Moving the stop loss, a cover-up of lack beliefs

Emotions arise not because winning or losing, but because what we believe winning or losing means about ourselves. Promoting a way of seeing or feeling ourselves independent from beliefs...

This thread proposes a levelled approach so to speak, equanimity, rather than being on the rollercoaster of winning and losing. So let's dive in - to see why an emotional reaction is triggered, determining us to take some bad decisions. What makes us disregard a trading plan or strategy that we made to begin with, and have an emotional reaction, then cling to a loosing trade for example, or moving the stop loss, risking more than we planned on a single trade... making it "more special" than any other trade, and how can we overcome these problems.

What are we really looking for?

First we must see that in general we pursue material abundance and in this case winning, not for the sake of material abundance, but for the feelings we can have when things go our way. It can be like a feeling of security, or safety, freedom, fulfillment, and so on. So we must see, it's the feelings we are after, and not material abundance per se, which is more like a means to an end, we could say.
Because of this, we can see that really to us, feelings have priority over circumstance, even if logically we say that feelings are a consequence of circumstance (which is not actually really true, because we have to agree at some level that they do). So because we are actually after the feelings, in case we feel bad, we can react and act in a way that disregards a previous plan for success, and go off track. This is done in order to get rid of the bad feeling, or to compensate.
What is then the root cause of these bad feelings?

Lack beliefs and compensation mechanisms

What seems to look like a cocktail of beliefs, turns out to be much simpler, as we will see that all have as a root some kind of a lack belief, with which we identify. Then we will see that the problem is not at the level of beliefs either, but rather our identification with them. But first, let's look at some beliefs, and how they all boil down to some kind of a lack belief about ourselves.

It could be that we are biased toward one side of the trade, but this is actually holding to one's opinion, which is actually a need to be right even in the face of evidence that it is not right, so it is still a fear of being wrong, where we lie to ourselves to cover up a lack belief. Some other beliefs might be "I'm not good enough", then trying to compensate through not facing the evidence of let's say - being in a losing trade. It may also be - that we had a good record for the month, and we want to keep up a good self image, and we don't accept a losing situation... (that instead of being a small loss, becomes a huge precipice in our balance, or maybe even a blow up of the account).
So basically moving a stop loss, disregarding a trading plan or strategy, is a compensation mechanism, a cover-up to avoid a bad feeling - which is a direct consequence of a lack belief with which we identify. We naturally don't like to feel bad, so we try to cover it up through such actions like moving a stop loss, to get a relief. Unfortunately, this is a false relief, as more anguish comes because of increasing the risk. From this point onward, in case the market doesn't come back, (which happens) this is like a downward spiral which only increases in intensity, to the point of "F* it, I'm going all in" and there goes the account.
So this has to be very clear. That this is a false relief, which only prolongs the agony. So where can we find true relief?

Is discipline the answer?

The vast majority will say - that it is discipline that will get us past this point... but this can only be said in the context of our belief that we can control these emotional reactions. The problem here is - that in an emotional reaction, exactly rationality is disregarded.

So in a sense, trying to discipline ourselves without addressing the underlying problem, and as a consequence not succeeding, only adds another problem to the existing problem. This also opens up the opportunity for guilt and shame, which only worsens the situation, as this calls for more compensation mechanisms.
Also take into consideration that any results obtained through dominating tactics enforced upon ourselves or others in general, are short lived, as one will always try to overthrow domination to feel free, even if that means loosing money... so at one point, discipline is broken, and one can act against its best interest, unconsciously so to speak. Behavior is only a reflection of how we are feeling. If discipline means repression of bad behavior, this doesn't address the root of the problem, but can in fact increase the problem.
Trying to correct ourselves through more fear based tactics, only creates more disconnection with ourselves, and can cause backlash, or an escape through another behavior... like overtrading, or not taking profits, or who knows.
This is not saying to indulge in bad behavior, which is like a symptom, but to operate where is needed, so the symptom doesn't appear, naturally. It's useless to repress symptoms, if the underlying root problem still remains, and continues to have its effects, as symptoms of inappropriate behavior. Our behavior only follows how we feel, and after all the discipline, the question remains... how can we find true relief?

True relief

So if it's not the behavior we have to work on, as we saw that behavior follows how we feel, we might believe that it's the beliefs we have to work on, in order to have good feelings. But maybe it's not even the beliefs we have to work on, since regardless of our beliefs (good beliefs or bad beliefs), it's our identification with them, our investment of trust - is what gives them any power they have.

