Lack of discipline.

I'm still relatively new to live trading and after some time trading profitably I went through a euphoria stage. I had several winners in a row and felt that trading was so much easier than I had made it out to be. Fast forward a few trades and instead of trading 3% of my account I'm maxing out because I haven't been wrong in the past so I can't be wrong in the future right?

Well funny my luck must have ran out on those first few trades so now my account is facing some serious drawdown which led me to overtrading the account trying to get the money back. I have a serious problem with picking tops and bottoms. If I go short you can rest assured that I just picked the bottom and the pair is going to fire off like a rocket and vice versa when I go long. Take for instance the gbp/jpy this week. Each time I went long it would go down another 100 pips. The pair was talking to me saying, "come on go long you know you want some of this" and so I would and then bam like a rock another 100 pip drop and me thinking ok it's not going down any further, look the 1 hour chart shows a bullish candle so I go long, repeat lather rinse, account now very close to blown.

Last Sunday the pair gapped up on the open so the first thing I do when my trading broker opened was I went long, set my stop and went to bed and woke up to a major loss. I have this fear of missing the big one which leads me to get into trades that have no chance of winning. This leads me to my question of how do you discipline yourself.

I always have this feeling like this next trade is going to be the big one and of course it's usually not. I have thought about going back on the demo but that seems counterintuitive to me at this point. I have a method that has worked for me in the past but I never follow it. How do you fight the urge and not pull the trigger? It seems it would be easier than this just don't click the mouse but I can't help it. When I do have some discipline and nothing is showing on the four hour charts I can't help it and start looking at shorter time frames and then if nothing there I pull up exotic pairs.

The other problem I'm facing is constantly watching the charts. I prefer the four hour charts but I watch them all the time. When I'm asleep I wake up every hour almost and run to the pc checking their status. When I place my trades at home before I leave for work I'm anxious in the car the whole time until I get to work where I can pull up the terminal. I'm tired and anxious all the time now on top of being irritable from foolishly losing my money. I'm already looking forward to Sunday night when trading begins even though I just took a massive beating these past few weeks.

I'm not quite sure if this is normal behavior or not. My account is not even that large. I'm sure most of you make more on the daily swap rate than my account was even worth but it still hurts seeing it evaporate. This was just speculative money to begin with but I would prefer to be up than down.

I just needed to vent but I appreciate any tips.

Your story sounds exactly like mine
I found that going to higher timeframes helped, I made a rule that I would only check charts two times a day 1. London open 2. When I get up. I know how it feels to think your missing out on something if your not glued to the computer, but controlling these emotions just comes with time, there is always another trade. I blew about 40% of my account with one trade about a week after I started...so I know your pain. Just keep at it!

I am sure you will get much better advice from some of the much much more experienced, but here are a couple pointers I think may help you. Firstly, get out of your head that the next big trade could be "the big one". If you are using a well thought out MM scheme each individual trade should be irrelevant. It is the long term that matters(think marathon). So you should never be anxious to think you missed the big one. Missing a trade is just an opportunity cost.

As for being anxious and all those feelings. I also trade mostly longer term time frames. After I put on a trade, if I walk away from the computer or go to nap, and I find myself anxious over that trade, or thinking about it too much(where is it going? I wonder how much I am up/down). I immediately get up and remove that trade. It has helped me control my feelings of attachment to any individual trade.

Also if you are feeling burnt out take a few weeks off. Collect your thoughts, come back fresh. You have identified your problem, now you have the power to start to take control of it.

Best of luck to you,
Mike

Sounds like typical newbie stuff. I am no expert, but here are some quick tips.

Take a break, step back to get some perspective. Go over your mistakes, usually mental errors, and solve them.

I would recommend using higher timeframes. One reason is to teach yourself to sit back and relax so the trade can develop.

Don't just enter because it feels good. Have a very good reason for entering. Whatever that is, is up to you to figure out what fits your style best. It sounds like you are gambling, not trading. After awhile I found myself leaning more towards staying out of the market rather than wanting to be in a trade.

It is very tempting to watch the action. Doing that and one will end up sabotaging their trades. Either jumping in without planning or jumping out of trades too quick before it goes further in your favor. Note: I do watch charts, but I do this with the intention to visually see how a pair moves. I am a visual learner so this helps me get a feel for a pair.

Take your Forex energy and put it towards educating yourself about Forex. Reading, playing with charts, pick a system and demo it. I usually find out a system is not for me, but I learn something from it which adds to my experience to become a better trader.

Don't worry about missing the "big one". The market will be there tomorrow with more big ones to come.

