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Trading psychology - GREED - A trader's malady

  • #61
  • Feb 8, 2011 7:50am Feb 8, 2011 7:50am
On shutting down the computer after entering a trade.

With a set stop loss and take profit (plus money management of strict small percentage risk e.g. 1%), I don't see what is wrong with shutting down the computer after taking the trade. It builds peace of mind because the trader knows for certain that the worst case scenario is hitting the stop loss, but the loss has been defined already so its not an unexpected loss.

What is not wise is to trade without a stop AND shut down the computer. There might be news, intervention, if it goes against the trader, there could be an undefined and large loss, and in worst case, the dreaded margin call!

I find staring at my trade (which takes hours to develop as I'm not a scalper) unhelpful. Looking at it develop pip by pip is not the best use of my time. Monitoring it now and then is OK.

Scalpers of course monitor their trades closely, that's understandable as they are in and out of the market fast and go for a few pips.
  • #62
  • Feb 8, 2011 7:57am Feb 8, 2011 7:57am
Quoting puffy
On shutting down the computer after entering a trade.

With a set stop loss and take profit (plus money management of strict small percentage risk e.g. 1%), I don't see what is wrong with shutting down the computer after taking the trade. It builds peace of mind because the trader knows for certain that the worst case scenario is hitting the stop loss, but the loss has been defined already so its not an unexpected loss.

What is not wise is to trade without a stop AND shut down the computer. There might be news, intervention, if it...
thanks for this statement puffy,
highlighted sentence is very sticky and 100 % true.
thats the line i prefer to go, but couldnt realize it in the past very often : /


Ph.
Hero calls followed by margin calls...
  • #63
  • Feb 8, 2011 8:04am Feb 8, 2011 8:04am
Quoting PhAnTi'
thanks for this statement puffy,
highlighted sentence is very sticky and 100 % true.
thats the line i prefer to go, but couldnt realize it in the past very often : /


Ph.

Cheers phanti.

When I first transited to live account, I was glued to the screen for hours. It made me
1) nervous when the market moved fast
2) bored when the market moved slow and
3) ate up all my time and interfered with my life outside of forex
4) Worst of all, it eroded my trading psychology as I would be tempted to over trade, kill my trade prematurely (when it was going unprofitable but still far from stop loss, as well as when it was going profitable but I wanted to lock in whatever tiny profits I had)

Ah well, to each his own I guess.
  • #64
  • Feb 8, 2011 8:07am Feb 8, 2011 8:07am
Quoting puffy
Cheers phanti.

When I first transited to live account, I was glued to the screen for hours. It made me
1) nervous when the market moved fast
2) bored when the market moved slow and
3) ate up all my time and interfered with my life outside of forex
4) Worst of all, it eroded my trading psychology as I would be tempted to over trade, kill my trade prematurely (when it was going unprofitable but still far from stop loss, as well as when it was going profitable but I wanted to lock in whatever tiny profits I had)

Ah well, to each his...
ok, thanks for sharing...

may i ask you which timeframes do u trade mainly? and do you shut down screens after opened some positions?

Quote
(when it was going unprofitable but still far from stop loss, as well as when it was going profitable but I wanted to lock in whatever tiny profits I had)

glad to hear that we all feel the same

Phanti
Hero calls followed by margin calls...
  • #65
  • Feb 8, 2011 8:47am Feb 8, 2011 8:47am
I wouldn't feel good about walking away from the screen until I'd gotten my SL to BE or very close.

Also, if I'm within earshot of the computer I don't like to set a TP. I like to set alerts for when price gets near my trouble areas and come back to judge from the momentum what, if anything, I should take off the table.
I suppose that's because the only trades I've learned how to take are the ones with the best potential to run.
  • #66
  • Feb 8, 2011 8:55am Feb 8, 2011 8:55am
Quoting PhAnTi'
That's true. The more you win,the more confident and self-secure you gonna be, just because you know and you see that your method is working and you will have a lot of succes with it.
Compare it to Poker , where a chipleader starts to play weak hands and gonna lose a lot of his stake again just because he thinks he gonna win again and again , so he increases his risk by playing bad hands.
Hi,

The feeling of confidence can be quite tricky, it sometimes happens with beginning drivers: you consider yourself to become a professional driver and get into an accident, because you are not so attentive as you were before.

