It's A Heart-Mind Game... Are You Ready?

Subby ran into a little problem. What's bothering him is that he's been down this road before...one of those trading scorpions surfaced...again. Here's the message he left NeverAgain:

Hi NeverAgain,

Would like to meet tomorrow if possible. Need to discuss a trading issue with you. This one is really bugging me.

Subby

NeverAgain and Subby chat for a bit and schedule a meeting for tomorrow afternoon.


NeverAgain: Hi Subby, got your message. What's going on?

Subby: Well, seems like I'm dealing with that drawdown issue again.

NeverAgain: Did you do you TA on your Balance Curve?

Subby: Yeah I did, and it seemed to help, but I think there's something else going on that's behind it that I want to discuss with you.

NeverAgain: Okay. Come by tomorrow after 2pm and we'll chat okay? Be sure to send me your latest statement and Balance Curve before you come by.

Subby: Will do and thanks for the call back.

NeverAgain: No problem at all.


We'll pick this up again tomorrow.

Don't quite understand these conversations. Are you Subby and NeverAgain is your imaginary shrink?

Custos,

This post might help newer readers who may not know about the thread search feature (top right of the page) to find where Subby started. A connecting of the heart-mind dots series began to help traders sort through some critical steps in the trading process. Part of the process involved dealing with issues a trader might face that arise from their subconscious: hence the term Subby. He first appeared in Post 271: Dot 5.

Subby is a fictional character who is on his way to being helped so he can be a better trader; and more of a "blink-trader" at that. NeverAgain is his coach that Mr. DoingWell Trader hired to work with Subby. DoingWell is looking to train someone to trade his system blink-trader style. No shrink has entered the picture yet. We'll see. Some very successful traders have said that when they got to a wall in their trading, they sought the professional help of a psychologist, and, because of it, were then able to make major breakthroughs in their trading.

Trading is a heart-mind "game". It really is. Hopefully traders would be able to identify with Subby's journey, or at least parts of it.

Thanks for asking.

FX4

Subby and NeverAgain are in their meeting...


NeverAgain: Subby, you've been doing very well this month, and the month is almost over.

Subby: I've been working very hard to be profitable at the end of the month.

NeverAgain: As of today you're there...

Subby: I know, but do you remember my first week trading live when I had that major drawdown just before the week was up?

NeverAgain: Yes, I remember...it reminded me of one of my earlier ones.

Subby: Well what is bugging me is the drawdown I had close to the end of this month. See there? I did much better than the last time in that I was able to emotionally get a grip, refocus and recover a good bit of the capital. Seems like there is some kind of performance fear or even a fear of success or self-sabotage or something...

NeverAgain: I see why you have the concern that you do. I'm going to make some notes Subby. Would you please recall what was happening leading up to the trade and during the trade.

Subby: Okay. I was trading the Eur-Usd and it looked like price was going to make a move up. I had to step away and when I returned the move had already begun. I saw a target a little bit higher up that I thought price might try to go toward, so I bought...with a small position; a scout...but price didn't go that far. It was back down from there, but it seemed like I didn't want to change my mind so I kept looking for it to go back up.

NeverAgain: Um-hum. And I'm sure you found some opportunities to buy again right? (Thinking...the dealer will be on his job for sure as he has to cater to those who might still be thinking long)

Subby: Yup. So, in a nutshell, I found myself with buy orders in a downtrend.

NeverAgain: Yikes. But you know what Subby? I must say you have gained a good degree of self-control because you were able to recover and still have a profitable month...though small. That's great progress. I also see some courage came to the forefront as you fought back even though it looked like you were losing. You didn't give up. Good job! Managing risk by using the appropriate position size is an important step to becoming a profitable trader.

Subby: Thanks. I do feel good about that part. The other thing I want to mention is that I opened the first long with a scout, a small position, then my second buy was 30 times larger. I think that is where I got into trouble.

