How best to fight the mental game...

[brownsfan019 17]

Hi Doc,

Good to have you here. In another thread - http://www.traderslaboratory.com/forums/f34/wide-range-bodies-big-candles-1480.html - towards the last few pages I started to discuss the challenges I was having with my exit method.

 

In a nutshell, the one glaring weakness I have in trading is always wanting more on trades that provided more (in hindsight of course), but at the same time, making money on days when those moves are just not there. I know there's many different ways to try to figure out when these moves will occur, but for sake of discussion here, let's assume that very few people can time when the big moves are coming and when they are not.

 

So my question is - how do you train your brain to accept your trades as they are? In other words, how do I train my brain to accept the fact that sometimes trades will continue to move in my direction after I've already exited a position?

 

I find myself on days like last Wed where I went long the ES at 1518 and exited at +2.75 to end up seeing at the end of the day it was up almost 20 pts from my entry getting frustrated. I have ways to jump back on and continue taking little chunks of that move, but of course I think - how nice would it have been to been long ONCE and pocket almost 20 pts. Then there's days where taking 2 or so each trade is what you'll get. And I know that those days are more likely than what we saw on Wed. I know that and understand that. Easy to sit here now and type that. But in the heat of the moment, as you know, your brain can play some wonderful games with you...

 

So doc, what's a guy to do?

 

Thanks for your help!

[TinGull 10]

Hey bf,

 

what Im about to say helped me a ton, though it may be obvious to some. Take what I say with a grain of salt, cause Im still a newbie trader (at least I feel so).

 

With that disclaimer out of the way...there were a couple of people who have helped me tremendously with some issues such as youre describing. My girlfriend and my coach.

 

When I have a trade that Im in and it's going my way, and then I see some weakness creep in I'll get out ASAP. Weakness to me shows up as price stalling under a pivot, seeing a quick rejection of a significant area... And then when I get out, many times it continues going my way. Frustrating. When I get all in a tizzy about it, my girl will say: Did you do the best you could do with the information you had at that moment? Sure...I did. I saw weakness and got out. "well what are you crying for?!" she says.

 

My coach told me...you can't see to the right of the chart, so why bother thinking about it. Think about what is happening right now. Lately this has become something that's gotten easier for me to do...not think. I had been letting some trades overmature and taking profit after the max peak had already occurred. Equally as frustrating for me. So now, I tell myself...I'll hold on until I see weakness. When that weakness comes in, there's a chance it'll continue up. How much do I want to risk to find out if it will?

 

My coach recommended applying a Fib rule to my profits. Say I see weakness...how confident am I in the trend that is happening? Do I want to risk 62% of my current profits to find out if it'll continue? Maybe I feel somewhat confident and I want to risk only 50% of my profits to find out, or...maybe price has already made it's average range and the likelihood of it continuing aren't high, so I might risk only 38% of my profits to find out if it can continue.

 

I figure, price is always advertising for buyers and sellers. If I'm in a move long and Im up say 30 points on the YM, and some small weakness comes into the market (advertising for sellers), is it likely that sellers will come out in force? If I dont think it's too likely, then I'll move my stop to BE+10. If I get taken out, then thats fine with me. I didn't lose any money on it, and my risk was defined.

 

Then, if it takes me out to the tick and rises up another 80 points, I grab a BB gun and shoot a squi....errrr....jk. If that happens I just say...freakin Market! What could I have seen to anticipate this happening. Every experience, good or bad, is a learning experience. That, to me, makes every experience a good experience as I love learning. When something doesn't go the way I wanted it to (get out too soon or too late) then I go to the garden and tend to my veggies. I know I followed exactly what I set out to do and that's all I can ask for.

 

 

I dont know if that helps you at all...but that sort of stuff is what helped me.

[brownsfan019 17]

tin - thanks for sharing, that was a good read.

 

For me, this part of the biz is the hardest part - realizing that you will never take maximum profits all the time. I'm not anal in many things in my life, but my trading biz is one of those things that I constantly want to improve on and take to even a higher level. Of course, just taking more profits when they are there is the simple solution, right?