At least such things always happen to me ) that is why the more I trade the more I think through
  • #67
  • Feb 8, 2011 9:07am Feb 8, 2011 9:07am
Quote
you consider yourself to become a professional driver and get into an accident, because you are not so attentive as you were before.

yep,similar to forex.
If we had an accident we will pay more attention while driving in the future.

When we had a streak of losses at trading we look for good and better setups/entries/exits more wisely....
Hero calls followed by margin calls...
  • #68
  • Feb 8, 2011 9:08am Feb 8, 2011 9:08am
Quoting Ifmyante
I wouldn't feel good about walking away from the screen until I'd gotten my SL to BE or very close.

Also, if I'm within earshot of the computer I don't like to set a TP. I like to set alerts for when price gets near my trouble areas and come back to judge from the momentum what, if anything, I should take off the table.
I suppose that's because the only trades I've learned how to take are the ones with the best potential to run.
i think thats up to everybody....
but of course you shouldnt leave screens without setting up a SL before ... but Sl and TG should be well defined before.

Phanti.-
Hero calls followed by margin calls...
  • #69
  • Feb 8, 2011 9:17am Feb 8, 2011 9:17am
Quoting PhAnTi'
yep,similar to forex.
If we had an accident we will pay more attention while driving in the future.

When we had a streak of losses at trading we look for good and better setups/entries/exits more wisely....
That is why in spite of the statistics saying that 95% forex traders lose we are still trying to find the best trading strategy )

I think that not only greed but also vanity makes us trading.
  • #70
  • Feb 8, 2011 9:25am Feb 8, 2011 9:25am
Quoting puffy

the worst case scenario is hitting the stop loss, but the loss has been defined already so its not an unexpected loss.

What is not wise is to trade without a stop AND shut down the computer.
Some sage advice, and your 'About' has some good stuff too imho....


------------------------------------------
"My goal is to be a disciplined trader by sticking to my trading plan and risking less than 3% of my account balance on any one trade.

No strategy can be 100% accurate. Taking losses is part of trading Forex.

Trading is about mastering my own psychology and being consistent. Complicated strategies are not necessary. Trade well and the pips will come.

There are no certainties in Forex, only probabilities. Even with high probability setups, profitability depends to a large extent on money management i.e. keeping risk exposure low (<3%), keeping risk to reward better than 1:1"
-------------------------------------------


If more people followed those guidelines I expect the alleged 95% stats would change significantly!
  • #71
  • Feb 8, 2011 11:51am Feb 8, 2011 11:51am
thanks for all replys earlier in the thread.

highlander2
  • #72
  • Feb 8, 2011 12:36pm Feb 8, 2011 12:36pm
Cheers pipmutt, and thanks.

Phanti: I started out with trading 1h timeframes, but now am slowly trying out 4h, daily, and even a tiny bit of scalping and news trading.

But I'm most comfortable with 1h since its a good balance between time required to monitor the trade (only a couple of minutes to check indicators and place trade), time to profit or loss is not too long (typically within a day), so it allows placing new trades at least once a day.

The daily trades can take very very long to develop, so not ideal for the impatient such as me, but its still good to monitor larger timeframes to see the big picture supply and demand.
  • #73
  • Edited 3:01pm Feb 8, 2011 1:08pm | Edited 3:01pm
IMO the vast majority of these psychology threads tend to overcomplicate things.

 

  1. Bottom line is that you either have a plan for your exits, or you don't.

  1. If you don't, then your exits will be almost certainly made on a whim, and/or on the basis of emotion.

  1. If you do, and the plan has proven itself profitable, then you'll develop the confidence to trade it consistently. Ultimately, disciplined execution can come only from a belief that what you're doing works profitably, and that belief can come only from experience.

