How do you stop the nervous feeling or anxiety created by having the positions fluctuate? Or do you not really experience those emotions. Everytime I have a good trade going, I try not exit so quickly. I tell myself work with the 5 min chart. Yet, I always get out early due to wanting to end that emotional feeling of nervousness. Once the position is closed, I am not nervous anymore. I am thinking about changing my stops to trailing stops, so they move along with the profit, but I have never used these before. -Joshua
___________________________________________________________________
I think the unhelpful feelings you have when you put on a trade have to do with thinking about money too much. Yes I know this business is about making money but the trick is to think about the application of your edge and trading plan/system instead. Remain ambivalent about the trade you are in.
Any one single trade simply is not important. Whether you win or lose on that single trade is not important. Being right or wrong on that single trade is not important. What is important is sticking to your trading plan so that your edge (you must have an edge that works) can manifest itself through the endless stream of probabilities that present themselves during the day, weeks, and months. When you have nothing riding on the outcome of a trade it is easy to let it go to wherever it’s going to go and trade it accordingly. Like flipping a coin.
You might say that is easy to write and hard to put into practice, but the reality is that when you make a fundamental shift in your thinking so that you can view your trading as purely taking advantage of probabilities via your edge with complete disinterest in any individual outcome then you will have an easy time of it.
To me it comes down to mental preparation. Rehearsing in my mind what steps I need to take to implement my edge/system/plan before the day begins. Control what I can control – risk/losses with stop levels – I can control nothing else market related. Everything else though is taken care of by putting my system into practice exactly as I visualized and rehearsed it regardless of rising or falling markets. This singleness of purpose doesn’t have room to let any other emotions intrude. It is what it is. The charts tell the story. There is no room for hoping, wishing, fear, greed. Only the application of the system.
Start working with the market instead of viewing it as an adversary. It will tell you when to buy and when to sell. It provides you with the opportunities. The money that you gain or lose is only a byproduct of your edge and the proficiency of your application of it.
On a side note, are there any trading questions out there as I’ve about run out of things to write about on this blog and by now my system of trading is plain to see and getting to be a bit of a bore posting the same charts.
Posts
12 comments:
thanks for the response. this is my trouble area. i gave up dollars all over the place today taking .30-.50. i had a perfect entry on aapl, no pain, but i closed it for $75. you can see my entry on the blog. it is the last chart on the day. i agree, i am too focused on the money aspect. i tried re-arranging my position window columns so that i don't see how much i am up on the stock. i just want to trade the charts. but i couldn't stick with that plan. i felt the need to know if i am at least pos or neg in a position. but in reality, it shouldn't matter. i set my stop, know my risk, accept the risk, and just trade the chart after that. today truly could have been a breakthrough day for me, to know that i can do it, but i squandered that chance by succumbing to my anxiousness to take profits.
Thanks for sharing this Scott - and thanks for opening up to questions.
I have a couple:
1. I find myself jumping in and out as I think a stock is trying to make a move. I have decided not to let this bother me, I think some of this will settle in time as I gain more experience. But I was wondering, on average, how many stopped out positions do you contend with on any given day? Did you find this number decreasing as you gained experience?
2. How would you define your edge? How would you suggest a beginning momo trader go about defining their own?
And - I enjoy your charts - though I can appreciate how much work it takes.
you asked for suggestions, how about one day of trading using instead of a chart a verbal explanation, when you got in(time)and why , and when you got out, time and why,i just cant see from your charts when you enter and out. thanks
Scott, The little bit you put in parenthesis is so vital to all of this, "...(you must have an edge that works)...
No matter how much confidence one has or strength of character, or relaxed state of mind, there will be no success without an edge, a trading plan that works! After all, can anyone imagine a first year med student performing delicate brain surgery? Training and practice, practice and training!
That sort of training is not available anywhere except in one's own trial and error.
Over the past year and a half, I have tried to gleen it from FNG to little avail. The secret to your edge cannot transfer to the written word, despite my best efforts to do so! Ha. As you have said yourself, it is tacit knowledge. That being said, what I get mostly out of your site and your posts is inspiration to go forward and a sense of encouragement. I read many years ago that success is heavily influenced by the company you keep. That is to say, being around successful people plays an integral part in one's own achievement. In this trading business it is exceedingly rare to directly associate with successful traders. We do it through blogs. Our successful "associates" are those traders like yourself.