 

One question tin (not sure if this thread is best or not) - how do you define 'weakness' when you are in a profitable trade and looking to consider a quick exit? Like I mentioned in the other thread, I am terrible at trailing (or maybe it's just the whole premise that doesn't sit well with me) and would be curious how you quickly flatten a position.

[TinGull 10]

Real quickly...I have been watching the speed of price movement. When I enter a position, I want it to move in my direction rather quickly. If it slows down after I've entered and I'm up maybe 10 points, I'll just move my stop to BE, as that is a sign of weakness to me. When price prints fast, the herd is entering, and when price starts to slow down towards a known reference area (be it a previous days hi or lo, value area pivot or 30min OR hi or lo) then I start to think that as a beginning sign of weakness. If price cruises through the pivot, but closes the candle back inside the pivot, that to me is a rejection of price movement and I'll get out. Or...good place to get in the opposite direction.

 

I look a lot at ATR of dailies as well as seeing spikes in price on the prior day to gauge a range for price the next day. If price has a really extended range to the upside...I won't look to initiate longs, as it's not hi odds. Looking for price getting stagnant when the YM has had a range of say 90-110 points is a good sign that pressure needs to be released and to me...shorts are hi odds trades that point.

[walterw 10]

I dont want to intrude on this thread, thought the idea is to hear docs opinion... but reading your issue on exits Brown it really reminds me of a great crisis I went thru on my trading career some years ago...

 

I know each individual has their own method of thinking and what can be helpfull fore some may not be for others... any way hearing all the bells sometimes can bring some light at the end of the tunnel...

 

My experience with exits is similar to what Tin just mentioned, you can get frustrated for geting out early or frustrated for waiting and loosing what at some point was profit...

 

I came to the conclusion that there is an "average" exit method that will work from 0 to 100 % expectations... so triyng to find an exit method that will always give me a let say 90% of my expectations its totally imposible, because the market is so unpredictible on its output that exits come on the same cathegory of unprediction...

 

So to calm the traders mind and take out the burden and stress of triyng to exit the best posible, I came to the conclusion that a trader must KNOW his average exit... (technically speaking ) and simply trade it...

 

If the outcome could had been better than average, dont feel bad... you had the discipline to stay tunned with your average exit and you are in peace with yourself...

 

Now that sometimes demands a truce with yourself in terms of what are your monetary expectations on an X universe time period, say day, week, 15 days or month...

 

If you program your self to make (lets say) 1000 dollars per month contract... in 30 contracts thats 30 k month... nice mmm ok... so be in peace with that target

 

maaaaybe the market wanted to give you 50 k that month.... but you know, that maybe creates a great anxiety, you are depending emotionally on the market performance and frustration will be in there... on the other side you made 30 k ¡¡¡ whats the deal on been frustrated...??

 

I would like to conduce a poll here on TL and see how many traders are making 30 k on a monthly steady basis...

 

You see, having certain monetary objectives and asigning to them the 100% of success detaches you of reading the market to rate your success... wich is an evil machine that will turn you nuts...

 

You made your month target.... you had 100% success.... be Happy and enjoy life...

 

Now my other key.... Keep your $ targets LOW... if the target is low, the more great chances you have of making it real... if its to high chances are lower so there is a psicologicall pressure there that tells you I am triyng to do something not realistic...

 

When you combine all this with your trading, taking average exits... it may work like a charm...

 

Takes self programing, takes time, takes will.... it is posible, it makes you free...

 

If the market outperforms your targets, let him outperform, you made your monthly target, feel good with that, enjoy life....

 

Hope helps.... cheers Walter.

[PYenner 10]

The advice of a trader with 20 years experience (Simon Harris) was-

"Don't ever regret taking a profit, only to find that the price continued to move your way".

To me, taking a profit is beating the game, doing your job.

Pat yourself on the back for getting it right, first and foremost.

 

The question really splits into two parts.

For the first part, when a swing goes as expected, I am happy to get 80% or more of the expected movement and to achieve safety from an exit that might be a bit early. That is the basic daily trade, the one you have "signals" for.

