Stressed Out About Pulling Trigger

[Callahan 10]

I have been trading for several years but not until now I have founded an strategy that works in a consistent manner. The strategy I made is a simple one, but in order to sound more interesting I will call it "elegantly simple". I created this strategy about 7 months ago and I have backtested (5 years) and paper traded it (4 months), the last 4 months I have live-traded it with only $10,000. Bottomline, I have proven the strategy is a good consistent way to trade stocks. Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios. As any strategy it has good days and bad days. Needless to say with $10k the bad days don't seem so bad... but here is where the problem is...

 

I had planed to increase the portfolio size to $100k (most of my trading capital) as the strategy has proven to be satisfactory. What I did not take into account is that I would chicken-out (for lack of better words) at the posibility that I might not have the stomach to weather the bad days. My strategy has a daily max drawdown of 5% so it is different to lose $500 vs $5,000 even though in terms of % is the same.

 

Being honest I am dissapointed in my self as I had always criticized traders that lack the guts to pull the trigger... but karma is a b#tch... I am doing the same think I have always condemned.

 

The situation is this, I am convinced the strategy is sound, I am convinced that it will give decent returns even though there might be some bad days, but even though my brain says GO, my gut is stressing out at the (certainty) posibility (?) that there will be bad days...

 

BOTTOMLINE: I need to grow a pair... any advice?

 

 

PS: More info on the strategy... US stocks, I open positions (long or short) at the close and rebalance the next day's close.

[SIUYA 11]

why jump from $10000 to $100,000 - why not implement it in increments. 1/3, 1/3, 1/3

OR

and I recommend this to every one --> get rid of the monetary element of it and focus only in percentages.

[steve46 12]

Sir or Madam

 

Generally speaking if you have trouble pulling the trigger after all the work you suggest you have gone through, then "something is wrong with this picture"...either you are exaggerating or some part of you does not "believe" in your system...to me it matters not...but until you resolve that divergence between what you say and what you "believe, you probably won't be able to make it work...By the way...this comment is the result of my work with Dr. Ari Kiev (not my opinion initially although I have come to agree with it)...you see I had the same problem more than a decade ago and he helped me to get over it...basically I had to do more testing so that knew the system inside and out...including the worst possible scenario (max historical drawdown), and how to identify whether the system was working correctly or "failing"...It took me about three months of additional number crunching to come to the conclusion that my system was worth risking money on...from then on I was ok with it...

 

I hope this helps....since I don't know you well its the best I can do..

 

Best Regard

Steve

[Tams 20]

I have been trading for several years but not until now I have founded an strategy that works in a consistent manner. The strategy I made is a simple one, but in order to sound more interesting I will call it "elegantly simple". I created this strategy about 7 months ago and I have backtested (5 years) and paper traded it (4 months), the last 4 months I have live-traded it with only $10,000. Bottomline, I have proven the strategy is a good consistent way to trade stocks. Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios. As any strategy it has good days and bad days. Needless to say with $10k the bad days don't seem so bad... but here is where the problem is...

 

I had planed to increase the portfolio size to $100k (most of my trading capital) as the strategy has proven to be satisfactory. What I did not take into account is that I would chicken-out (for lack of better words) at the posibility that I might not have the stomach to weather the bad days. My strategy has a daily max drawdown of 5% so it is different to lose $500 vs $5,000 even though in terms of % is the same.

 

Being honest I am dissapointed in my self as I had always criticized traders that lack the guts to pull the trigger... but karma is a b#tch... I am doing the same think I have always condemned.

 

The situation is this, I am convinced the strategy is sound, I am convinced that it will give decent returns even though there might be some bad days, but even though my brain says GO, my gut is stressing out at the (certainty) posibility (?) that there will be bad days...

 

BOTTOMLINE: I need to grow a pair... any advice?

 

 

PS: More info on the strategy... US stocks, I open positions (long or short) at the close and rebalance the next day's close.

 

your subconscious mind is very smart...