So the main problem is trusting that these beliefs have anything to do with ourselves.
So getting relief is not resolved by trying to not lose money (therefore not accepting a losing situation, and moving the stop loss, overtrading, disregarding a trading strategy as a cover-up), but through seeing that it doesn't mean anything about ourselves. Winning or losing doesn't mean anything about who we are. If who we are is seen to be independent of winning or losing circumstance and what that means about ourselves (beliefs), therefore being free of lacking possibility, then all that trading remains, is a skill.

For example, in school, if we get grades for a skill, it can be clear that the grade represents only the level of one's skill, but not something about ourselves. This way, in case of a bad grade, it is seen that it is necessary to take more lessons, or do more exercise. If it is not taken personally, by not believing a bad grade means something about ourselves, then we act more like an administrator of our skills, and we can work on them with more equanimity, without emotions interfering.
This way, one can keep pose in his / her life, or trading, even in not so good circumstances. While if this identity is enmeshed with the circumstance, everything becomes a drama, and then compensating mechanisms take place and it's only worse, as we have seen.

You can also read this as an article, and maybe find more interesting articles on getuptrader.com, my site. Thank you for reading.

Interesting post.

Everyone's trading plan is different, and for some traders, moving a SL might be part of their plan.

However, if we are talking about moving SL earlier than planned, then that could be due to fear, lack or confidence, impatience.

Nothing wrong with it though, it might be that the trade has changed their mind about the trade...

Yes, this is for the case where one is moving it, disregarding his initial plan, out of fear, or actually to cover up a lack belief about Self. Not lack of belief... as the title was changed. Side note. Someone from FF administration "corrected" my thread title, and now it's ruined, as it doesn't say what is intended. Clearly they didn't read it. . I will write to them, as I can't change it.
Yes, this is more a post about the belief in lack - regarding who we really are, and how this affects our trading. It gets "down" to us as Being, that is independent of time, thus unaffectable in time, thus without the possibility of lack, as it just IS. The more we can feel that we can't take away anything from ourselves, or add something to ourselves in time, as Being, the less feelings of despair, the less we are attached to outcomes - and as a result, we can rationally close a trade when we see it's not going according to plan.
So this post is exploring why this emotionality happens, helping us to see it is not about winning or losing, but about what we believe it means about ourselves. It proposes a levelled approach so to speak, rather than the rollercoaster of winning and losing.
Thanks for writing.

Hi, sure moving your stop loss could be a part of your trading plan but moving it back into a bigger position? I don't think that is an option in my opinion. You set a limit risk of how much you are willing to lose on any trade. Moving your stop loss to a point where it is more pips than before that wouldn't be a good decision. I think CPxiom was concluding that moving your stop loss to an even bigger risk is not the way to go.

Always believed strongly in the statement that capital preservation is the most important aspect of trading (no different to having a set budget when going to the casino). Moving SL to BE certainly helps with that as long as it does not choke the trade and potentially limit yourself from a winning trade which could then breed fear and anxiety.

The best way would be to data collect and follow what your backtesting proves is the optimal strategy and then let the law of probability play out.

Yes, exactly... and we explore why - even if there is a clear plan, we break it, due to emotionality. This post explores how these emotions arise, and helps us to see and feel ourselves independent from our beliefs regarding winning or losing, so we can trade more lightly, without clinging to a losing trade, to an idea we had about the direction of the market that proves to be different, to a past equity line, a.s.o.
Thanks for writing.

Yes this is about moving the stop loss in minus, and the example part with the casino budget is very well said.

Agreed. The whole point of stop loss is to give your trade space to become profitable. If you are moving to BE you are altering the probabilities. Moving to break even is a fear driven adjustment. If you believe in your strategy you should have the confidence to let you trades run their course.

For beginners it means turning a trade that may have been 1:5 Risk:Reward into 0:5 Risk/Reward <---this math doesn't work. Too many changing variables, too little consistency, and no way to track progress.

Cat is dead or alive? Until my position is not closed I have neither loss nor profit.
But who said that you a) need stop loss at all b) must have 1 sl for 1 position? c) place it immediately d) move it

Why not to gain profit from another position and reduce your loss trade at the size "profit - (fee + spread)"? Why not to average?
There are million ways how to recover loss position. And sl is the worst scenario. I mean that mental suffering is useless. Trading is mathematics, there is no place for feelings.

And that SL at BE thing. SL at BE is not SL! It is TP. There are no loss already. So it is not stop loss. It is take profit.