NeverAgain: Probably so! The loss would have begun to snowball from there (pointing to the sharp fall off). I'll have to email you some info on scaling in and out of your trades. So, what do you think made you go to a position size 30 times larger in a flash?

Subby: I guess I was trying to recover the loss but was not paying attention to what the market was telling me. I was probably in desperation or survival mode. When I looked at the chart later, DoingWell's system was ready for a short, but I was emotionally attached to the long.

NeverAgain: You make an important point there Subby...being "emotionally attached to the long." So, how do you think you could have put yourself in a safer place emotionally?

Subby: I think I would have been better off closing the trade, reassessing what was happening and accepting the fact that I missed the move I had been waiting for. All that should have been done before I clicked. We both know what happens to the heart-mind when we click and "commit" ourselves right?

NeverAgain: Right. And if the ego is involved, then hope sets in to bind the trader to their position because they see it as an extension of themselves, so the outcome had better be good. I think what you have suggested would have been a good course of action. On your concerns of possible self-sabotage or fear of success...we'll have to see if that comes up again and under what circumstances. Sounds to me that you were just distracted and didn't prepare yourself well to handle how you would have felt if you missed the trade. (He starts doing some TA on Subby's Balance Curve)

Subby: Could be. That is something I have to watch as I have seen it throw me out of alignment with the market. When I'm sitting there absorbing the moves, it's all good and trading is soooo easy.

NeverAgain: And that's the way it should be, unless you're using a robot or something. Now look at your Balance Curve. I'm always amazed at how the mind works. I'm sure you weren't thinking of where these lines would fall as you were trying to recover, but look how your balance hovered just under that green horizontal line before you pushed back up. I know the drawdown looks bad to you, but I'm so excited to see that push back up. That is a major improvement from the first one (the one only you and I and God saw ).

Subby: It feels better too (smiling). I just want to be sure nothing else is going on.

NeverAgain: Let's see if this surfaces again in connection to a time or deadline or some goal set. You see where I marked the red X? That is probably where you loaded up. Too large of a position size at the wrong time (emotionally and otherwise) can really do damage. I'll definitely send you an email over the weekend with an approach to scaling in and out of trades. It works well with DoingWell's method too. Good job Subby!

Subby: Thanks. Whew...I feel better now.

NeverAgain: Great. Would you like to go to the Traders' Lounge again tomorrow night?

Subby: Sure.

NeverAgain: Okay. I'll send you the email before then so we can discuss it at dinner.

Subby: I have to tell you...you're a good coach. I never feel like I've made such a mess that I can't talk to you about it.

NeverAgain: I'm glad. By the way, might even have a surprise for you at dinner.

Subby: Really? Hmm...

NeverAgain: Okay Subby. Time is almost up and I have to leave the office in a bit. Let's call it a day shall we? We'll continue tomorrow.

Subby: Sure thing. Drive safely and we'll chat some more tomorrow. I feel so much better, really I do.

NeverAgain: Feeling better for a trader is always a good place to be. Have a good night Subby.

Subby: You too and thanks again.

Subby leaves feeling much better about his actual progress. He can't wait to meet NeverAgain tomorrow and start trading next week.


We'll pick this up later when Subby gets the email.

Subby gets an email from NeverAgain.


Hi Subby,

Decided to shoot this email over to you since we are planning to have dinner tomorrow. Here is a scaling in and out suggestion that some professional traders use. Fti at Forex Factory uses it in his style of trading. Using the Fibonacci Summation Series for position sizing:

1..... 1..... 2..... 3..... 5..... 8..... 13..... 21..... 34..... 55..... 89..... 144... etc.

So, the idea is that you enter with a scout, a really small position to test the waters. Then you send in a checker to make sure the market's really doing what it looks like its doing, if the scout looks promising. If the checker confirms that your thinking is in sync with what the market is showing you by what it is actually doing, then you can attack with larger positions scaling in as you go. If not, you have to begin to implement your plan to limit your risk.

