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problem solving

  • #1
  • First Post: Feb 25, 2010 12:58pm Feb 25, 2010 12:58pm
let's say I've managed to identify some problems with my trading (assuming I'm following a well defined trading plan, so that shouldn't be the problem since I'm comfortable with it)

so the problems are (or were)

- not being careful on entries / exits
- getting greedy
- not limiting losses in some situations
- trying to recover losses (the loss spiral)

i've also managed to find solutions to those various problems

- being more patient
- respecting the trading plan
- respecting basic trading principles

the big problem

- i don't seem to apply the solutions to prevent those bad trades

what should I do?
trade more, concentrate more?
am I missing something?

it's the 2nd week in a row in which I'm breakeven because of bad trades

thanks for reading
  • #2
  • Feb 25, 2010 2:03pm Feb 25, 2010 2:03pm
Of your list of faults, it seems the easiest to correct is the "loss spiral". Focus on eliminating that one and once your are convinced that is behind you pick another and repeat. Maybe you are trying to do too many things at once. I like to think of a sports analogy. A rookie basketball player has so many things to learn. But if his coach tries to teach everything at once, the rookie gets confused. The better approach is to work on one aspect then move on to the next. The other things will improve on their own anyway without the coach harping on them.

Congrats on recognizing your shortcomings. I can see some that I had and some I still have. The biggest challenge after achieving some success, is to not let the market convince you that you are in control. The market is always in control.
  • #3
  • Feb 25, 2010 2:47pm Feb 25, 2010 2:47pm
Quoting ssnakezor

the big problem

- i don't seem to apply the solutions to prevent those bad trades
It seems like you lack the level of discipline required, or you're getting bored waiting for trade set-ups which meet your criteria, or both.

Maybe consider watching more pairs (more opportunities?), or spending less time in front of the screens to help prevent 'forcing' a trade.

Ask yourself why on earth would you want to take a trade which didn't have the very best chance of success.....
  • #4
  • Feb 25, 2010 5:46pm Feb 25, 2010 5:46pm
Quoting ssnakezor
let's say I've managed to identify some problems with my trading (assuming I'm following a well defined trading plan, so that shouldn't be the problem since I'm comfortable with it)

so the problems are (or were)

- not being careful on entries / exits
- getting greedy
- not limiting losses in some situations
- trying to recover losses (the loss spiral)

i've also managed to find solutions to those various problems

- being more patient
- respecting the trading plan
- respecting basic trading principles

the big problem

- i don't seem to...
Hi ssnakezor - well good on you for at least being able to identify your problems and the accompanying solutions (way ahead of most would-be traders I would suggest!), and the challenge of being able to properly implement those fixes is no doubt familar to many traders as well. Just 2 points from my experiences that may (or may not) be relevant to your situation:

1) The value of walking away from the screen. "What is the purpose of me sitting in front of the screen, watching the charts, right here and now?" For me, if it is anything other than - following my plan and waiting for the right set-up - or - learning how to be a better trader - then I should walk away - because chances are is that it falls into the counter-productive and potentially account damaging category. (eg the spiral)

2) Having the confidence and patience to stick to the plan? To me, this came from fully understanding the capability of my trading plan. ie what is the risk, what is the expected rate of return, and how might this differ under various market conditions. What are the assumptions in my trading plan and how can they be tested to identify their real risk? And this can only be reached through lots of experience, lots of ongoing testing, and asking yourself difficult questions about the robustness of what your plan is telling you to do. I see this as a very practical activity, and not in the realms of 'trading pyschology' than many would have us believe - because to me, the 'pyschology' (eg patience, discipline, etc) comes from the practical activities that go towards understanding the true capability of your trading plan and therefore having the confidence that you are doing the right thing. Chicken or the egg for some people I suppose, but that that's just based on what works for me.

All the best.
  • #5
  • Feb 25, 2010 7:29pm Feb 25, 2010 7:29pm
Quoting ssnakezor
- respecting the trading plan
... basic trading principles

am I missing something?

it's the 2nd week in a row in which I'm breakeven because of bad trades

thanks for reading
(from a demo'er)

What are you respecting? Maybe you're missing something in how you define your entries/exits. Try another trading edge.