All your anxiety and losses come from the fact that you really don't have a system. You may have stops and take profits designed for what you’re doing, but your entry sucks. You’re basing your trading decisions on your (incomplete) perception of the strength or weakness of a pair. Most of the time charts are constructed to give you the exact impression needed to take your money from you, so this is a fool’s game you’re playing.

Work out what your "exact" entry criteria are. You need to have x+y+z conditions met before you ever take a trade. Then go and back test your entry criteria with different stop and take profit points to see what has worked best in the past. Get a test pool of at least 100 trades and work out the probabilities.

When you have that done forward test it for at least 100 trades. Track every trade that you took and more importantly the ones you didn't take because your "intuition" told you they were a bad idea. Compare your results for taking every trade with your intuition distorted results to see which one makes you more money. I can almost guarantee that once you see how shitty your intuition is at determining trade viability you'll cure your discipline problem.

After 200 trades (100 back, 100 forward) you should have some confidence in your system and that will dramatically reduce your anxiety. You may still want to watch the charts, but it will be for very different reasons then you watch them now...

PS- Every time I see your avatar I think of that hacked up Kermit and Bigbird getting stoned song.

Stop watching the 4x infomercials on tv

You may want to find a broker that uses micro pips or units so you can still maintain the psychology of trading real money but at only a fraction of a dollar.

If you want to read about forex trading check out interlibrary loan at the public library. You may be able to tap into borrowing trading books from business schools all over the country for free. Rather than using up your limited capital to purchase books.

Every little bit helps,

Lou

You are 100% right. I was just reviewing my trades this week and the week started off right and I could say ok a and b were hit so enter but as the week progressed I couldn't determine why I had enterered the market. There are just random entrys at random times. It's easy to sit and look over these now but at the time I was just so wrapped up in getting right I lost my head.

Actually I have a mini account with InterbankFX but I have been trading .50 lots which is a micro lot. The coming week I have set the default in MT4 to .10 lots. I won't deviate from that until I put together a string of winners.

Honestly, if you switched your lot size to 0.01 you would probably be further ahead based on what I'm reading. But I would suggest to anyone starting out trying to find their way to trade at a high enough level that to keep you interested, but that doesn't make you anxious to follow the preorchestrated strategy. There is plenty of time to play bigger later when you have that proven method and proven execution skills. Everyone thinks they have what it takes to win right off the bat but the unfortunate fact is that virtually everyone needs to learn from the school of hard knocks that they aren't trading superstars out of the box, and that they need to have a plan, discipline, good money management skills, mental toughness and all the rest. You need to find your own way and Darkstar put you onto some good ideas. (As an aside, anyone wishing to get a post-graduate level of insight into what being a pro trader is all about, I would suggest reading all of Darkstar's posts. His insights are right on and the depth of understanding is incredible as well as his ability to articulate that understanding in writing.) I would say full comprehension of his first paragraph is probably beyond most beginners but let me give you a piece of guidance that might help you move toward profitability faster.

Decouple your definition of trend from your entry / exit plan. In other words, have a condition(s) that triggers an up trend or down trend. When the up trend condition exists it doesn't trigger a trade entry or exit. Have a separate entry plan of action that seeks to get you in at good prices but only in your trend direction. I would suggest for your positioning logic that you focus on buying low and selling high, which can be done by positioning on pullbacks rather than on extremes or in other words letting the market come to you, rather than jumping in because it looks like it's going up. Big difference. One thing that I do in my positioning is to scale in at multiple levels in the "trend" direction and I use scaling to improve my average price to bail myself out of trouble but only under certain circumstances and when my plan allows it. Your positioning execution requires a great deal of discipline in not taking on more risk than your plan calls for. If you trade too heavy too early you run out of ammo when you need to add more, and your size becomes a proverbial anvil around your neck. Running out of margin is a worst case scenario. I allot a small enough amount of capital to each scale in so that I can cover multiple levels or a normal trading range - all part of the normal plan, and I have enough capital left to cover extra adds if needed, when the normal plan isn't working and I see a chance to add in the original direction to help my position. I would say that is an advanced technique that comes with experience.

And expect that every trade will be the next "small one" rather than the next big one. You will be right 85% of the time and your expectations will be much more in alignment with the realities of how the markets move. Expecting the next trade to be the next small one might also help cure you of your need to put on so many impulse trades. Good luck!

