Fear of losing unbooked profit due to greed and perfectionism...

[MC]

I'm hoping the Dr. and/or those of you that had my problems and overcame them can help me out here.

I've been in the market just over a year now and have learned an immense amount from giving everything I have mentally to my studies. I watch the market real time from open to close at work where I also am lucky enough to be able to trade as actively as I want. Then I come home and at night and on the weekends and study many MANY more hours (thankfully my Girlfriend is VERY supportive). I've put so much into this thing and I feel I'm approaching the stage of using my edge and becoming profitable but my mind keeps getting in the way. I know there is no substitution for experience which I'm maybe lacking, though I also know where my issues are and can spare trading capital by getting my head right early on. Please here my cry for help.


I have very little gambler in my blood and love a sure thing (AKA greed). I know the market trade for trade is NOT anywhere near a sure thing, though NET profitability can be a sure thing if you set yourself up for it. I also know to gain you have to risk and that many success stories often start with a failure. I know this and know how to get there in concept but my mind won't allow me to execute the plan. I have a profitable system in backward and forward paper testing which is the easy part since paper trading subconsciously is just a game to many, myself included.

I execute stop orders no issue and can deal with loss on that level very well. What I can't seem to shake is letting a trade work for me in the face of profit. I get a glimpse of profit and cash out knowing my target probably will be hit without me. I have tried to scale out only to sell the 2nd half right after the 1st half. My system calls for a scalper contract to know I'll book some profit and then a runner with a trailed stop from break even for a chance at the bigger move risk free. BUT...I can never seem to allow myself a shot at the bigger move. I thought the knowing sure profit is waiting would help quench my greed but sadly it hasn't worked for me.

I'm a perfectionist which may be a battle deep in my head causing me stress as well. Perhaps I fear being wrong so much that I'll take the quick win of the battle at the expense of winning the war? I do realize consciously I'll rarely if ever hit a home run and that perfection isn't needed to be net profitable, but execution IS needed. At the risk of sounding proud, I think my smarts are actually hurting me. I over think everything deep in my brain despite being able to tell myself to trust my instinct. I know I will gain profitability because if I let winners run live I'd already be well into profit just like I've done paper trading. So it's not a question of if, BUT when. And this is where I hope yall can help this greedy perfectionist out.

Anyhow, the cliff notes version...
*I suffer from perfectionism and greed.
*I'm smart enough to know what to do consciously and whats broken but now I need help with the sub-conscious to stop hurting my performance.
*I NEED HELP.

Thanks for listening to my rant and I look forward to your insight. I think this is the best trading community on the web and I'm proud to be a part of it.

[aiki14]

I trade in stocks and options, with an intraday to 2 week timeframe, so I may have a different perspective than you do specifically, but here's how I do it.
When I enter a position, I have an entry price, upside exit price, loss tolerance and time frame. If any of those are reached, I am out of the trade. If it's a loss I remove it from my screen for 30 days to avoid wash sale problems. If it's a win or the time is up, I re-evaluate it as if it's a new trade. Usually if I do re-enter it's with less at risk, so I lock in a portion of the profits. If I do not re-enter I avoid watching for a while so I don't second guess myself. Then after a few weeks I'll spend some time trying to determine what I may have missed.
My upside target is normally 2X or 3X higher than my loss tolerance.

The technical trading in futures, commodities, and Forex, is outside of my purview and I'll leave it to folks expert in those areas to comment on how they handle your quandary.

[Hlm]

Warning: It’s been awhile since I have posted on ANY forum and may have a tendency to ramble and get a little off topic.

Perfectionism…that was, and still is, one of my trading ‘demons’. When I added day trading to my arsenal I soon found myself in the exact position you’re in. I started out as a pure scalper trading all in and out at fixed profits. Of course it didn’t take long to find myself constantly watching the market run while sitting dumbfounded on the sidelines. I then developed trend setups that caught the runs only to give much of it back on choppy (consolidation) days. Being a so called “perfectionist” I was always tweaking my entries and trying to figure out what methods to use when. This, of course, was my analysis paralysis stage brought on by an abundance of indicators.

What dragged me out of this stage was the realization of Money Management as a setup. I truly believe that this is the answer to figuring out the whole market conditions mystery for momentum day traders. The facts are simple…on trending days scalpers don’t make as much as position holders and on consolidation days the opposite is true. With money management you can take advantage of both. At the scalpers target take off a large position of the trade. Depending on how much you have left you can move your stops up close to your entry (net breakeven) or to your entry (profit is locked in).