What I find interesting is that when Noah was preparing to come out of the ark, he sent one raven first, then one more bird, a dove (like a checker) for confirmation before he unloaded all the other animals. Works well in trading too . No sense putting your "big guns" out there if things aren't ready. You'll just put yourself in a literal mess...emotionally and otherwise. Could you imagine Noah trying to get all those animals back in that ark after having been there for all that time?

One good thing about entering with very small positions is that if you are proven wrong, it is not such a big deal to close that trade. But, if you find yourself with a larger position in trouble, and have not yet developed the heart-mind to cut the loss or flip, you could find yourself sliding down an emotionally slippery slope: and would your equity would probably be sliding down too.

Have a good night and we'll talk more tomorrow.


NeverAgain


Will be posting their dinner conversation tomorrow.

He was also wise enough to not send a duck

...for sure.

If he had sent a duck, and the duck got stuck, he couldn't come back to say squat. Talk about a sitting (or standing) duck set-up. To hear some tell it, there are also some trading duck set-ups. Don't want to mention it here as it could be a vital part of some traders' methodology. But, that's how the guys on the other side of the trade might see it.

Btw, the duck came out with the rest of them (the other animals that is) after the fact. Might even be more trading wisdom there...let the market do its thing first, then put your sitting or standing duck out there.

For those who have a trading ear to hear....

FX4

Hi Traders,

Rufus sent me some info on a book that he just finished reading. Searched online and also saw great reviews on it. Here is a short YouTube video interview with the author. He makes one statement toward the end that has been repeated in this thread a few times even up to very recently. Let's see if you can pick it out.




Thanks Rufus!

FX4

Here is a quote from the Read Me First "chapter" of the book mentioned above:

I think it is important for readers to know that now more than
ever, I sincerely believe that trading is more an art form than a science.
As an artist, there will be times when we are at our best, times when
maybe we are just getting by, and times we are under extreme adversity.
As I mention throughout this book, a lot of what we perceive to
be our unique adversity is sometimes self-created. If we are self-aware
enough, we can see this relationship. If we are committed to our success
enough, we can learn to stop creating adversity for ourselves as
well as resolve the adversities that we have created. Indeed, some of the
best art ever created has come from an artist who has struggled through
extreme personal tragedy and pain, only to find his or her divine spark
of excellence that now expresses itself on the canvas, in stone, or on the
manuscript page. In my opinion, trading is no different and could be
considered an equal expression for this spark of excellence. Some people
are familiar with Vincent Van Gogh’s issues; try learning about the
life of Galileo or Jackson Pollack if you want to see how far adversity
can take you. Those men amaze me with their tenacity and skill. They
would have made great traders.

Just to show how what is on the inside is expressed through art:

Many years ago a friend and I took an art class together. At one point, the instructor asked us to draw an animal of our choice. So, we had to bring a picture and draw it in class. She happened to find an alligator along the water's edge with some picturesque greenery as the backdrop.

At that time, she was going through a very rough time and, at the time of doing the drawing, she was extremely angry. I have to tell you, the eyes of the alligator showed it too! They didn't look like the ones in the picture. Even the instructor commented on it.

Said all that to say...what you bring with you to the market will play out in your trading. Art is art.

Also, sometimes in therapy sessions with children, they are asked to draw which can reveal other issues. What picture has your trading been painting?

Here's another tidbit of encouragement from the book...

In my case, I experienced a deeper and more purifying kind of
adversity, and part of what made those years good for me (in the end)
was the final acceptance that no matter the circumstances that I find
myself in, it is always my response to them that either moves me forward
or moves me back.

So, regardless of the picture your trading is painting or has painted, use it as your stepping stone. More encouragement from a consistently profitable trader...

FX4

What you're saying is that
personal, emotional color drawings made in a setting with other people unconnected with your own life issues,
allows your mind to free itself of burdens through self-expression.

That sounds intense. It's so difficult for the left brain to deal with such things, and you left it to the right brain.

