to know how our emotions and behavior affect our trading, and that is certainly a big part of trading. But the market is "tricky", in the sense that it is difficult to predict for most people. If 90% of traders fail, then they must be using the wrong information, tactics and strategies. And the people who do know how to make money in the market, probably are not going to tell you how they do it. They will give you little hints here and there, but intentionally leave out critical information.

It is true, that people can be given a winning strategy, and fail to implement it. So it isn't all about having the right knowledge. But if we don't have the right knowledge, and a winning strategy, then no amount of psychological discipline will ever make us a winning trader.

The market often shows signs of reversing direction, consolidates, and then continues. The market often seems directionless. It often seems like it is trying to "fake you out". That is what causes the problems.

Are you trying to constantly have an order in the market, rather than waiting patiently for the best set up?

[Tams]

Originally Posted by ajhunter »

The title describes my trading experience. I currently seem to trade well for a month or two, making a set amount of money each day, and then one day I'll break all my rules -- take out stops, double-up losers, only counter-trend trade, completely refuse to be wrong -- and lose the equity that I had made.

This has to be psychological! I personally think that I have a version of "fear of losing" combined with "overconfidence for my skill level". When I have traded well I begin to gain confidence and thereby loosen my adherence to my rules. Instead of taking my early morning loss on what I clearly recognize as a bad trade, I presume that I can simply trade my way out of this "difficulty." Good Luck. Why would today be any different than yesterday or any of the other days and weeks that I have made my monetary goal? That's what I seem to be telling myself as I fight the trend, and then fight some more, and some more... and why not a curtain call as well.

Well that may be part of the problem right there -- misconstruing trading well with a monetary goal? Looks like I have to do a lot of investigating of my beliefs.

Just wondering if anyone has any techniques to avoid this mistake? Or, if anyone has overcome this problem? I guess in time the pain will become too great and I'll learn not to break my rules.

you have to do some soul searching and ask yourself if you really know how to trade, or why to trade.
nobody can do the assessment for you, you are the only one who can answer that question.

to me, trading is like riding a bicycle.
when you first learn to bike, you would fall a few times.
but once you got up and can go around the block a few times, you are not supposed to fall anymore.

At least not falling down for no good reason.
e.g. you go speeding down a slope... and you fall. You know why you fall... the purpose of the ride was different from the ordinary ride. You used to ride the bike from point A to point B, maybe to the corner store for milk (transportation), or around the block 10 times (for exercise).
now if you fell when you sped down a slope... you were not doing the transportation thing or the exercise thing anymore... you were looking for excitement, and you got it.

there is a purpose to trading. It is different to everybody.
some trade because they lost their job.
some trade because that's their living.
some trade because they like to gamble.
some trade because they are bored.
some trade... because they like the excitement.

find your purpose... and enjoy the ride.

[SIUYA]

Originally Posted by ajhunter »

Just wondering if anyone has any techniques to avoid this mistake? Or, if anyone has overcome this problem? I guess in time the pain will become too great and I'll learn not to break my rules.

as a suggestion - open another account for your punting/gambling/no rules trading, and keep your strict rules based boring but profitable trading separate.
One issue with this idea is that you will want to favour the strategy that makes you money on the days its profitable and possibly it will re-inforce some bad habits....but as you have those already and this is about trying to separate the "why" as opposed to much else it might be worth while.

This works for me in that I have various accounts and strategies. It does not stop me from making mistakes, but it keeps me focused, and any actual drawdowns get compartmentalized and dont blow up the account.

[ajhunter]

Thanks to All,

Tradewinds -- Yes when I am struggling I am not patiently looking for value but rather wanting to be in the market but nevertheless swimming against the current all day.

Tams -- I'm going to take the bicycle analogy to heart. To be a proficient -- mature -- trader means that you simply don't respond in the fashion that I occasionally do. Time to grow up.

Reminds me of one my favorite Posts on TL concerning the how to avoid trading the Chop. Response:"Don't do it".

Siuya --I've never thought of that. If I'm feeling off and fighting my better judgement I should just my modest loss and then trade "badly" on the Simulator account. At the end of the day I'm sure I'll be glad I did. Interesting.

[Richie1977]

simply have a max loss for any trade, and or max loss for a day...

[peterjerome]

Originally Posted by ajhunter »

The title describes my trading experience. I currently seem to trade well for a month or two, making a set amount of money each day, and then one day I'll break all my rules -- take out stops, double-up losers, only counter-trend trade, completely refuse to be wrong -- and lose the equity that I had made.
.

sounds like you know exactly WHAT you are doing wrong....now, just STOP doing it.
it is within you to do that.

peter.