I understand your boredom and the dull repetition that goes along with what you do here at FNG. Ultimately, you will continue here on your own terms and in a way that serves you first. It is important you know that we still do benefit from your posts because through them, we are associating with a successful trader.
I think there is a gold mine of info here and I still delve into the old stuff... it has been a number of months since I've done a post by post analysis from the beginning but I still revisit the whole catalog now and then. I've spent countless hours here... and have read the whole blog, (nix that), I have studied every blog post at least twice. You're right, there's not much mystery left... it's all there to see. But I will keep studying and imprinting the entries and exits on my brain in the months to come, perhaps years to come.
I hope you continue to post, even if it is at a reduced pace/frequency. I will continue to read... after all, I like to to "hang out" with winners.
I've been watching the LEVEL II for a while and it's eye opening. Don't know if you have any specific strategies or tells you look for.
Thx in advance, Scott.
Blake
Hi,
It will be of great value for new traders like myself, if you can arrange a webinar as you were planning.
thanks for sharing.
DTF- I get stopped out or have losing trades every day. It's true that as you gain experience you get better returns but as the market is unpredictable and can do anything at any time you are bound to be on the wrong side sometimes. A few months ago I had a string of about 7 consecutive losers in a row.
K55- I don't think I can be any more clear on when I get in and out. As for the reasons it's always market and or stock momentum or lack of it that I use to get in or out.
BCT-I started this FNG blog as a record for myself. To record the trades and the situations so that I could find improvements. Trading day after day after day means that it all becomes just mush after a while and you don't remember the exact conditions a trade was placed under without a visual backup.I also started it so I can demonstrate to my young daughter what it looks like so she can learn later if she wants.
Its morphed into something else along the way and my boredom with posting the same charts is starting to reflect this.
Blake- I don't watch level 2 as I trade small spread, high volume stocks and it doesn't matter who is showing they are buying or selling. With .01 spreads and high volume you get instant fills and thats the name of the game.
Tajir-My priorities have changed somewhat so my webinar is on hold.
Although I can't call myself experienced in any way, there are a few things I've noticed which have helped me get over the exit anxiety.
1) Take a step back to understand what the price action is telling you. Mark a line where you first feel you should get out. See how the price acts around that. If it keeps going up, make a new line at a potential exit. If it goes against you, you are only out of your SL, but you will have learned to watch how the price fluctuates rather than your P/L.
2)Trade off of a time-frame where the whipsaws that mess with you are not significant. If you trade along with a bigger picture, it can help ease your mind when you aren't sure when to get out.
3)This kinda ties in with 1, but if you really have trouble holding on to positions, then slowly build up your confidence by going for larger and larger amounts. Start by trying to take only .10/share, and each week you are successful, increase the amount. Eventually, you'll learn to see which moves warrant holding longer for additional profit, and which ones will only give .1
Scott: Dude - you completely rock. Incredibly thoughtful and insightful of you to post this for your potential daughter's interest.
CN: I like the way you think. Thanks for sharing.
I bet you his daughter would be better than most of us because she would be unemotional, no attachment to the money, not need to depend on the outcome of any trade. she would be "trading in the zone". its all a mental game. thanks for the great post scott.
i know you get bored posting your trades over and over again. but like blue collar said, i enjoy coming to your blog, when everyone else out there is negative (money or sentiment) on the day, and see you were successful. it lets me know it is possible.
when we are trading in our "caves" its hard for me to believe that i can make money, because i don't trade side by side with someone who is consistently making money. i only have a few select blogs and chat rooms to see how the day went for other folks. and for me, i enjoy yours the best because of the simplicity, humbleness, insightfulness, and your desire to teach others. and as simple as it is, i know it takes alot of time to post those charts during the day. also, i hope you realize simple is not a "negative" word in this case. because as easy as some of your system is, it is extremely difficult for me to replicate.
i know it just comes down to detaching myself from the market, getting in the flow, and being free to see what is happening right before me.
Scott, Check out Dr. Brtt's blog post of today, April 28th, and you will see a much better-presented version of my earlier comment. The value of mentoring by those like yourself...
BTW, Dr. Brett is at www.traderfeed.blogspot.com in case you're not a reader of his.
Post a Comment