Another, less involving or effective way is to flip a book upside down, skim fast through the book, and "randomly" choose a page to read. Your subconscious mind will tell you which page to look on and so the book's content will reveal what you were thinking subconsciously about and sometimes also a possible solution for it.

An extra use that is for trading, is of drawing a real or photographed image
is to have skimmed a whole bunch of image books or lived around an area you've sketched in the past,
and transfer in your informed subconscious the chart you're having trouble with
onto a subconsciously recalled image from the books or real area.
Draw that image and project within the drawing, the drawing devices one regularly uses.
Then paste that drawing, with its projection, onto the chart.

Hey FX4

I have put this book up with "Reminiscences of A Stock Operator", in importance for my trading.

My mental perspective of the markets have gone 180 degrees from where I started a number of years ago. Charts were infested with indicators. All they did for me was indicate where I could loose. Mental hyperventilation was the only result when the red line crossed the green one.

Now trading is a mental strategy much more so then a technical one, like a chess game. Indicators still have their use but for very specific reasons laid out in detail in my trading plan. No more random lines, boxes, numbers, or gurus.

So I will still read about and study indicators at times for two reasons. 1. I might be able to put it to use for a specific thing. 2. Helps me understand where tons of other traders may be entering the market. My goal for entries is that I want to be moving my stops to break even about the time the rest of the herd is climbing on board. That is my confirmation.

Some thoughts.

Gotta go feed the horses, fix the fence, mow the yard, etc. make sure things are done so come market opening my head is clear.

Rufus

Now it's more intense to me LOL.

The point I was trying to make is that what is happening on the inside of a person emotionally comes out (in some way), and can be seen in the form of art...drawing something that can express emotion, or, that the person can express emotion through it somehow...like drawing a scene that depicts anger for example. The transfer of that emotion is done by the subconscious (as was the case with my friend) as the person may be trying not to expose what they are feeling, but it comes out anyway. However, it might be a way to vent...release the emotional energy build-up.

Just saying that the presence of emotions affects us even when we don't realize it. If that is so, it will affect us in our trading as well.

Not sure how I would apply your suggestions, but would read them again and think them through.

FX4

I have put this book up with "Reminiscences of A Stock Operator", in importance for my trading.

Rufus, that's WAY up there LOL.


My mental perspective of the markets have gone 180 degrees from where I started a number of years ago. Charts were infested with indicators. All they did for me was indicate where I could loose. Mental hyperventilation...

Do you think a new trader would buy that? Maybe not. If they are not properly, and I dare say, correctly oriented to the use of indicators, they will mentally hyperventilate LOL...Infested...what a choice of word. There is a thread here that posts fancy chart work. You should see some of those charts...more indicators than PA.


Now trading is a mental strategy much more so then a technical one, like a chess game. Indicators still have their use but for very specific reasons laid out in detail in my trading plan.

Yup and yup on the words in bold!!! Maybe traders just have to go through the hyperventilation process to appreciate good, clean trading...don't know. Like getting past all the fancy drinks out there before one can appreciate some good, clean, cool natural spring water.


My goal for entries is that I want to be moving my stops to break even about the time the rest of the herd is climbing on board. That is my confirmation.

Wonder how long it will take the herd to realize that they are part of the herd, and if/when they do, how to stop being part of the herd. I remember very vividly some years ago, I was watching a chart and using a system someone else was using before I put mine together. I noticed when the move actually started and wondered, "How did they know (whoever they were LOL) to get in there and at that time?" That was full-blown herd. I would have been clicking after you moved your stop to breakeven.


Some thoughts.

Gotta go feed the horses, fix the fence, mow the yard, etc. make sure things are done so come market opening my head is clear.

Thanks for the thoughts. Go feed the horses, fix the fence, mow the yard and come to the market with a clear head. Good advice. I should knock some things out myself so my thoughts are clear come market open as well.

Thanks for stopping by.