If not, it sounds like a phase. You kind of tiptoe around your trades, unsure of yourself. Let go of what you can't control, and enjoy your edge for what it is.
  • #6
  • Feb 26, 2010 3:02am Feb 26, 2010 3:02am
Quoting pipmutt
It seems like you lack the level of discipline required, or you're getting bored waiting for trade set-ups which meet your criteria, or both.

Maybe consider watching more pairs (more opportunities?), or spending less time in front of the screens to help prevent 'forcing' a trade.

Ask yourself why on earth would you want to take a trade which didn't have the very best chance of success.....
i hear this a lot. what i, and many others i'm sure, would like to know is how does one give consider a trade a 'higher probability' trade. if we assume, as i do for the most-part, that the market will do what it likes then how is it that one trade is different to another? if the answer is to do with s/r i think i will give myself an uppercut.
Congratulations ScalaFX for coming out of the closet!
  • #7
  • Edited 4:05am Feb 26, 2010 3:13am | Edited 4:05am
thanks for all these replies

pipmutt is right, I get bored sometimes, yet moving away from the screen for a break might mean missing some good opportunities, so it's debatable

ha-pattern pointed out something crucial, if you don't trust your own decisions, then it's obvious that you're exposing capital to hazard

and hedginghog pointed out something interesting, I guess it will take some time until I can make trading a bit better

and again, thanks for the replies, will come back later

later edit :

nubcake said that we as traders might be looking for "high probability trades", it's true we know that probabilities aren't certainties, I think it's more about how you understand the market, what patterns do you see, what's the mood of any market etc. as for trying to be exactly right about the market, that's impossible, so I'm trying to manage accordingly to two basic principles - limit losses and let profits run (to the extend of not being greedy). today it has been a good day until the moment of this reply but it's not over

later later edit :

scored my daily target, I'm happy

also, I noticed how I usually make mistakes when it comes to sustain profits over and over again, it's like being afraid of loosing, the simple fact that one trade has even -0.1 pips bothered me in the past, maybe it won't in the future
  • #8
  • Feb 26, 2010 11:23am Feb 26, 2010 11:23am
Quoting ssnakezor

scored my daily target, I'm happy
Could that be the problem, having a daily target?

I'm also impatient and I also get bored but the difference is I walk away and go do something else rather than watch a flat market. I also set an alert on the chart when a set-up is setting-up, if that's an option for you it might be an idea. And I never have a daily/weekly/monthly target, the market offers what it offers and doesn't have any respect for any targets I might set! What happens when your target isn't met, do you carry it forward to the next day and give yourself twice the pressure?
  • #9
  • Feb 26, 2010 11:29am Feb 26, 2010 11:29am
Quoting nubcake
i hear this a lot. what i, and many others i'm sure, would like to know is how does one give consider a trade a 'higher probability' trade. if we assume, as i do for the most-part, that the market will do what it likes then how is it that one trade is different to another? if the answer is to do with s/r i think i will give myself an uppercut.
There's a difference between higher probability and best chance of success.

Every trade you take should be given the best chance of success and meet your trading criteria, why take anything less? Because you're bored or trying to meet some arbitrary target is no excuse.

Don't get me wrong, I do the exact same thing sometimes when I'm bored and inevitably it goes wrong! What did I expect

Look at it this way, if the market isn't moving and I'm not trading then there's something comforting about that. If I was trading like crazy while no-one else was then either I'm a genius (if I'm making money) or a fool (if I'm losing it)

As they say, patience is a virtue!
  • #10
  • Feb 26, 2010 2:53pm Feb 26, 2010 2:53pm
Quoting pipmutt
Could that be the problem, having a daily target?