 

it can figure out the conflicts and inconsistencies in your strategy,

the ones that you are not consciously aware of.

 

your subconscious mind is trying to protect you,

holding you back when it detects unresolved issues.

 

get a piece of paper and start writing down your logic...

if you can computerize it, you will have your problem solved.

if you can't ... mmm... you are the only one who can understand why.

[pa18 10]

BET OR GO HOME .....

 

It's that simple, if you don't pull the trigger, what's the point, you might as well pack your bags and go and do something else.

 

However, its not all a big loss, Tams got it correct, all you need to do is train your subconscious

 

To do this, all I do which works for me, I talk to myself positively and out loud, win, lose, when in a trade etc...

 

[ame=http://www.youtube.com/watch?v=KsegbspBA9w]YouTube - ‪firedUpCocky‬‏[/ame]

 

and my wife thinks I nuts talking to myself lol

[$5DAW 10]

BOTTOMLINE: I need to grow a pair... any advice?

 

This may be the key, not so much growing or enhancing your physical appendages but growing psychologically. Most everyone has commented on this and I agree, something is missing between the work you've done identifying your edge and its implementation. I will say, jumping ten fold in size seems a bit extreme, but who among us doesn't want to add another zero to their account. I've found, finding the maximum anticipated draw-down and multiplying that x 2 and adjusting my positions/risk to fit within my comfort zone works for me. Maybe it's 1/3 or 1/4 or 1/2 only you can make that call. If I'm stressed when I enter a trade, I'm almost always doing something I haven't proven to myself beyond the shadow of doubt, the probabilities of positive results are in my favor.

 

By reading your post I get the feeling you're going to do something, right or wrong. Just stay within your comfort zone, and I'm sure everything will work out fine. Good luck and nice job on the edge by the way

[zdo 20]

Callahan,

 

Each of the posts above addresses one of the devils/aspects with this issue and there are several more not yet mentioned. One of them has got you by the nuts, a couple others stand ready to punch you in the guts, and several are messing with your neurons...

Maybe call Rande Howell... or at least read his book. (Just an idea - ie have no financial interests or affilations...)

 

hth

 

zdo

[Tradewinds 12]

I have been trading for several years but not until now I have founded an strategy that works in a consistent manner. . . . . I have backtested (5 years) and paper traded it (4 months), the last 4 months I have live-traded it with only $10,000. Bottomline, I have proven the strategy is a good consistent way to trade stocks. Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios.

 

. . . . . . .

 

What I did not take into account is that I would chicken-out (for lack of better words) at the posibility that I might not have the stomach to weather the bad days. My strategy has a daily max drawdown of 5% so it is different to lose $500 vs $5,000 even though in terms of % is the same.

 

. . . . . .

 

The situation is this, I am convinced the strategy is sound, I am convinced that it will give decent returns even though there might be some bad days, but even though my brain says GO, my gut is stressing out at the (certainty) posibility (?) that there will be bad days...

 

I'm wondering if you are not really happy with the returns. You stated: "Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios."

 

It seems like there is still some lingering doubt. All people do not like the discomfort caused by uncertainty. Some are able to deal with it better than others. How are you going to decrease the discomfort caused by the lingering uncertainty? We can say that we believe in things, but don't really believe. You stated: "I am convinced the strategy is sound." My gut feeling is, that you need to admit to yourself, that you really are not 100% convinced that the strategy is sound. I believe this is your starting point. As long as you are telling yourself the the strategy is sound, but not trusting it, there is a conflict that is causing discomfort.

 

Please don't misunderstand me. I'm not trying to convince you that your strategy is not sound. I'm saying that it's difficult to fix something when you are working in the dark. Imagine trying to accomplish a task in pure darkness, when you can't see anything. Until you admit that you really don't trust your strategy 100%, then you are in the darkness, fumbling around. Again, admitting you don't trust your strategy DOES NOT mean that it's a bad strategy. The distinction needs to be made between those two things. Once you admit that you are, in a sense, not being totally honest with yourself about your trust in your strategy, you can then feel good about facing reality. Then, "The light goes on". You go from denial, into a clearer definition of the problem.