 

The second part, when the movement goes further than expected, has to be treated as a second strategy and you can only trade such a strategy if you have a signal for it that can be relied on. If you don't have such a signal then you have done all you can do for the present. The aim is to go in search of signals that you are currently unaware of. They may exist, they may not.

 

But until you have a relible signal you should stick to the strategy you have because gambling leads inevitably to losses.

 

To me, leaving a portion of the trade running in the hope/risk of a windfall is gambling and likely to be a waste of time and effort, a distraction from the real issue which should be about looking for a usable signal.

[ItalianSharp 10]

Let me give you my 2 cents here.

 

First of all, any exit strategy should be correlated with a position sizing strategy.

 

If you are a YM 1-contract daytrader it'd be unrealistic to expect to make 50pts off any given trade. Just stick to your basic exit strategy and don't care what the market does next unless you get another entry signal.

 

If you trade more than 1 contract, scaling out might be the best fit simply because you take profits at different levels...and if you are lucky enough to catch a decent trend, you can take out most of the move with a single trade.

 

Last but not least, what are your volatility expectations at the time of your trade? Is the market move led by important news announcements? Are all the other markets moving in synch? How fast is the market moving?

 

If you look back at the FOMC minutes of last Wednesday, after the initial 30min chop, all markets finally took a direction and produce a rare parabolic upmove.

 

That would have been a good time to get greedy simply because FOMC minutes often produces those types of moves. If you are lucky and good enough to be on the right side, just sit back and enjoy your profits...place your stop at BE + some and let it ride...those are the times you can make a shitload amount of money with minimum effort.

 

In summary:

 

1. If you trade 1 contract, stick to your basic exit strategy and take whatever the market is willing to give you at that time.

 

2. If you trade more than 1 contract, scaling out is a good compromise and will allow you to catch most of the trend moves.

 

3. Always monitor volatility. If volatility is high and markets are pushing, let it ride.

 

IS

[BlowFish 10]

Be interested to hear what the doc says but I think we have it covered. Many people have said the same thing in different ways. Essentialy, You can't have it all. You need to know what moves you are trying to capture and stick to hunting them. While it seems you accept this at one level you are clearly resistant to the idea. (forgive me for becoming more blunt as you repeat the question )

 

Perhaps the question you need to be asking is why am I seeking 'perfection' in a place it can not be found (my plan) rather than a place it can be found (how I execute my plan). Well this is what I suspect having been down that particlar never ending path.

 

Ask yourself better questions and you will get better answers.

[brownsfan019 17]

Hey guys,

Thanks for the input. Hopefully the doc will stop by and give us her opinion as well!

 

I agree that you cannot extract all the profits, all the time. And Walter was right, the income being generated from trading was much more than when I was a broker working 70 hr work weeks, so life should be good, right? I know, from a birds eye view, that makes perfect sense and to look at it right now, on a Sunday night, sounds great to me as well.

 

Come Monday though... if a trade just takes off... the battle ensues - call it greed vs. realism. Realism states that I will not extract every last penny all the time. Greed says to get it and get it now.

 

It's a wonderful psychological battle and I guess if the problem is whether I made $XX,XXX this month vs. $XX,XXX last month, it's a good problem to have. Now the pursuit is to push those X's a little further and debate about making $XXX,XXX vs. $XX,XXX a month!!!!

[BlowFish 10]

If you want more XX's increase size as your equity grows. I'm sure you know this of course .

[torero 10]

Brown, I know you want to hear from the good doc but I learned it from somewhere that the best way to get rid of some of unwanted unhealthy thoughts would be to rationalize them. So here it is: When you were a stockbroker, were you able to get every single account from all the sales pitches you've made? Were there some typical profiles you know it would be easy or difficult for you to land win them over? Think about it hard and you'll see why these thoughts don't make sense. It's possible but baby steps by drawing out new goals and plans in achieving those goals.

 

So maybe you can draw up a new trading method in order to capture these goals/points?

[brownsfan019 17]

Good point Tor. I never landed each and every whale that I went after, nor can I do it in trading. I can however get as many as I can, whether that's one large whale or a handful of 'baby' whales.

