It's been several months, my account isn't looking good. I have taken the time to make some self-assessment after trading. One of the behavior I have is an impulsive finger. Click, click, click... going against my trading plan, well not going against it but clicking the mouse way early before my entry signal.
There is a lack of focus. I have found that each time I entered early before my trade, I was feeling greedy. I felt that I can catch a big move, I felt excited and a rush. I also felt that I was missing out on a great opportunity to make some profits.
This is out of control, I need to control this urge. I need to stay composed and in control. I need to develop self control and patience.
Self control and patience are a prerequisite in trading. As with life (not just in trading), impulsive decisions, impulsive actions or impulsive behaviors usually lead to problems.
As much as you would like to tell yourself to be patient and be in control, it wouldn't help very much in changing the behavior. Mark Douglas (trading in the zone) suggests that you try to catch yourself during those moments when you lose control/being impatient and try to get some control at that moment. This is one way of changing the behavior, but it is not the efficient way. This is not getting to the root of the problem. Trying to get some control during those moments would be to late. Most often, the moment you realize that you f***ed up, everything has already been done.
You see, you have got to come to the battlefield prepared. If this happens, this is what you do... when that happens, then this is what you do next. You shouldn't go into battle, not knowing what to expect, then meet the circumstance and say, "What do I do now!?". You should be prepared and know what you are doing, way before you enter the battlefield.
Can you imagine a surgeon not prepared in the operating room (battlefield). He takes a scalpel, cuts the patient open and then says, "What do I do now!?" So why would you go into trading not prepared?
During my developing years, I set aside training days (not demo-ing days). To train myself in self control and patience, I set a trading day (Friday) as one of my training day. Not weekends, but during live trading hours.
Friday was a day of no trading. I would simply sit and watch the market moved for 6 hours. I watched the market moved up and down, made lovely breakouts, skyrocketed to new heights and plummeted to extreme lows. I watched myself as I went into an emotional roller-coaster ride; the greed, the rush, the disappointments, the confused and all the mixed emotions you can ever have in trading.
I did this for 2 years (every week), slowly seeing the results the effect it had on me. I still perform and continue this exercise once every month (last trading day of the month).
You will develop self control and patience. It does this by molding your mind into a belief that everything is fine, that everything is OK, that everything is safe when you miss a trade/don't trade. It molds your mind into a stronger belief that opportunities are abundant. When you hold such perception (everything is safe, abundant opportunities), your behavior will act accordingly; self control and patience.
Training exercise: Whether you are a scalper, short, medium or long term trader, set a day of the week (during trading days) to watch the market intensely. No Trading during this training. The beauty of it is that you don't even have to take any notes (if you don't want to). You don't have to analyze the charts. Just sit there and watch it. Just be aware of the emotions and feelings that are running through you.
IMPORTANT: Even if you see the best setup occur, the biggest move happening... it is STRICTLY NO TRADING. Just sit and watch, nothing else.
This is a very important exercise. This is the fastest way I know how to instill self control and patience.
I can hear most are whinging/sulking already. It is like a person who wants to become a doctor, but says he doesn't want to deal with piss, shit and vomit. If you don't want to deal with it, you are best to be in another Profession. These are the roads you must take to become a Professional trader. I have more than 10,000 hours of looking at live charts, and that's the difference between you and me. One drawback of medium-long term traders are that they don't get enough live screen time.
Mold the mind, don't mold the behavior. The way to mold the mind is to train it. Training, training, training, ... You must be prepared long before you enter the battlefield.
It is OK to miss a trade... But it is NOT OK to miss a trade because of laziness.