Now the big question that MC is having trouble with…what to do with those trailers. At this point in time the trade cannot turn in loser (very important). Either you have locked in profit or you are going to get stopped out with just buying the broker lunch. How aggressive you want to get with you trailers depends on many factors. How many trailers do you have left? How strong is the momentum? What S/R areas are coming up next? For example, if I have more than one car left I would most likely dump one off at the next S/R. If I only have one left I would be looking past that S/R to see if there is anything bigger on the other side (MP Value Area, HOD, LOD, etc).

Personally, I do not like the idea of random upside targets or indicator trailing stops. There are two reasons that stand out the most when I see traders cut their trailers short. First, they have yet to lock in some profit. If you want to be a winning trader you have to take profit. Sounds simple but there are surprisingly a large percentage of traders that let winning trades turn into losers on a daily basis. Second, they are watching the market but not truly reading and understand what the market is saying. For the men out there, it is the same as hearing your wife talk but not actually listening to what she is saying…can only end badly.

So how do we read the market? I am sure most of you have higher risk “counter-trend” trades or can at least see them. Sometimes it’s just the same setup but on a smaller timeframe. Where will this higher risk trade possibly break? Where do you think it will go? Where is the next support down? At what point does the trend change? This is how I trail my stops. Just like when playing chess, you want to constantly be evaluating the possible moves of your opponent and reevaluate your risk accordingly. This will be different for each individual depending on many variables such as setup, position size, standing for day, etc. For me, I will take profit at the point where I would consider the possibility to take the opposite side. More times than not, at this point price will pullback to a place where I can reevaluate and look at taking another entry into my original direction while limiting my market risk. Depending on the S/R nearby and the momentum/bias of the trade, I will not hesitate to take breakeven after breakeven on the trailers. Many times these trades occur right before the runner.

Back to your problem MC. You state that you “fear being wrong so much that I'll take the quick win of the battle”. You are right; this comes directly from your perfectionist personality. I had the same exactly problem at first. But it sounds like you already know what needs to be done. Get yourself in the mindset that taking a breakeven on the trailers is NOT a bad thing IF by your evaluation the trade still said up at the time. A BAD thing would be to exit a once winning trade with a loss. Stop focusing on what could have been and focus on what is. Once you have profit locked into the trade lean back on your chair, take a deep breath, and then start listening to the market. Why did you enter the trade? Is the setup still strong? Can you see signs of wiggling and pausing but still with upward momentum? Keep asking yourself is there a reason to get out? If not then don’t and move stop on trailers up accordingly. Of course there will be times when the market comes back, stops you out, and runs in the right direction. But then again, there will be plenty more times when the market comes back, stops you out, and then tanks.

Again, sorry for the rambling and getting a little off topic.

CliffsNotes version…
*Don’t just watch the market, read it. Just like you hopefully did when you entered.
*Trailers are there to take advantage of long runs and taking a b/e on them is NOT necessarily a bad thing. Move stops on trailers up according to the first point.
*You know it, just do it.

[MC]

Definitely not ramblings there Hlm. Thanks for all the input and advice so far from you both.

You're right, I really just need to start doing repetitions of proper execution and turn this into a problem of the past. I'm normally a very systematic and balanced person in all other aspects of life so for me to be emotional is awkward. I think that makes me stress even more and look for the first out so I can stop feeling that emotion. I don't like feeling emotions, perhaps I need to add that to the list of quirks.

I daytrade the YM off either a 5 minute or 144 tick time frame depending on action. I'm a former skateboarder/rebellious type so I dislike micromanagement yet that's what I'm choosing to do here.

Overall I think my market sense for risk profile and money management are ok. It's just getting some properly executed trades under my belt to ditch the emotional side of things. I have looked at some NLP and hypnosis things and would be open to anything that might make my transition easier and quicker.

Again thanks for taking the time to assist me.

[torero]

Great post Hlm. I want to add that you might need to refocus your perfectionist ideals from win/loss stats to breakeven/target hit stats. I know it's not easy especially when you have to constantly review your trades and performance but try to overlook the win/loss columns. Instead, focus on the perfecting the profit target placement. Let's say you want to trade the breakout, set the target at the next resistance level that it's almost a sure thing the breakout will reach. So setting objectives are one of the peeves of perfectionists (always making plans and lists), use this as a starter. From there, you can go for targets farther out from your entry, baby steps...


The other thing is to use 2 exits: the first half of your position take immediate profit. Move the 2nd to break-even (entry point) or breakeven from the entire position. This may help your tally to 0 loss and feed the instant gratification beast and let the 2nd one go.

Being a perfectionist also does have its advantage. That is, you become very picky (and should be) with setups. This should put the stats in your favor. Of course, there will be problems with regret of letting a trade that was not perfect but later become a biggie. So remember, every event has a consequence. That is, with every new strategy, there are new beasts that will surprise and hurt your mental toughness, watch for it and good luck.

