Doc, my passion gives me much stress...

[Dogpile 10]

Doc, I have been obsessively focused on beating the markets for over 10 years now -- both in my financial job and then for the last few years as an individual trader.

 

On the one hand, I feel being obsessive/passionate is a good thing as it takes tremendous focus and passion to do well at almost anything -- nobody can blame me for not putting all I have into it. On the other hand, this kind of obsessive behavior comes with a bad side effect: severe stress. If I go a few days without making money, I will generally get stressed and start thinking about the mortgage and what would happen if I could not make it over the long-term... and stress over whether I could still get a good job and support my family.

 

Given this fear and the stress-factor and the fact that a good job came along that is aligned with my resume, I now face a tough decision. Give up trading and take a job that is being offered to me that pays reasonably well and offers a long-term career path and security. Or stay with something that I feel very strongly about -- my passion -- but which is also the source of much of my stress.

 

thanks in advance for all comments...

[waveslider 10]

Hey dogpile,

 

I remember reading this somewhere - I think "Zen in the Markets" :

 

"Approach trading as a competition between you and yourself. Can you follow your own rules which constitute an edge? That is the competition."

 

If you are worried about the money you need from trading, this worry will be the biggest obstacle in your success.

 

If you can't separate mortgage-money from trading, you are either truly under-capitalized, or unconvinced of your ability to follow your own rules.

 

In either case you are ruled by your fears.

 

Believe me man - I know where you are coming from. I just bought my first house and have a pregnant wife. Trading is my only profession. I haven't had a losing month in a year. The first winning month of this streak was the first month I got over my fears and "followed my rules".

 

Try meditation, try positive affirmation, try NLP. Convince yourself of your ability, then start your day out on the right foot - without fear.

 

"On the other side of terror is illumination" - Robert Anton Wilson

 

hope it helps - - I'm sure I'm not the only one here who knows what you are going through. You can do it, your passion will make it happen.

[Soultrader 12]

Dont want to hijack your thread but I will add some inputs of my own. The most important thing for me to decrease my stress level is to go out. I mean work hard play hard. I do this once a week. Other than that, I like to meditate, watch stupid movies that dont require thinking, and work on this site. I happen to love operating this site so much that it actually eliminates mhy stress. I think the key here is to find a hobby or passion in something other than trading that you can relax on. Fishing? Golf? Tennis? Just a few suggestions. I tend to spend approx 12 hours a day focusing on trading and preperation. So when I return home, I like to do other things and completely forget about trading. This helps me freshen up my mind for the following morning.

[TinGull 10]

The one biggest thing that helped me along (and this was within the past 3 weeks) was reading Unlimited Power by Anthony Robbins. Applying those sorts of techniques that he outlines in that book (much to do with NLP) has been the biggest breakthrough I've had not only in trading, but with life in general.

 

Take a peek through that book. Since I've just started out with trading (almost a year now) I have had many many mental roadblocks to get through, and I wanted to get through them quick. Having a supportive family has helped tons too.

 

And...dogpile...you rock dude. Your analysis is always top notch and you really seem like you've got your head on straight with trading. I think either way you choose you'll be successful and don't have anything to worry about.

[MrPaul 10]

Doc, I have been obsessively focused on beating the markets for over 10 years now -- both in my financial job and then for the last few years as an individual trader.

 

On the one hand, I feel being obsessive/passionate is a good thing as it takes tremendous focus and passion to do well at almost anything -- nobody can blame me for not putting all I have into it. On the other hand, this kind of obsessive behavior comes with a bad side effect: severe stress. If I go a few days without making money, I will generally get stressed and start thinking about the mortgage and what would happen if I could not make it over the long-term... and stress over whether I could still get a good job and support my family.

 

Given this fear and the stress-factor and the fact that a good job came along that is aligned with my resume, I now face a tough decision. Give up trading and take a job that is being offered to me that pays reasonably well and offers a long-term career path and security. Or stay with something that I feel very strongly about -- my passion -- but which is also the source of much of my stress.

 

thanks in advance for all comments...

 

Take the Job, the markets will always be here.

 

I really focus on the fact that you say that you get "severe stress".

 

There is nothing more important than your well being.

