Mental mistakes

[wsam29 10]

I'll be honest, for as much as I know and the length of time I've been trading, I am still very prone to mental mistakes.

 

John Carter said to me when I did the mentorship that my problem was coming up with a trading plan and I should be able to put in words and explain my entry set-ups. They also talk about thinking in terms of probabilities.

 

Here's my issue, most of the trades that I "glance" at, without putting too much thought into them, turn out to be some of my best trades or no-trades.

 

When I try to adhere to my so-called set-ups, I do very poorly, actually down right I just suck at it it. The hardest part is sitting arond and waiting for them to occur or not occur. Its my personality, I just want to get it over with so I can go on with a "normal" life, if there is such a thing when you are a trader or want to trade for a living as a profession. For poker I can sit there all night just waiting for the hands I like to play and consider if they are worth playing based on what other players do/bet.

 

A great example if a retracement of a move for a "conservative" entry for possible price continuation in that direct. Everyone knows this is the ideal "set-up" for an entry of high probabilities. Here's where I have my problems and mistakes. I don't know the exact probability other than 50/50. It's not like a hand in poker you are dealt with, there are 52 cards in a deck and depending on your hand and the flop, that is how you know your probabilities of making a hand.

 

These pullbacks can occur from many technical patterns, double bottoms, sideways channel break out, you name it.

 

The problem I have when it comes to trading is the way I think when these "set-ups" occur. I always think they will work out and when they don't or the price does something that its not "suppose" to, I get mentally messed up. But I am following a "plan" that is not working so hot at the moment.

 

I do admit, I spot dull and quiet markets quite will with my eyes and that may be my strength because I understand that "set-up". Its after the market has made its inital move that I get all messed up because the price may not continue in the same direction. (I just answered my own question here)

 

My issue has always been my way of thinking, maybe I do too much of it when I am about to trade or wanting to trade. I ask myself this sometimes, "maybe I should try playing poker instead?" I always know when to fold a hand that has low odds of winning or "outs" as they call it. When I lose a hand that has many outs, I accept it with grace and when it wins, I understand the odds of making a hand are x and don't get excited one bit when it hits.

 

Now if I can only transfer that mentality to trading, I am set for life.

 

They have this lottery here in Ontario, Canada called "Cash for Life" the winner gets $1000 per week for the rest of their life until a certain age or when they bite the dust. Having that same mindset would be my "Cash for Life."

 

Since I've never sat down at a poker table at a Casino, the thought of a "career" change is frightening because it is no home game that I am accustomed to. Also how much of a stake do I need to get started say at a 5/10 limit table?

 

I need to really zen out and not think too much when its time to trade. Have absolutely no inner or outer conflict.

[Kiwi 16]

After a number of years I have just reread Douglas's Trading in the Zone.

 

What I realize is that I have a similar issue. I have intellectualized probability but when I am trading I do not believe it at a deep level. I don't recognize that this setup has a 60% winrate so I should expect 4 out of 10 entries to fail.

 

So, like most traders I try to improve the odds by learning more about the markets or somehow discarding those setups I think will fail (lol). This might resonate:

 

"It's the ability to believe in the unpredictability of the game at the micro level and simultaneously believe in the predictability of the game at the macro level that makes the casino and the professional gambler effective and successful at what they do. Their belief in the uniqueness of each hand prevents them from engaging in the pointless endeavor of trying to predict the outcome of each individual hand. They have learned and completely accepted the fact that they don't know what's going to happen next. More important, they don't need to know in order to make money consistently. Because they don't have to know what's going to happen next, they don't place any special significance, emotional or otherwise, on each individual hand, spin of the wheel, or roll of the dice. In other words, they're not encumbered by unrealistic expectations about what is going to happen, nor are their egos involved in a way that makes them have to be right."

 

I am just about to run a few cycles of his exercise to see if I can improve my performance. I'll let you know how it goes.

[notouch 10]

If you're good at poker then online poker is a great way of fleecing newbies. Just be aware that there are other professionals and maybe a few bots at the table doing the same thing.

[TinGull 10]

Kiwi hit it on the head. That was a MAJOR hurdle for me, and now I've devised a method that I believe in whole heartedly and and allow myself to know that I will lose, and the market can in fact do whatever it wants. I in no way can move the market (yet *evil grin*) and know its the rest of the people that will move it my way or not. It kinda stinks to think about being dependent on other people....but it's the way it goes.