  1. If you have difficulty keeping to the plan, then set your SL, TPs and/or trailing stops (or if it's more complex, have an EA written), and walk away. Automated exits reduce both screen-time and worry. And that way, if the losses accumulate over time, you know that it's your plan that's faulty. The only reason to exit manually is if you believe you can forecast probable market behavior, and thus adjust your exit points, as the trade unfolds.

  1. Don't overleverage yourself emotionally. If the money swings are making you uncomfortable, trade smaller position sizes.

  1. Know your risk. If you're not completely comfortable with the worst case outcome of your proposed trade, then either adjust the risk, or don't make the trade.

Intellectually, it's that simple. If, for whatever reason, you can't find it within yourself to put the theory into practise, well, the harsh truth might be that trading is not for you. You need to decide whether it's better to quit, or to continue to waste your time and lose more money.

  • #74
  • Feb 9, 2011 12:57am Feb 9, 2011 12:57am
Quoting hanover
IMO the vast majority of these psychology threads tend to overcomplicate things.

 

  1. Bottom line is that you either have a plan for your exits, or you don't.

  1. If you don't, then your exits will be almost certainly made on a whim, and/or on the basis of emotion.

[list][*]If you do, and the plan has proven itself profitable, then you'll develop the confidence to trade it consistently. Ultimately, disciplined execution can come only from a belief that what you're doing works profitably, and that belief...


true...true...true....

set up a plan.
stick to the fuckin plan.

then you will have the required edge.

Ph-
Hero calls followed by margin calls...
  • #75
  • Feb 9, 2011 1:00am Feb 9, 2011 1:00am
Quoting puffy
Cheers pipmutt, and thanks.

Phanti: I started out with trading 1h timeframes, but now am slowly trying out 4h, daily, and even a tiny bit of scalping and news trading.

But I'm most comfortable with 1h since its a good balance between time required to monitor the trade (only a couple of minutes to check indicators and place trade), time to profit or loss is not too long (typically within a day), so it allows placing new trades at least once a day....

i started with scalping and swtiched to the larger frames like h1,h4 and even daily now....
to be a swing trader is far more comfortable for me... i can leave screens and charts and dont need to build an emotional ....helped me a lot.

Ph.
Hero calls followed by margin calls...
  • #76
  • Feb 9, 2011 4:37am Feb 9, 2011 4:37am
Hi folks

I said I'd be back with my next trade, so here I am, feeling a little ashamed.

I was looking for a sign that price wanted to pay proper respect to 1.35.
I got that sign and jumped on the bull.
I'm glad that I believed in the trade enough to stay in through the drawdown.

What I'm unhappy about is the way I reacted when the plan was almost fulfilled.

This morning price came twice to within 2 pips of my target and moved away slightly. It came back a third time and only made it to about 4 pips from the target before turning back a little.

Knowing, and I mean, knowing, that price would touch the 1.35, and even pass it for a few pips, my mind still exited me from the plan in which I believed so much. Sure, I made a good wage for the trade, but the twins Fear and Greed took away the satisfaction of a plan well executed.

I'm not here to moan. I just thought others might see something of themselves in this and learn from it as I hope I will.

PS. I'm glad I jumped on the trade with no fear of breaking a winning streak. It will break, and that's okay

Michael
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  • #77
  • Feb 9, 2011 4:45am Feb 9, 2011 4:45am
Quoting Ifmyante
Hi folks

I said I'd be back with my next trade, so here I am, feeling a little ashamed.

I was looking for a sign that price wanted to pay proper respect to 1.35.
I got that sign and...
Hey !

Nice trade.
may i ask you where you set SL and TP ? ( Tp 3500 i guess? ).
Well i also have those feelings quiet often,when setup seems to work out , you have a nic eprofit but you are afraid to lose it again and give it back to markets.
There are to lines :
Bank the profit before you might reach the target and see the price hitting your target maybe later.
In this case you banked some profit and see PA touching your target ( so you have a profit gap,BUT ! you have profit.)