 

Something is keeping you from trusting your strategy. I'm a person who needs a lot of certainty, and a really, really well tested system before I'm going to have any trust in it. That's just the way it is. I'm probably not going to make major changes in my personality at this point. I just have to face the reality of it, and once I've accepted the way I am, don't fight it, work within the abilities that I do have. It may take me longer to "get there", but chances are, that when I "get there", my level of competence is going to be better than average.

 

So, first of all, I think you are in denial about how much you really trust your strategy. After you get past that point, it's time to get honest with yourself about how much certainty you personally need to feel comfortable trading the way you want to trade. Don't fight it, don't try to swim upstream, figure out how to work within the boundaries.

Edited May 20, 2011 by Tradewinds

[johnw 10]

I'm wondering if you are not really happy with the returns. You stated: "Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios."

 

It seems like there is still some lingering doubt. All people do not like the discomfort caused by uncertainty. ............................................................

 

Hi TW,

 

I follow this thread with interest and I think that you and Steve46 are right on the money.

 

There is a gaping discrepancy between the system the Trader has created and his/her sense of self trust.

Until this discrepancy is reduced to a seamless sense of self belief, then nothing of value is going to happen.

 

I think that this is the cause behind the enormous failure rate and it is most probably the point at which

Chartists turn into system vendors rather than push on to becoming highly successful Traders

...or they blame something external to themselves and give up.

 

This can be a very cruel business unless we commit totally to it.

 

Yes, there may well be deep seated issues to overcome before self belief can be built in sufficient doses to become habit for the Trader in their daily lives.

But the pointy bit of the trading exercise occurs when the Trader comes to trade his system and his/her knees turn to jelly.

 

It has nothing to do with the size of his/her gonads, it is all to do with self belief.

 

Somewhere inside the Trader is the realisation that the world they have known will simply not work in the world of trading.

Edited May 20, 2011 by johnw

[procol33 10]

Just don't go right away to $ 100k....The rule is this...If you are too uncomfortable trading the size you want to trade...then decrease the szie until it hits your comfort zone...No harm in putting 30k in the account and letting it grow is there?? Putting all your chickens into 1 trading strategy is not adviseable anyway.

 

Good luck.

 

Lg

[brooky29 10]

Just to add to the comments is the odd deep rooted belief that some people have that they cannot

or do not deserve to succeed.

 

If someone has grown up in a world of average major success is often

regarded by themselves as beyond their reach and they will invent potholes all by themselves but with

100k available as capital I don't think this applies here unless it is borrowed money. (Big no no)

 

I agree with a comment above that if you only deal with percentages you are much better equipped to

pull the trigger on larger trades.

 

Seeing 5k go down the toilet is never nice, but seeing 5% disappear seems somewhat less soul destroying.

 

I personally have a year long budget spreadsheet that uses the same risk and calculates lot sizes

according to the compounding balance and only ever look at what lots I should put on depending where I am in the timeline. The only time I note the dollars is when I enter in the profit or loss after each trade.

This helps me immensely.

 

Another big help for myself is to take time to plan the trade, place it with SL and TP and walk away. I either have got it right or wrong.

 

I would have thought that 10k and a good strategy with good money management would have been more than enough to crank in a nice return. Perhaps the strategy relies a bit to much on deep stops and that fear is making your guts turn.

Good luck

[Rande Howell 10]

This is a common problem. Essentially it really doesn't matter what you think. What is important is what you believe about what money and risk. Self limiting beliefs about you adequacy, your worth, and you sense of power are automatically triggered in certain moments in trading -- particularly the moments where you are actually risking capital (worth) rather than pretending to think about it.

 

I encourage you to explore the money narrative that your beliefs are rooted in. You are born into these beliefs, and they have you. You do not have them. I also like SUIJA's idea of ramping up your capital in stages. Each stage will trigger the automatic assessments of your worth and competency and ideally needed to be worked with as you acclimate yourself to a new mindset about money, worth, power, adequacy, and risk. It's a good way of building strength rather than blowing yourself up.