[TinGull 10]

Like little beluga whales?

[brownsfan019 17]

Paging Dr. Janice, you have a thread or two on TradersLaboratory to reply to.

[walterw 10]

I hope we dont drive her nuts ¡¡¡ jejejej maybe after the TL experience she goes for therapy ¡¡ jejej... Dr. Janice this forum is unique on its kind... dont panic ¡¡¡ cheers Walter.

[Guest cooter]

Hey Doc,

Any comments to the initial post?

[ammo 10]

if you successfully keep taking small profits and your acct grows,so will your confidence which will come from your increased knowledge,as it increases so will your ability to read the market,be patient and be glad you are profitable,the rest will come...good luck

[thetradingdoctor 10]

It is prudent and reasonable to catch the majority of a move. If you can do that consistently, you are a winner. Trying to top tick or bottom tick is like a blind man in a pitch dark basement looking for a black cat that isn't there. You get one chance in a lifetime to pick the absolute top or absolute bottom of a move. Try to trade the middle and be grateful if you get it. In terms of how much money people need to make every month, this is totally individualized. This is part of your trading plan and you are competing with yourself every month to succeed in this plan and be consistent. After all, it is a job, least we forget. Also, I do not advise increasing size until one is really able to execute consistently and successfully and to meet his/her monthly goals for 6 months. There are many who want to increase size when winning, and many who actually do increase size when losing. I think that either of these has a tendency to backfire and I do not recommend them. Some may, but I can only tell you what has worked for me. I believe in getting rich slowly and steadily. I do not swing for the fences or try to be brave when I don't have any real edge.

 

Each of you must find your own way, sing your own trading song and learn from the greatest teacher in the world--the markets. No one can tell you what to or how to do it. You can read tons of books, articles, newsletters, etc, but --in the final analysis-- it is you, your screens, your keyboard and your brain that makes the final decision.

 

Hope this helps a bit.

 

Thanks!

 

Janice

[brownsfan019 17]

OK, no offense doc, but I don't see any added value from your post vs. the other posts from the other traders here.

 

Before I get chastised or anything, when I look to a professional 'trading doctor' I am looking for more than 'you must find your own way'. I specifically asked about how to train your brain to accept that you will not catch every move, take every tick, etc. That's a very specific question looking for a specific response.

 

I think you'll find that the most active of us on this board have been given the 'find your inner trader' stuff. And I'm sure it looks good on brochures, books, etc. But if you really want to tap into this forum and provide value, I'm looking for more than this post, esp after 8 days since I first posed the question. Personally, I'm not impressed thus far. That may mean very little, but I think James should be aware of the overall impression we have. I would also suggest that James occasionally survey members when it comes to a vendor being on the board. It's a fine line to be a vendor on a message board and one that should be examined occasionally.

[PYenner 10]

Sound answer Doc.

They used to say that Fred Astaire was the greatest dancer,

yet Ginger Rodgers did all the same steps backwards.

The market leads, we learn to stay in step.

Change what you can change but accept and come to understand the market as it is. Same with human nature.

Live with it and learn from it, yeh?

[namstrader 10]

Totally agree with you Brownsfan019.

[walterw 10]

OK, no offense doc, but I don't see any added value from your post vs. the other posts from the other traders here.

 

Before I get chastised or anything, when I look to a professional 'trading doctor' I am looking for more than 'you must find your own way'. I specifically asked about how to train your brain to accept that you will not catch every move, take every tick, etc. That's a very specific question looking for a specific response.

 

I think you'll find that the most active of us on this board have been given the 'find your inner trader' stuff. And I'm sure it looks good on brochures, books, etc. But if you really want to tap into this forum and provide value, I'm looking for more than this post, esp after 8 days since I first posed the question. Personally, I'm not impressed thus far. That may mean very little, but I think James should be aware of the overall impression we have. I would also suggest that James occasionally survey members when it comes to a vendor being on the board. It's a fine line to be a vendor on a message board and one that should be examined occasionally.

 

Brown.. I think she is not the only one that doesnt give specific information...