The Schroedinger cat? That is a very interesting topic on its own... how nothing is settled until we observe it... or translating that to trading - we could say how no position is a losing position until we don't give it that meaning. The observer that collapses the wave into a particle - is the moment we define something conceptually, and concretise it for ourselves... then take measures actually according to our projections, meanings given to a situation. But actually nothing means anything, or anything can mean anything. Very Interesting, we could elaborate on this. .
This resembles to what I say in the post, but rather I am referring to oneself... not a position, like we can't define ourselves, and we can see we are independent of such meanings put upon ourselves. This is what I was saying when I said that actually we are not upset because we are wining or losing but because what we believe it means about ourselves. So that cat is us in my post... So seeing ourselves independent of such beliefs, or undefinable if you like, gives way to trade without emotions, yes more mathematically as you say, as losing is not perceived as an attack on who we are. But yes, again, very interesting... why define ourselves, and why define a position, also... true. "I mean that mental suffering is useless" I love that quote

The only thing I would say, is that I did mention in the post that this is referring to the case where we trade one position with one planed stop loss, not other styles of trading. Quote: "Again, not saying there are no such trading styles where you hedge positions, add to positions, basket trading, a.s.o. This is only for a one trade situation." It's more about breaking a rule because of emotionality, and why that appears - because we don't see ourselves independent from the meanings put upon ourselves.
Great, thanks for your response.

I don't think anyone actually said anything that you said. You don't have to have an SL but you probably should have some sort of exit plan. Crazy idea I know.

What's the difference between taking a 100 pip loss as price continues against that trade idea another 1000 pips, and fighting that loss with trades in the opposite direction? Don't bother answering, there are a million ways to do this trading thing. We can poke holes in strategies all day. The only thing that matters is profits, and the risk you took to get said profits.

There is a name for losses not yet recognized, "unrealized losses".

You speak a lot about emotions of the trader in your post. There should be zero emotions. Either you have a trading strategy that works or you don't. If your strategy actually works, there is absolutely nothing to be emotional about. Just keep applying the strategy and watch your account grow.

People break their rules because they either greedy or don't have a working strategy. They move stop losses because they feel that their strategy is failing them. It's really that simple. As I was taught, you need to have the confidence to keep going back to the well. Lose a trade, go back to the well. Win a trade, go back to the well. Confidence can only come from the unwavering knowledge that you are executing a profitable strategy, with rules and algorithms that tell you exactly what to do in each situation.

A working strategy is crucial, and as you say "if your strategy actually works, there is absolutely nothing to be emotional about", but it happens.
In the part where you say that "They move stop losses because they feel that their strategy is failing them" (as drawdown periods happen) I say in the post that an identification happens where that sentence becomes something like "I feel that I am failing, or that I am a failure"... and then obviously the emotions and the cover-up.

This is the reason for the post... to help to discern between skill or strategy, and who we are. And see that who we are remains unaffected, because it is not true that if a strategy is failing, we are failing. This is clear at scrutiny. So going further... actually it's never true that "we" are winners or losers. We just say so .
It is about equanimity.
Thanks for writing.

My partial personal experience on the matter. This type of stop loss moving is proof that one is delusional or risking too much, etc. triggering emotions that shouldnt be there in the first place. I suggest bringing down trading volume. Getting a cent account and focusing on trading, interactions with pair's price, not with the money in the wallet... Then maybe problem will be gone and, if not, work on the delusional side. Stop imagining things. Fight it. This trading stuff is making us loco crazy ! Cheers all !

I believe that this is a strong statement and capital preservation is the most important aspect of trading. It helps with that as long as it does not strangle the trade and likely limit yourself from a winning trade which could then breed fear and anxiety.

Even though I say trading should be absent of emotions, we are still human. There will always be an excitement attached to extracting money from the markets. It's competition after all. There will always be the thrill of victory and the agony of defeat.

Oddly enough I'm 100% comfortable with taking closing my trades for a loss. The emotions really only kick in when price is approaching my profit target. When my trade is stopped out it confirms that my thesis is wrong. I can move on with my life, and look for new opportunities to deploy the capital that was previously tied up in a losing position. So you see, a loss soon becomes a win.

Thank you for noticing. And yes, this is considering that one has put the stop loss reasonably. Then it is about moving it to more loss, "not accepting the situation". And then, as we see in the thread, it's not actually "not accepting the situation", but not accepting what we believe losing means about our self. And while the non acceptance of feeling as a loser is right, and normal, (no-one likes to feel like that) the meaning we give to losing - regarding ourselves is unnecessary.