 

I know a few people are have become extremely successful and very wealthy over the course of their careers (trading and otherwise). The ones who had a big stress factor also now have circulatory issues that would frighten most people.

 

Everything in balance...

 

 

That my 2 cents:cool::thumbs up:

[Soultrader 12]

Take the Job, the markets will always be here.

 

I really focus on the fact that you say that you get "severe stress".

 

There is nothing more important than your well being.

 

I know a few people are have become extremely successful and very wealthy over the course of their careers (trading and otherwise). The ones who had a big stress factor also now have circulatory issues that would frighten most people.

 

Everything in balance...

 

 

That my 2 cents:cool::thumbs up:

 

I agree. Health before wealth. Stress is probably the biggest cause for alot of sickness.

[namstrader 10]

Dogpile,

 

I just got my hands on "The Master Key System" by Charles F. Haanel "the Father of Personal Development" ebook from over at thetacticaltrader.com

 

Rumor has it that while he was attending Harvard University, Bill Gates discovered and read The Master Key System. It was this book that inspired Bill Gates to drop out of the University and pursue his dream of "a computer on every desktop." And the rest they say is history . . this is a quote from it.

 

Pursue the the dream with the understanding of the mental laws that strengthens the will and the use of imagination that brings forth the enjoyment of life on its higher planes. All is found from within not outside ourselves.

 

Just passing on something that I intend to learn from and it may be useful for you and others here. I lost my most recent trading account and I am rebuilding my foundation now, to rid my stress that exists with undercapitalization.

[MrPaul 10]

Dogpile,

 

I just got my hands on "The Master Key System" by Charles F. Haanel "the Father of Personal Development" ebook from over at thetacticaltrader.com

 

Rumor has it that while he was attending Harvard University, Bill Gates discovered and read The Master Key System. It was this book that inspired Bill Gates to drop out of the University and pursue his dream of "a computer on every desktop." And the rest they say is history . . this is a quote from it.

 

Pursue the the dream with the understanding of the mental laws that strengthens the will and the use of imagination that brings forth the enjoyment of life on its higher planes. All is found from within not outside ourselves.

 

Just passing on something that I intend to learn from and it may be useful for you and others here. I lost my most recent trading account and I am rebuilding my foundation now, to rid my stress that exists with undercapitalization.

 

I don't mean to et off topic but I read that Napoleon Hill was actually so inspired by Haanel's work that it lead him to write the "Law of Sucess" and all his other exceptional works thereafter.

[brownsfan019 17]

Here's the problem if he takes the job - he'll always wonder 'what if...'

 

Which of course can lead to a new form of stresses.

 

I suggest following your heart. You get one life to live. Do what makes you happy. For me, that means I cannot work for a corporation. Tried it and it destroyed me from the inside.

 

The safe option is obviously the job. While the markets will always be here, you also can't buy the time back that you lose either.

[torero 10]

Brown, you're the greatest! Always thinking out of the box, can't go wrong with that!

 

It's a tough choice. If you have need to trade support your expenses, it's a big order and lots of stress. You have to prove yourself you can do that first and be comfortable with it before taking the plunge. This stress will show up eventually in your trading at crunch time near end of the month. The outside factors will cause undue emotional stress and it may get to you.

 

You can always continue to study the markets in the meantime. Record the market session and view them after work or on weekends. Using this technique and paper trade it. The other option is you can trade the first hour before heading off to work.

 

Either way, good luck on a tough decision.

[Guest cooter]

If the job is a relative sinecure, that easily and comfortably puts $$$ on your family's table, then by all means, go for it.

 

But if it really doesn't make you happy, you'll soon be disillusioned and leave anyway.

 

It all depends upon your goals in life. Make money, feed your family, and be happy.

[Dogpile 10]

thanks for the input fellas.

 

I have this post-it on my computer which I got from a great book I read "Trading In The Zone" by Douglas.

 

Fear <==== Correct Mindset ====> Reckless

 

could also read as,

 

Insecurity <==== Correct Mindset ====> Overconfidence

 

I find myself drifting from one side to the other of this little balance. I have learned to control this somewhat by using mechanical strategies for entries and instant hard stops on all trades.