How do you fight the urge and not pull the trigger...

simple,...made trades only in your head, just to proove yourself your system is more right then wrong...but that leads to not pulling the trigger,...next stage...lol...

imbiber,

theres a theory that goes like this:

if you are not acting/trading like you should/have planned, dont take it as a negative, but rather focus on what your are acting like, your actual behavior and see it as a "solution" to a hidden "problem"

if you can adress this problem,you can work on your behavior pattern..."discipline" might not help you out here

I see what you mean and I kind of already put the solution in motion. I realized that I have a side of me that likes the impulse trades and I like to gamble. What I did starting this week I took a small chunk of my equity and decided it was only to be used for the impulse/gamble trades. It's working so far. I have only taken two impulse trades, one winner, one loser so I'm back at break even but I feel better knowing that I have money set aside for these trades.

imber,

seems like you are doing the right thing...to do your nasty impulse trades with a very small trade size is better then to press yourself into "discipline" with some raw power..

My friend, you just described me right now. I am also new at this, and your post is EXACTLY my mentality to trading as well. EXACTLY to the letter - I also wake up every hour to check my trade, I am also anxious in the car driving to school, I also am depressed with losses even though they are not that much because I trade mini lots. And I also trade the GBP/JPY and it's like the pair is seducing me...

I got really frustrated the other day because I planned a trade but didn't execute it, and had I executed it I would have made 300 pips - and this was not the first time this had happened. This frustration caused me to no longer hesitate with my trades and so I opened several positions which were all losses. I was so frustrated, because when I didn't execute my plan was profitable but when I did it was a loss.

I also seem to just stare at the chart and each pip movement causes my heart to thud, and it saps me of energy to do other things.

Today I decided just to stop trading and WRITE down a systematic plan that IGNORES EVERYTHING except what it defines. Meaning I will no longer care if GBP/JPY is trending 300 pips a day, I will just stick to my plan and if it is profitable I will be content with that even if GBP/JPY is 'potentially' more profitable. But I'm a beginner so I wont share my plans or give advice as it probably wont be too helpful, but know that you are not alone .

I do have some thoughts though about why we should not gawk at profits or be depressed by loss. At this stage, it is not actually winning or losing in our trades that matters, but creating discipline and a method that will be continuously profitable. So going back to the demo to test a system and test your discipline is not counter productive. Or maybe reducing your lot size would work as well.

It would probably be best to give up trading if it is just going to make you anxious for the rest of your life. Contentment is true wealth, not dollar bills. I would also really like to know how to become disciplined and how to disconnect one's self from marriage to their trades, and look at trading with a cold stare rather than having my heart tied to every pip.

Take a look at this post http://www.forexfactory.com/showthread.php?t=19467 and if you're by a book store you should pick up the book too.

Good luck

Lux

For me,the biggest mistake I made when first entering the forex market was that I was both greedy and fearful and, of course I had a 90% drawdown in my first year (2006) ,and my selfdiscipline was a mess ,now I start trading with a simple system,following the rules and a strict money management and I could say that I am winning again(around 10% account growth monthly since november 2006 ).

Hi,
I went through that typical story,random furious success at start,heavy losses in real money.

What worked for me is strict discipline by doing the following:

1-Create an excel sheet that looks like Date/time , currency, snapshot (a snapshot of Ur chart keep the file name in that column) , assessment(estimation), trade details(entry,stop,limit), Open comments(where us say what do u think while trade is open each comment in a line and time stamp, closing comments(stop triggered,manualy closed,..etc), and finally conclusion (stuff like the usual should'ves).

2-Weekend to analyze each and every trade winner or looser and comparing charts,its very important to check the chart of decision and the later chart of progress.that will give you a hint of where do u go right or wrong reading charts.

3-Another sheet within the same file to estimate on currencies or situations that U have a vision for but decided not to trade,and track these as well.

Its not important how much you make or loose,its the understanding of how things go.

P.s:
I am NOT an expert or so,I just got helped by a very generous person who is a real deal expert,and just trying to pass help as well.

Goodluck

I was inspired to make the excel sheet a few hours ago very similar to what you described and then read this post
hahah

This is my first post here at FF, but I have to say imbiber, I really feel your pain. It's like some kind of newbies disease.

I'd also like to thank all the long-time traders who chime in and repeat the obvious since it obviously didn't stick the first 10 or 20 times we heard it. LOL.

Seriously, knowing all the ingredients to being a successful trader is a lot easier than actually living them. I think this will probably take a lot more time, and money than any of us newbies suspect. We need all the help we can get.

Last but not least, after a string of winners or losers, I switch to one of my "mostly-decimated" demo accounts and trade it further into oblivion to satisfy my desire to keep trading. I believe I'll eventually learn to control myself, but for now I just try to protect what equity I have.

PS, all my trading is demo, but I do try to pretend one of the accounts is real.