[BlowFish]

Cracking first post HLM.

This thread shares much with this one http://www.traderslaboratory.com/for...html#post26143 in this very section.

Of course the irony is that all we can do is execute perfectly based on how we read the market imperfectly. Narcissism? Nah, but the ego plays its role. Be humble in the market or it will humble you! (quoted from just about every list of 'top trader traits' on the planet).

[MC]

The trade yesterday I was up $140 and walked with $50 so it's bitter sweet for now though I'm not going to let 1 trade define my will power.

I'm only allowing 2 trades a day to force myself to be very selective.
I just took one and got out for $10 gain despite being up $50.
The key though...I executed again, so though it sucks I've left money on the table these last 2 trades I'm executing and in the long run that will reward me I'm sure. I can either be rewarded a few times for not executing and re-enforce my bad habits or I can break them now and never look back. Yesterdays play honestly could have just as easily kept running and I gave myself a shot at that. When I finally catch and ride a rocket this will all be worth it and will prove net positive.

Thanks for the input gang.

Added----
OK, took my 2nd trade and am done for the day.
Net $60 gain.

I didn't let the 2nd hit my target so it was not a solid win to me.
And yes, it did go on to hit my friggin target and then some, so the times I don't let the trades work for me I get burned. Fitting and reminds me why I need to keep following the plan. You never know which trade will hit your target so treat each like a winner till stopped out.

2 of 3 following the plan is 2 better than I've ever done before so I need to press on here and stay focused with my new comfort level.

What a difference pivots and my other guides are making. Both trades were shakedowns that I normally would not take due to fear. I saw the key levels and will continue to take high probability trades with sound risk to reward ratios. Some may find this hard to believe but I was sporting 5 point stops on these trades on a 3 minute chart. On the YM that's pretty damn tight but the levels were there and if they failed the reason for being in the trade were void anyhow. No wonder I was failing left and right with no levels or MA's on the chart. I had no road map to help spot entry and targets.

[james_gsx]

Wow, it's like reading something I would write about my own problems

Hlm can attest to this, in the chat everyday I see similar setups that everyone else sees. I take those setups and time and time again I take a quick 1-2pt target and watch it run. Sometimes I get in the zone and have consistent trades that turn out to be very profitable. Then something clicks in my head that I wasn't suppose to do that well, then the emotion and frustration kicks in and I give it all back.

A few things I do now that might help or they might not help.
1 - I don't trade the first hour anymore, I let the market set up in this first hour so I can later plot my s/r lines. Yes I have missed some big moves, but I feel better throughout the day.
2 - When I feel emotion taking over or that I might give everything back, I simply walk away for 30 minutes. I do whatever I want that's not related to trading, so I can clear my head. And by saying that emotion is taking over and I might get everything back, this can happen when I'm in a hot streak. I will take several winning trades but continue to take unbooked profits too fast and leave more on the table. When I see price take off without me I tend to get frustrated and my instincts tell me to chase. This might be your case, it might not be but it's something to think about.

One thing that hlm said in the chat that stuck out at me was on a rather rough day for him. I was doing great since my scalping mindset was perfect for the choppy day, but he said, "It's not about the money it's about the trading." This really hit me because I realized that I'm always staring at my p&l and thinking about money. I want to run around telling everyone how much cash I just pulled in and that I'm on my way to buying my private jet and Bentley. But if I focus on the money, I'll never get there because I'll want to grab small profits so fast that when a losing trade comes around all that work gets blown out of the water. So instead I need to focus on my trading and analyzing myself, not the money.

In my trading plan I have an entire self psychology section dedicated to my perfectionism and overcoming it. Basically instead of analyzing every trade I take, I analyze my emotions at the time, whether or not it was apart of my setup, did I execute and manage the trade properly? This helps so I'm not analyzing the hell out of charts every night (which creates fear the next day because I'm worried about money and missing out on everything) but instead I know what I need to focus on with myself. I know I'm a good trader, I just have to get over a few road blocks to get where I want to be.

It's nearly 4 am and I'm sure a lot of that didn't come across as clear as I want. So if you have any questions feel free to ask me. If none of it made sense then I apologize

[monad]

Great Post james, You are spot on, very much in keeping in with what Mark Douglas outlines in his books on Trading Psychology which is 99% of this business

Patience, mindset free from remorse over missing moves, focus on the next trade etc are the key,

[Hlm]

Yes, great post James and glad to hear it.

Just remember...
Trade from the charts (wealth and growth), not your PnL (survival). The market only has so much movement to give at any given time. If you have a finely tuned strategy that is consistent and fits your risk tolerance, you can always add another contract if you want more from your PnL.