I'm also impatient and I also get bored but the difference is I walk away and go do something else rather than watch a flat market. I also set an alert on the chart when a set-up is setting-up, if that's an option for you it might be an idea. And I never have a daily/weekly/monthly target, the market offers what it offers and doesn't have any respect for any targets I might set! What happens when your target isn't met, do you carry it forward to the next day and give yourself twice the pressure?...
This week proves your point, despite I am establishing targets I somehow managed to screw it up, but I'll explain that in a bit.

Daily targets are a good thing, the idea behind that is to limit my greed and provide a way to monitor my performance, if I outperformed or worse.

This week was characterized by this nasty habit, I used to meet the daily quota, then made a loss, cooled my head and made back the profit. This is caused by greed, something I'm now aware of.

This day actually ended differently, I didn't go away from the screen.

Talking about greed, I managed to bust that profit I was talking about because I got greedy and got in the loss spiral.
Greed turned to fear and everything is history.
The problem wasn't with the good trades (I mean the really good ones, those expected by my setups).
It was with the bad ones (contrary to the setups, wishful thinking? not being patient? anxious?).

After reading a bit from Elder Alexander's book "Trading for a Living" it struck me in the head, the management of emotions was the missing link.

I'm not upset about losing the money, it's the fact that I couldn't manage my emotions to prevent such childish decisions.

It took me two weeks to figure this out, but it's better than never.

What I've observed over the past weeks is that before even considering thinking about cash, I should think about the management of emotions which generate most of my mistakes : lack of patience, the loss spiral, everything. It fits, it explains everything.

In conclusion, the lesson is learned and I'm waiting for the next week. There's still work to be done.

later edit : and patience is indeed a virtue
  • #11
  • Feb 26, 2010 6:25pm Feb 26, 2010 6:25pm
...but what are your daily targets based on? Is it:

 

  1. What you "think" you should be achieving / what "feels right?" Or
  2. Is it based on what the capability of your method can deliver on a daily/weekly basis?

There is a BIG difference between these two perspectives, and if you are setting targets based on the former (1) rather than latter (2) then yes, you will get all caught up in the "emotion" and "pyschology" of trading, because you will be searching for comfort and reassurance from something that is somewhat arbitrary... this is a very difficult way to trade.

BUT if your targets are based on the latter (2) situation, then you will most probably happily join the ranks of "less-stress traders" (unfortunately not absolutely "stress-free traders"!) who have fairly predictable trading outcomes, and whose job is not to meet a daily target, but just to follow their plan.....and the achievement of that realistic and meaningful target should follow.

Sure, this is easier said than done, and aiming for scenario (2) has far reaching implications about the critical thinking, analysis, practice and development you must apply within your overall trading method, but hopefully you know what I mean. I feel that this is an absolutely critical area of trading that is often neglected, and unfortunately often put down to the mystical realms of “trading pyschology” when it really is something far more practical and tangible – but it does mean hard work, something that so many would-be traders try very hard to avoid. (It seems from this thread that thankfully you do not fall into this category!)

I say all this because some time ago the gradual shift - and it does take time - from perspective (1) to (2), made a BIG difference to my trading outcomes, and the relative ease with which I was able to go about my job – to this day I am still working to to improve in this area, and see this as an ongoing effort.

Hope that helps. Cheers.

  • #12
  • Feb 27, 2010 2:41am Feb 27, 2010 2:41am
Quoting Hedginghog
...but what are your daily targets based on? Is it:

 

  1. What you "think" you should be achieving / what "feels right?" Or
  2. Is it based on what the capability of your method can deliver on a daily/weekly basis?

There is a BIG difference between these two perspectives, and if you are setting targets based on the former (1) rather than latter (2) then yes, you will get all caught up in the "emotion" and "pyschology" of trading, because you will be searching for comfort and reassurance...

Follow the plan and the results will follow, excellent!

And that's all there is to it, simple in theory but not so easy in practice as you've pointed out. Greed, fear, impatience, boredom, psychology etc etc etc all mean nothing if one develops the unwavering discipline to follow the plan.