 

I have a few years worth of mortgage money saved. I do make money every month --it is the intra-month dry spells that cause stress. Actually, the real cause of the stress is the seeming random factor at work in the market. I love my set-ups -- but there is a certain randomness to how they work over the course of a week or a month because of the stop-loss factor. Sometimes your stop works by a few ticks and you make big money. Other times you get stopped to the tick and you lose. Other times you are just off on your gameplan and you stop out quickly and happy you did cause the market takes off in the other direction. I do truly believe in stops. There is just this funny game I play with the market for that percentage of your overall trades where the market tries to hunt down your stop before proceeding with what it wants to do. Sometimes your stop holds, other times it doesn't. This has been a never-ending process of how to set stops. But I chat with traders every day on this and this happens to everyone so I know its not just me. So you go on some run where you just feel cursed. Other times, your stop holds and you feel like you are a fine-tuning monster.

 

Thanks again all. Always good to work on some psychological stuff -- such a big part of this biz.

[brownsfan019 17]

Dog - it sure sounds like you are advanced in this wonderful biz, so I would caution you to abandon ship now. I mean, you sound like you are at a point that others dream of achieving & obviously paying the bills right now is not a concern (which can often lead to immediate failure). Just learn how to deal with the stress a tad more and I think you'll be fine. I would not give up now, it sounds like you are close by how refined your last post was. Many noob's could never write something like that.

[jperl 11]

Sometimes your stop works by a few ticks and you make big money. Other times you get stopped to the tick and you lose. Other times you are just off on your gameplan and you stop out quickly and happy you did cause the market takes off in the other direction. I do truly believe in stops.

 

Well Dogpile, since you raised the issue of stops, let me suggest you learn not to use them. If you were a newbie, I would of course tell you to use them, but you're not a newbie, so you need to learn some advanced techniques of trade management that allows you to turn a losing trade into a winner. I used to use stops all the time and was slowly bleading to death. Eventually, I learned how to do scale ins and reversals. That got rid of the slow blead. To do this requires that you change your mental set with regard to loss. You need to develop the idea of risk tolerance. How much of your capital are you willing to risk on any one trade. Once you do that, you can better manage your trades. Stops if you use them at all should be relegated to safty stops, far from your entry in case your whole system crashes due to power failure.

 

JERRY

[brownsfan019 17]

Well Dogpile, since you raised the issue of stops, let me suggest you learn not to use them. If you were a newbie, I would of course tell you to use them, but you're not a newbie, so you need to learn some advanced techniques of trade management that allows you to turn a losing trade into a winner. I used to use stops all the time and was slowly bleading to death. Eventually, I learned how to do scale ins and reversals. That got rid of the slow blead. To do this requires that you change your mental set with regard to loss. You need to develop the idea of risk tolerance. How much of your capital are you willing to risk on any one trade. Once you do that, you can better manage your trades. Stops if you use them at all should be relegated to safty stops, far from your entry in case your whole system crashes due to power failure.

 

JERRY

 

That's one theory Jerry.

 

I personally would never put on a trade w/o a hard stop. Takes those emotions right out of the trade when stops are placed in a protective position. And by protective I mean where your position has a 'get out' place that is respected and protective in case of power failures. Stop placement is just as crucial as the entry and exit, if not more; however I would never recommend trading w/o one.

[Dogpile 10]

<<you need to learn some advanced techniques of trade management that allows you to turn a losing trade into a winner.>>

 

hey man, that is good stuff. I would also like a magic potion that allows me to sleep with Hollywood actresses on the down-low.

[jperl 11]

I personally would never put on a trade w/o a hard stop. Takes those emotions right out of the trade when stops are placed in a protective position. And by protective I mean where your position has a 'get out' place that is respected and protective in case of power failures.

The problem with hard stops is just that. They are static. They don't allow for any change in the market dynamics while you are in a trade. How many times has your stop been hit, and then the price action reverses back to your entry? Probably more times than you are willing to admit. Or how many times has the market blown through your stop, only to reverse and come back to your entry? The point is, when you are in a trade, you have to manage it. That doesn't mean just sitting on your hands like a newbie waiting for either your stop to be hit or your profit target to be hit. It means being proactive in the trade like most pros are.