 

Do you keep a spreadsheet of your trades with data that goes along pretty deep with the trades? I recently started doing that (thanks keymoo) and it has done WONDERS to help me mentally. Things like the amount of time it takes the trade to hit, how long did the trade last...mine are Market Profile based so I have the size of the value area, did we open outside value? If so, by how much? How much heat was taken on the trade....if I got stopped out, how far did it go past my stop and if I had just reversed instead of stopping the position how much heat would I have taken before profitability came my way?

 

Having a plan of attack is awesome, and if your setups aren't working in this market, definitely try and either find ones that are more suited to rangebound markets (we might be in this one for a while) or maybe look for a different instrument to trade that favors your setups. There's so many different things to trade out there that something is bound to have a style that fits the way you want to trade.

 

Just my measley $.02

[GCB 10]

I'll be honest, for as much as I know and the length of time I've been trading, I am still very prone to mental mistakes.

 

John Carter said to me when I did the mentorship that my problem was coming up with a trading plan and I should be able to put in words and

A great example if a retracement of a move for a "conservative" entry for possible price continuation in that direct. .

 

wsam, I can relate to the difficulty you are having and the ambivalence you are feeling. I think what it boils down to is that at a very fundamental level you are really unsure whether the probabilities of your method are favorable. You sound a lot like me in many ways. I think the way to be successful as a trader is that you have to have a rock solid belief that you have an edge and the edge has to be quantifiable. You have to continue to study and refine (not curve fit) your method until you are sure the odds are favorable. But you also have to realize that there will still be times when the method will not work well. The trick is to know what is wrong--the method or the timing of using it.

 

I think the basic stuff is time tested and in our case it's just a matter of consistent execution. It's the Gann/Elliot/moon phase stuff that to me is way out in the weeds. Someone might find using that stuff "works," but I think that is more coincidence than correlation. It's all just some strange way of looking at price or people. Some traders do better when they look at price through three different fun house mirrors at once. If that works for them, more power to them, but to me it's like a baseball player who thinks wearing his high school socks helps his batting average.

 

There's nothing wrong with filtering your "afraid-they-aren't-better-than-50/50" setups if your filtering method is quantifiable and repeatable. For example, taking pullbacks only if they are up against a helpful support and resistance and so forth. The problem with filtering is that you can overdo it ("I've figured out how to eliminate risk! Don't take any trades!! The holy grail is mine!! Uh...wait a minute."

[Soultrader 12]

$500 is enough to sit on a $5/10 poker table. Im assuming this is limit holdem?

 

Now I can say this.... poker is as tough as trading. There are plenty of games with new fish around but the higher the stakes get the better the players. I have been playing poker for quite some time, ever since I was in middle school. I am probably a better poker player than trader. But the one thing that stopped myself from continuing to become a full-time poker player was this: "Do I really want to do this for the rest of my life?"

 

The answer was no. Now I enjoy the game of poker and I make some income here and there whenever I play. I have played with hundreds or maybe thousands of different players and there is always one thing in common. The players who win are usually the same crowd. Even in online poker.... I recently visited a poker room where I used to play a year ago. I checked out the high stakes table there and I only found 2 players I truly recognized from before. Its the same as the WSOP. In the 2006 WSOP, an amateur called an all-in made by a professional. Before the call, the amateur said, "Ok! Let's gamble". Now the professional won that hand... and he remarked, "Im not here to gamble. Im here to win!"

 

I have had numerous amounts of people asking me to teach them how to play poker. I have tought several and have seen only 2 player amongst the group of about 10 who are now making money consistently. Even the players that used to win are now washed out... when they going on a losing streak they blame it on the game. They never look into themselves and realize that it is their style of play that needs to be fixed.

 

Now almost always when I am asked to teach them poker.. I tell them no. A winning poker player thinks differently from a losing poker player. No matter how much I teach them and sit at their side during a game.. if the mentality isnt there he's not going to win. I know they are plenty of poker players who make a very good income playing. But whenever someone approaches me and asks me if he should become a full-time poker player... I never recommend it. If you are good at it great! Play on your free time and make that extra side income. But I personally get more gratification and the feeling of accomplishment as a trader. Just my thoughts