 

its very similar to some traders giving their final day stats about a black box method to the forum, what help can that add to the other technical trader fellows... ?

 

 

I think in a forum there are three type of active members :

 

1rst Collaboration... He gives and receives...

 

2nd Product Vendor... He makes publicity of his product (obviously will not show you entire product )

 

3rd Members with some inferiority complex, need to talk about their super performance but do not technically collaborate...

 

I think Doc is on the second group and obviously will not show entire product.. no sin... cheers Walter.

[Guest cooter]

I would also suggest that James occasionally survey members when it comes to a vendor being on the board. It's a fine line to be a vendor on a message board and one that should be examined occasionally.

 

I'm with you here.

 

I can name at least two other vendors who haven't lived up to expectations; indeed, I've received a few PMs for comments about one of them recently.

 

If a vendor isn't providing added value to forum members, above and beyond what might be ordinarily available elsewhere, then James really shouldn't bother having that vendor as a "partner" on the forum.

 

Just my two ticks worth....

[wrbtrader 10]

OK, no offense doc, but I don't see any added value from your post vs. the other posts from the other traders here.

 

Before I get chastised or anything, when I look to a professional 'trading doctor' I am looking for more than 'you must find your own way'. I specifically asked about how to train your brain to accept that you will not catch every move, take every tick, etc. That's a very specific question looking for a specific response.

 

I think you'll find that the most active of us on this board have been given the 'find your inner trader' stuff. And I'm sure it looks good on brochures, books, etc. But if you really want to tap into this forum and provide value, I'm looking for more than this post, esp after 8 days since I first posed the question. Personally, I'm not impressed thus far. That may mean very little, but I think James should be aware of the overall impression we have. I would also suggest that James occasionally survey members when it comes to a vendor being on the board. It's a fine line to be a vendor on a message board and one that should be examined occasionally.

 

I just want to jump in here to address to issues in which one concerns your questions and the other concerns a partner vendor of this discussion forum.

 

First of all, I read this thread with interest because to me it is a common problem concerning trade result expectations.

 

Here's your question again.

 

So my question is - how do you train your brain to accept your trades as they are? In other words, how do I train my brain to accept the fact that sometimes trades will continue to move in my direction after I've already exited a position?

 

In my opinion, you got your answer from others that have responded to you prior to Dr. Janice Dorn providing some insights.

 

This is how I train my brain to accept the fact that sometimes trades will continue to move in my direction after I've already exited a position.

 

Prior to entry, I have a trading plan mapped out from entry to exit just like any top athlete does.

 

For example, lets say a football coach ask the quarterback to throw the football to a specific player on a route about 5 yards to achieve a needed first down.

 

That quarterback has a task and the task is mapped out on the sidelines and in the huddle prior to the snap.

 

He's not ask to throw a touchdown nor a 30 yard pass...he has one specific task and that invovles getting a first down.

 

If that goal is achieved...top athletes rarely go back to the sidelines and say I could have gotten a bigger play via throwing a touch down.

 

Instead, they go back to the sidelines feeling good that they've accomplish th goal that was mapped out prior to the snap.

 

This is true for any sport or any other career professions.

 

Lets get back to trading.

 

If your a trader that's using fixed profit targets...you will have a difficult time in catching a big move via the flaws associated with fixed targets.

 

For example, you've conditioned yourself to believe exiting winners at +2 point profits while exiting losers at -1 point loss...

 

Your conditioning your brain to take action when either +2 point profit target is reach or when -1 point loss is reach.

 

Thus, its a waste of time to wonder about those 3 point, 5 point or bigger moves when your trading plan is conditioning your brain to take action at a less number.

 

Further, if your achieving the goals set by the map trading plan (getting those +2 point trades)...

 

Your achieving success and to ask for more or to question why you can't capture more is also saying your not satisfied with your trading plan or fear is involved when you reach your profit target on volatility.

 

I'll talk about the fear aspect a little.

 

Some traders get fear (shocked) when a profit target is reached on increased market activity.

 

It's fear that catches the trader off guard and then the conditioned brain kicks in and tells you "we don't have time to do additional analysis, dump the position now".