JERRY

[MrPaul 10]

The problem with hard stops is just that. They are static. They don't allow for any change in the market dynamics while you are in a trade. How many times has your stop been hit, and then the price action reverses back to your entry? Probably more times than you are willing to admit. Or how many times has the market blown through your stop, only to reverse and come back to your entry? The point is, when you are in a trade, you have to manage it. That doesn't mean just sitting on your hands like a newbie waiting for either your stop to be hit or your profit target to be hit. It means being proactive in the trade like most pros are.

JERRY

 

Interesting point Jerry, I honestly would have disagreed with you 6 months ago.

 

I know exactly what you mean though. I have had the amazing opportunity to work amongst some highly skilled seasoned professionals and that is surprisingly exactly what they do.

 

It wasn't until I fully accepted the fact that 90% of the information I had been fed through trading texts was just plain "off" and in some cases outright dangerous to my trading capital.

 

These guys were buying into down moves building 100-400 lot positions on the ER2 or ES and not using a hard stop. They were averaging down/up, adding to the position, trimming some off, moving their "stops" and completely dancing with the markets. At first I thought they were crazy until they would unload their positions an hour later at huge sums of profit after a rally or decline.

 

It took me a little while but I soon learned that there are a few stratospheres of expertise and trade management, when you start to reach the upper echelon you wont find what you need at Barnes and noble any longer. It just simply doesn't get printed.

 

 

P.S I'n not saying that anyone should trade like that, I just wanted to shed light on the fact that there are many very sophisticated ways of managing a trade that include not using a hard stop and waiting for it to get hit or not.

 

[Dogpile 10]

well for me and given my style... if my set-up doesn't work right away (within first 5 minutes) then the odds of it working at all drop off to something probably close to 50/50, perhaps worse.

 

just today, a short set-up, I took it and stopped out quickly for a loss (less than 5 minutes). I re-entered at a better price because the market didn't carry big off that move, it was a shakeout move. I recognized this and re-entered. I ended up making my loss back and some profit and put myself in position to make a big win while locking in the gain with a trailing tightening stop. This is just my style. You can dance with the markets and still use hard stops.

 

it has also happened where my stop goes off before my chart has even caught up with the real-time price. this is usually some mid-day unscheduled news that causes a very fast move in the market. my stop takes me out a few minutes before briefing.com can tell you what the news even was, much less react to it. I have just found that trading is like a Rubik's cube, you will never get that 6th side. Every method has some drawbacks, including use of stops. But the tradeoffs favor them IMO.

 

did you see the move in the DAX yesterday? dropped -123 points in 2 minutes. that is what, $6k per contract? man, electronic markets can get sick sometimes.

[brownsfan019 17]

The problem with hard stops is just that. They are static. They don't allow for any change in the market dynamics while you are in a trade. How many times has your stop been hit, and then the price action reverses back to your entry? Probably more times than you are willing to admit. Or how many times has the market blown through your stop, only to reverse and come back to your entry? The point is, when you are in a trade, you have to manage it. That doesn't mean just sitting on your hands like a newbie waiting for either your stop to be hit or your profit target to be hit. It means being proactive in the trade like most pros are.

JERRY

 

But what you are discounting is the ability to re-enter a trade. I would much rather exit trade A at an acceptable loss and re-enter trade B (in the same direction as trade A) and allow that trade to work. I have no doubt that if you are trading hundreds of lots that you can be more flexible as described here. Personally, I am usually in the 30-50 lot range and personally, I don't want to be averaging into a loser or sitting on a 50 lot wondering when I might exit at a loss. My stop losses are predetermined and measured. And as long as you have the flexibility to re-enter in a scenario as you've outlined, that's a much better proposition in my opinion. I'd rather be wrong once and then right, than wrong once and holding onto a large loss that just gets larger. And larger.

[Guest cooter]

Protraders don't hold on their losses.

 

They cut'em short and look for the next setup.

 

Hence, the use of stops - either trailing after an initial target has been hit, or fixed.