On the other hand you can let it run and hoping that price gonna hit ur target, in this case u will either have 0 (if u move sl to be) or you'll have all (your target ).

so i orefer to save what you have and let partial units run towards target.

Phanti



btw: you have a winning streak? you suck
vice versa here ^^
Hero calls followed by margin calls...
  • #78
  • Feb 9, 2011 4:56am Feb 9, 2011 4:56am
Quoting Ifmyante
Hi folks

I said I'd be back with my next trade, so here I am, feeling a little ashamed.

I was looking for a sign that price wanted to pay proper respect to 1.35.
I got that sign and jumped on the bull.
I'm glad that I believed in the trade enough to stay in through the drawdown.

What I'm unhappy about is the way I reacted when the plan was almost fulfilled.

This morning price came twice to within 2 pips of my target and moved away slightly. It came back a third time and only made it to about 4 pips from the target before turning back a little....
nothing wrong with this michael, i sometimes do the same when i see price a few pips from the target, there is nothing worse that a profit target being missed by a pip.

the past few months i have started scaling out of my positions, before i was an all or nothing trader, if i could have the pips that i let turn to nothing last year id have done very well. these days i take 1/2 or 1/3 off at around 1.5x risk or the first troubled area.
then take the rest at 2 or 3 to 1.

alothough my risk reward has suffered a bit, my strike rate has shot up from below 50% to 65%. this has made a huge difference to me both in winnings and in emotional aspects.

my RR hasnt actually been affected that much, because before there were that many trades where i was only make 20 pips, when i could have had 200.
  • #79
  • Feb 9, 2011 5:12am Feb 9, 2011 5:12am
Quoting PhAnTi'
Hey !

Nice trade.
may i ask you where you set SL and TP ? ( Tp 3500 i guess? ).

btw: you have a winning streak? you suck
vice versa here ^^
Thanks PhanTi'

Sl was just under the signal Pin Bar. Yes it wasn't a strong PB, but I believe price respects Big Round Numbers as much as I do

Good to see you over on the other thread this morning BTW. That's where my winning streak began!

Quoting highlander2
nothing wrong with this michael, i sometimes do the same when i see price a few pips from the target, there is nothing worse that a profit target being missed by a pip.

the past few months i have started scaling out of my positions, before i was an all or nothing trader, if i could have the pips that i let turn to nothing last year id have done very well. these days i take 1/2 or 1/3 off at around 1.5x risk or the first troubled area.
then take the rest at 2 or 3 to 1.

alothough my risk reward has suffered a bit, my strike rate has shot...
You're right

when there's the chance of a runner, lock in some profits (wage) and see where you can reach (fortune)

I didn't see this trade as running though. I was just expecting respect for BRN and a possible right shoulder for an H&S to continue the downmove
  • #80
  • Feb 9, 2011 6:59am Feb 9, 2011 6:59am
Quoting Ifmyante
Hi folks

I said I'd be back with my next trade, so here I am, feeling a little ashamed.

I was looking for a sign that price wanted to pay proper respect to 1.35.
I got that sign and...
Hi Michael,

You shouldn't feel ashamed, it is a good trade.
It seems that next time it will be better if you shut your computer down for a while after you set SL and TP:
Quoting hanover

  1. If you have difficulty keeping to the plan, then set your SL, TPs and/or trailing stops (or if it's more complex, have an EA written), and walk away. Automated exits reduce both screen-time and worry. And that way, if the losses accumulate over time, you know that it's your plan that's faulty. The only reason to exit manually is if you believe you can forecast probable market behavior, and thus adjust your exit points, as the trade unfolds.

I do even worse things, because I sometimes close trades if they are close to my SL though I understand that I shouldn't. Try to decrease my losses at least this way )))
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