 

Rande Howell

[JerryHatfield 10]

"You need to grow a pair?"

 

Listen, if you have the nerve to EVER pull the trigger, you're doing better than many people out there. I know that even with my most reliable Forex strategey (85%+ [when STRICTLY followed]), I still have that little bit of trepidation. Dude, if your testicles are coming way up into your stomach before every trade, you might want to rethink your "elegantly simple" trading method. Go drive a cab for excitement.

 

There's no rule that you HAVE to let your max loss be 5%. If that's too much for you, trade smaller, or further refine your system.

 

This will HORRIFY many readers, but I initially do no go in with any stops or limits, especially when I'm scalp trading. Oh, I have a ballbark idea where I think things will go, but I dont run a trailing stop until I'm well in the money and don't have time to sit there and babysit the trade. In my case it's 90% TA, 5% FA, and 5% gut instinct. I have a lot of confidence in my TA and system, and it's working extremely well. I very often net 50 pips before that second cup of coffee.

 

There have been occasions where I didn't do all of the (simple) steps that pretty much ensure success, and have a trade turn bad REAL quick. Salvaging these can be a gold-plated pain in the butt, but It can often be done with Forex, and probably easier than with securities. A friend who also trades came by recently right after a trade that I didn't put the homework into was around 600% against me. He was aghast. I explained that I went back and found my oversight, and a "reason" for the trade going against me, and that it'd be cool in a couple of hours. He hung around and watched the reversal (where I added to my position - cost averaging, ya'know), and came out with a couple of hundered pips net.

 

Was there some damage to my stomach lining? Maybe a little at first. After I redid everything, I felt a little chagrined that I made that thoughtless a mistake, but calculated it'd turn around. It turned out okay. Unfortunately, some wags will say that was the worst thing that could have happened, since it would do dreadful things such as "make me overconfident," re-enforce bad trading methodology" and so on.

 

I guess what I'm trying to say is that there are a few hard-and-fast precepts you need to abide by when trading, and I don't need to repeat any here. As for the rest of it all, for every person you find that says "Do this," you can find another who'll swear that is the worst thing you can do. You've tested your system, know what it can do, and know it has "Bad days." I suggest that you devise a metric to help you predict or at least anticipate those bad days in advance, and then you can take the day off and go play golf or whatever. Is it possible for you to reverse your strategey to make money on those bad days?

 

Personally, I assume EVERY trade will be a loss, and am pleased that very few are. Retest your system with a few more parameters, giving it a little more room to run, and see if there is any improvement. "Stops" are just that: they STOP you from making any money on a trade, or any possibility of turning it around. See if you can adjust your system to better fit your comfort zone, and do what you KNOW works for you.

 

Good luck and good trading!

[jdevron 10]

Begin small and just let it compound by reinvesting your profits. Don't get impatient.

Check out the free videos here for tips on risk management which use an easy formula to deal with your issue. ETF Trading | ETF Trading Strategies | ETF Trading System | ETF Securities - ETF Trend Trading

[phantom 16]

BOTTOMLINE: I need to grow a pair... any advice?

 

Hey buddy,

 

Which professional hasn't been in these shoes before?

 

My advice to help you grow a pair is to keep trading your actual account without size, but start trading size on a $100,000 sim account. If your system has a real edge, you should be able to make the sim account grow. This activity should help you overcome your subconscious restrictions at some point...

 

Only problem is your trade management discipline. This is what really separates the men from the boys in trading. My suggestion to you is that as soon as the market gets clear of your entry number by just a few tics, move your stops to breakeven, especially when trading size. YOU MUST LEARN THE FINE ART OF SCRATCHING TRADES TO BECOME A TRUE PRO.

 

I leave the rest of the trailing strategy for some other time.

 

Hope you make a ton of money, then buy me a beer!