 

My point I'm trying to get at is that if you want to capture a bigger move on some trading days...

 

You need to improve your understanding off the markets so that you know when trends are most likely to occur.

 

Knowing that will allow you to map out your trade (condition your brain) prior to entry to go after a bigger target than the +2 point target.

 

Simply, a better understanding of the markets allows your brain to accept the fact that sometimes trades will continue to move in your direction after you've already exited the position.

 

In other words, your brain (you) will never accept the above facts about the markets until you develop a better understanding of the markets your trading.

 

A better understanding that lets you know its time to map out a touch down scenario, first down only or whatever.

 

With all that said, getting back to Dr. Janic Dorn...she's a partner vendor of this forum.

 

She's not going to offer to good stuff of her service for free.

 

Further, I thought her commentary was good in par with the other free advice you gotten at this discussion forum even though you obviously feel she didn't add any further insights.

 

Think about it, you already got your answer from others prior to her commentary and yet you were not satisfied enough in that you expected the partner vendor to provide further info beyond what others have already said.

 

Dr. Janic Dorn may have saw that not much added value can be made beyond what others have already said for free.

 

She's a partner vendor and if you need help with something that's beyond what others and I have already stated...you should visit her site to see if there's something she may offer that can help you.

 

If not, she'll probably be like most of us in that her advice is in par with the advice of others.

 

By the way, I played sports on the international level in the 80's and I could not have reached that level without the paid sports psychologist my parents had hired...whatever was given for free was basic common sense knowlege in comparison to the good stuff as in the stuff that cost my parents some bucks.

 

He had to spend a lot of time with me before he could properly help me.

 

Therefore, I can't imagine a trader psychologist or the likes being able to resolve what's bugging you about your trades in a few paragraphs nor without getting to know you better as a trader as in the stuff you don't talk about.

 

Further, if you say your question differently...it may shed more light when answered.

 

How do I accept the fact that I'm not satisfied with my trade results after I've exited (reached my goals for the trade) to only see the price action become more profitable had I not exited the trade???

 

Think about it...would you be asking this your question (my rephrase of your question) if the markets immediately reversed in the opposite direction after your exit or if you had a better understanding of what tends to cause a trend?

 

Is this a chronic problem in your trading in which you could have gotten more out of your trades...if not...why bother with this type of hindsight analysis.

 

Best Regards,

Mark

(a.k.a. NihabaAshi) Japanese Candlestick term

[brownsfan019 17]

Brown.. I think she is not the only one that doesnt give specific information...

 

its very similar to some traders giving their final day stats about a black box method to the forum, what help can that add to the other technical trader fellows... ?

 

Walter - difference is that I am not a vendor that is here to provide professional support. I am a trader like you. If I don't want to share my exact entry methods here, so be it. You've asked me repeatedly and what have I put on the board? Now you're just irritating me with this constant badgering. I don't see every trader here putting their exact entries and exits on the board. As a matter of fact, outside of me, you, pivot and a couple others, there really isn't much on the board outside of that.

 

Case in point:

 

Over THREE THOUSAND members, yet there's only a handful of us actually sharing stuff that is useful. So, sorry if my entire trading plan is not laid out on a silver platter here, but it looks like that is what is expected here actually - just piggyback off of others. :o

 

According to my brief math, it appears that approx .3% - .5% of the TL population actually contribute items of substance on a regular basis. That would mean that the handful of us that are actually providing ideas are supporting over 99% of the rest of the leaches on TL. Makes you wonder if it's even worth it.

 

If it's that much of a problem, forget about it. Have a mod close the thread. I don't care. The purpose of the thread was to not reveal my entire trading methodology for you or anyone. It was to share an idea, after all, I thought that's what we were here for. I presented an idea to consider and provided some real-time stats for me. Since that's obviously not enough, don't worry about it. No more stats will be posted.

 

------------

 

Sorry for posting this within this thread but I can't keep having Walter chase me around TL trying to get my entire trading plan laid out. Again, as soon as the rest of TL can step up to the plate, maybe I will too.

 

------------

 

Proceed with the topic on hand.