"Plan the trade, and trade the plan!" - Anon
  • #13
  • Feb 27, 2010 4:52am Feb 27, 2010 4:52am
@hedginghog : I see your point, rest assured my daily target is based on the second case. You're also suggesting that I should concentrate more on the method rather than the cash itself, when I'm trading I'm thinking about the pips not the dollars, so no problem there.

@pipmutt : and yes, I guess that I didn't follow the trading plan in the end when it comes to the discipline of calling it a day and doing something else. h

And yes, it will take time. I'm just waiting for the next week to start and try to perform better.

I am grateful that we've discussed on these matters, you have my thanks for that. I'll come back hopefully with good news.
  • #14
  • Feb 27, 2010 6:38am Feb 27, 2010 6:38am
Quoting ssnakezor
I'll come back hopefully with good news.
Yes come back and let us know how it works out, it's sometimes the most insignificant things which trigger the ah-ha moment!
  • #15
  • Edited 8:58am Mar 1, 2010 2:35am | Edited 8:58am
back with news

i'm not yet "supertrader", that will have to wait

i noticed two things

- the first trade of the day is crucial, depending on it's outcome, I either have a wonderful day or bad day. this reveals a nasty flaw regarding the management of emotions and it's impact on my account. the fix to this is, obviously as we have been discussing the whole time, discipline

- I also noticed I didn't seem to grasp these concepts : discipline, management of emotions, it's easy talking about them, but putting them into practice is hard

conclusion : it will take some time to see real progress
  • #16
  • Mar 1, 2010 4:34am Mar 1, 2010 4:34am
Quoting ssnakezor
back with news

i'm not yet "supertrader", that will have to wait

i noticed two things

- the first trade of the day is crucial, depending on it's outcome, I either have a wonderful day or bad day. this reveals a nasty flaw regarding the management of emotions and it's impact on my account. the fix to this is, obviously as we have been discussing the whole time, discipline

- I also noticed I didn't seem to grasp these concepts : discipline, management of emotions, it's easy talking about them, but putting them into practice is hard

conclusion...
or perhaps you just have no idea which way to place a trade, or whether one should be placed at all? that's what i feel about my trading at least when it goes the way you said
Congratulations ScalaFX for coming out of the closet!
  • #17
  • Mar 1, 2010 9:05am Mar 1, 2010 9:05am
one reason why I'd might be biased would be the lack of entries available at a certain hour, I'd rush in too hard and kaboom

i'll admit I wasn't calm at all during the morning, i was excited, i needed to do some trades yet that urge lead to further ranting on my bad trading habits and a very bad mood

but after taking a break I felt much better and already made some good trades, so I think the answer to my previous questions is revealed, and bolded

I need to be calm when I'm trading. If I'm not calm, take a break and don't do any trades.
  • #18
  • Mar 2, 2010 4:32am Mar 2, 2010 4:32am
and the good news is that it's finally working, today and yesterday ended up on the expected profits, trading got a bit better, did fewer mistakes than the previous weeks, now I'll see how the next three days will turn out
  • #19
  • Mar 2, 2010 5:11am Mar 2, 2010 5:11am
Quoting ssnakezor
and the good news is that it's finally working, today and yesterday ended up on the expected profits, trading got a bit better, did fewer mistakes than the previous weeks, now I'll see how the next three days will turn out
A walk in the park, right?
  • #20
  • Mar 2, 2010 5:13am Mar 2, 2010 5:13am
Quote
and the good news is that it's finally working, today and yesterday ended up on the expected profits, trading got a bit better, did fewer mistakes than the previous weeks, now I'll see how the next three days will turn out

nope. quite frankly i think it's simply because the market has changed this week. to put it as bluntly as possible... last few weeks have been poopoo for me yet come monday and tonight (tis tuesday night when it's your monday morning) i am back profitting again. different market than the last few weeks from my perspective.

you seem to be mirroring myself. you poor sucker

a high ranging market like tonight and last night are where the easy money is. meandering markets like 90% of the last 2 weeks is a nightmare except maybe for those who have some ranging market skills.

of course i am probably completely freakin wrong.
Congratulations ScalaFX for coming out of the closet!
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