 

 

Luv,

Phantom

Edited May 22, 2011 by phantom

[suriNotes 11]

Several years ago I read a book by Dr. Ned Gandevani "How To Become A Successful Trader: The Trading Personality Profile: Your Key to Maximizing Your Profit With Any System". In this book he addresses the problem of 'Why Can't You Pull The Trigger". I think it is important to figure out what type of trader you are and act accordingly. There is also a Trading Personality Profile test in the book, which identifies trader-types... He may have other services and books but I have only read the above book and recommended to others.

 

Regards,

Suri

 

PS: I do not know Dr. Gandevani and never corresponded with him or his business.

[Callahan 10]

Wow... guys, your comments are really hitting home and I can´t do anything else but thank you for all your help.

 

Talking this to anybody else other than traders would be an epic fail... I could just imagine what would have happened if I talked this to my wife!!!

 

God Bless

[maddman 10]

Callahan, thanks for sharing your story, that was very nice.Try trading with 2% first...what do you think? Then move up in $$$ as confidence moves up.

I have been trading for several years but not until now I have founded an strategy that works in a consistent manner. The strategy I made is a simple one, but in order to sound more interesting I will call it "elegantly simple". I created this strategy about 7 months ago and I have backtested (5 years) and paper traded it (4 months), the last 4 months I have live-traded it with only $10,000. Bottomline, I have proven the strategy is a good consistent way to trade stocks. Don't misunderstand me, I am not going to break the bank, but it gives some decent returns in most scenarios. As any strategy it has good days and bad days. Needless to say with $10k the bad days don't seem so bad... but here is where the problem is...

 

I had planed to increase the portfolio size to $100k (most of my trading capital) as the strategy has proven to be satisfactory. What I did not take into account is that I would chicken-out (for lack of better words) at the posibility that I might not have the stomach to weather the bad days. My strategy has a daily max drawdown of 5% so it is different to lose $500 vs $5,000 even though in terms of % is the same.

 

Being honest I am dissapointed in my self as I had always criticized traders that lack the guts to pull the trigger... but karma is a b#tch... I am doing the same think I have always condemned.

 

The situation is this, I am convinced the strategy is sound, I am convinced that it will give decent returns even though there might be some bad days, but even though my brain says GO, my gut is stressing out at the (certainty) posibility (?) that there will be bad days...

 

BOTTOMLINE: I need to grow a pair... any advice?

 

 

PS: More info on the strategy... US stocks, I open positions (long or short) at the close and rebalance the next day's close.

[bwebber 10]

Callahan,

Sounds to me like you are doing things right. Do not change your strategy and don't trade on simulator. You just need to condition yourself by gradually adding to your position sizes. If you have a good strategy confidence will come.

[MadMarketScientist 11]

The stress about pulling the trigger comes from not knowing the outcome and the consequences. Essentially you are going in blind ... I would be scared too! If you had a system with calculated expectations and risk exposure (stop losses, scenarios outlined, etc) then I believe it is much easier to pull the trigger ... calculated risk vs. 'gambling'.

 

Bill Dunn once said trading was a matter of survival. Living to trade another day. Risking a max of 1% of your trading capital ensures you live to trade another day.

 

Traders who shoot for the moon on 25%, 50%, 100% of their trading capital get shot down by the market makers and others who saw them coming. Apprentice floor trades have to make 30 trades a day using support and resistence and still breakeven at the end of the year (they have to make a small profit to cover costs). then they graduate.

 

MMS

[linkon7 10]

I used to have this same problem. Only way to come out of this to trade the smallest qty allowed by the exchange. Now the fear of end result is out of the mental system since a win or loss doesn't really affect the capital. Now shift focus on execution. After 20 odd successful execution, increase the qty slowly... objective is to gain 70-90% of the execution as perfect as possible. Once the mind is used to trading the system, it accepts the fact that worst case scenario is stop loss gets hit.

 

gradually increase the amount at risk...! But keep it to comfortable limits...!