[jperl 11]

But what you are discounting is the ability to re-enter a trade. I would much rather exit trade A at an acceptable loss and re-enter trade B (in the same direction as trade A) and allow that trade to work. I have no doubt that if you are trading hundreds of lots that you can be more flexible as described here. Personally, I am usually in the 30-50 lot range and personally, I don't want to be averaging into a loser or sitting on a 50 lot wondering when I might exit at a loss. My stop losses are predetermined and measured. And as long as you have the flexibility to re-enter in a scenario as you've outlined, that's a much better proposition in my opinion. I'd rather be wrong once and then right, than wrong once and holding onto a large loss that just gets larger. And larger.

We've had this discussion before in a previous thread about the difference between scaling-in vs. averaging down. They are not the same so I won't repeat that whole discussion here.

 

The important point I want to make is that, if you are using hard stops AND you are not profitable (which is the vast majority of daytraders), then you might want to rethink your trade management to include scale-in and/or reversal strategies with position sizeing. You might well discover that your trade profitability will improve substantially.

 

JERRY

[Dogpile 10]

jperl, I hear your point and can see that for certain strategies -- averaging-in has some merits. especially if you have wider risk tolerance and are trading a higher timeframe and feel that there will often be a lot of noise around your entries (where fine-tuning really clean entries is not your focus).

 

but you are being disingenous when you say they aren't the same thing (scaling in and averging-down) -- they are exactly the same thing. the only difference you are citing is that you use discretion on the scaling-in -- not blindly add to a position just because it has moved against you. ok, that is a crucial element whether you 'scale in,' 'average down' or 'stop out and re-enter'. other than this discretionary second piece that is applicable to any trading strategy, there is zero difference between scaling in and averaging down.

 

in your example in the previous thread, you mention the market only has to come back 2.5 pts to breakeven. well yes, you now have breakeven as your upside and 40 pts of downside if market drop 2.5 pts. this is not a symmetrical payoff.

 

if it works for you, that is great. I am open to new ideas and if I am not getting it, then please give another example because there is no difference in the example you initially gave. in fact, I really should try this to some extent to balance out my 'higher timeframe' ideas.

[jperl 11]

but you are being disingenous when you say they aren't the same thing (scaling in and averging-down) -- they are exactly the same thing. the only difference you are citing is that you use discretion on the scaling-in

 

I'm being as candid as I can possibly be about this Dogpile. You have fallen into the reverse logic trap. Because scaling-in and averaging-down have one thing in common, doesn't make them identical.

You have already mentioned one point where they are different. Scaling-in is planned, Averaging down is not. Before you scale in you know exactly where you will do it and whether the new entry is in your favor. Averaging down overloads the boat because the boat was full on the first entry. Scaling-in adds to a mostly empty boat.

 

in your example in the previous thread, you mention the market only has to come back 2.5 pts to breakeven. well yes, you now have breakeven as your upside and 40 pts of downside if market drop 2.5 pts. this is not a symmetrical payoff.

 

You are absolutely right about that. It is not symmetric, which is why I said one needs to rethink the whole concept of loss on a trade. There is paradigm shift here where one has to substitute risk tolerance for stop loss in ones thinking. If you always require the reward/risk ratio for your trades be some fixed number like 2/1 or 3/1, then you will be forever stuck in the old paradigm. Once you get out of that mold, you won't look back.

 

JERRY

[Dogpile 10]

okay, jperl -- I still think we are just playing a game of nomenclature here but I will try to learn something new rather than fight this. I do not think of 'averaging-down' as necessarily buying more lower --- only when you actually decide to do so is it averaging down. You are calling 'scaling-in' some kind of intelligent version of averaging down. By your definition, I agree with you. Blindly averaging-down is so ridiculously bad that it is not worthy of much discussion. Intelligent, well thought-out averaging (what you call 'scaling in') --- does clearly have merit if you believe you are right on the pattern but you do not have as much confidence in the precise entry.

 

An alternative method which is essentially the same as what you are saying is to take 1/2 a position with a stop but then re-enter with a full position if you decide you still like the set-up. the advantage I see in this is that you do get out of the market and sidestep all of those out of the blue relentless program trading swings that can run you over.

 

the 'scaling-in' concept and the use of a stop are not mutually exclusive. I think this is what brownsfan was saying and I agree.