FX4

Its nothing better than an good inspiration speech. It was very good to hear them maybe 3-4 years ago. But in the long run only the strongest and the baddest survive. Have you ever tought about that everything you do and trade no matter what a good system it is always going against you dont tell me it is frustrating and its pain. In the other point they are laughing at us to us retail traders. They are smoking cigares and celebraiting our loss. Market makers, investment banks, and all the other MFs.Its the sickest and most twisted game on earth and get used to it. when my emotions died i becomed much much greater trader.i was a victim before, but after 10 years they become the victim. its natural law there doesnt exist more dangerous animal than lion. when you become lion you walk with them. when you start to see through their eyes everything becomes more easy. its good to be here

Hi TravoltaImp,

Not sure what you are referring to here...

Its nothing better than an good inspiration speech.


But in the long run only the strongest and the baddest survive.

True...the most determined, most courageous etc...


Have you ever tought about that everything you do and trade no matter what a good system it is always going against you dont tell me it is frustrating and its pain.

Pain is pain, but even the human body adapts to absorb pain.


...when my emotions died i becomed much much greater trader.i was a victim before, but after 10 years they become the victim.

Great that you are not on the losing end anymore.


...when you become lion you walk with them. when you start to see through their eyes everything becomes more easy. its good to be here

Lion trader!!!


Would like to ask, are you angry with the way this "game" is played? If so, what changes would you suggest? Thanks.

FX4

Yes i was very angry and even more bankrupted Due to this game 5 years ago. After that i had 3 years off. And now 2years back in the game. I have emotionally died but i have recovered lost funds and tripled them with new approach. but in the end i am not happy, i have lost other things that are worth more than money

You certainly have a champion spirit. Having gone through the losses you have, to get back in there and fight says alot. Some people would have quit on life all together.

Glad you have made your losses back and much more. Very sorry to hear of the losses that money can't buy. Those sound very personal.

I have emotionally died...

Some traders describe it this way...."trading with ice in their veins". The market doesn't "get them that way" any more. Hard to say it this way, but sometimes it's the hard places along the way that make us prepared for the win. The market can be a very hard teacher.

Hope you'll be able to get past the hurt and pain of those years. What made you come back to trading; something that "caused" so much pain?

Take care,

FX4

Subby and NeverAgain are meeting for dinner. Let's get in on the conversation...


NeverAgain: Glad that email with the Fibonacci Summation Series will give you a guideline to follow when you're ready to increase your position size.

Subby: It makes alot of sense too, because not only is your money on the line but your emotions go there with it. Also, there is no need to put more money on the line than necessary when testing the waters.

NeverAgain: That's true and something every trader should never forget. It's really tempting to just jump in with a bigger position to get some more pips, but emotionally, it may not be that easy after a trader clicks when compared to what they were thinking and feeling before.

Subby: I have experienced that for sure: the emotional change prior to placing the trade when compared to afterward. It's usually not the same.

Subby: (Taking a sip of iced tea) Is that DoingWell? Looks like he just got here.

NeverAgain: Sure is (waving to him).

Subby: And he's coming this way.

NeverAgain: Yes. He is the surprise I mentioned to you yesterday.

Subby: Great to see him. It's been a while.

DoingWell: Hello NeverAgain. Hi Subby. Good to see you both.

Subby: Good to see you too. You look well.

DoingWell: Thanks. I took some time off to get a little R&R. I needed to get away. Sorry I'm a bit late...see you guys have already ordered.

NeverAgain: That's okay, 'cause here comes the waitress now. You can give her your order if you know what you want.

DoingWell: I come here so often she should know what I want to order by now (laughing).


DoingWell places his order...


DoingWell: Well Subby, seems like you have gotten comfortable trading my system. Looks like it's time for you to go to another level.

Subby: I feel pretty much at home with it: what I'm really trying to master now is me.

DoingWell: Aren't we all, huh NeverAgain.

NeverAgain: That's right...it's a never ending battle; but it does get easier with persistent, deliberate effort. I know I have had my journey. Thank God that's behind me.

DoingWell: Well Subby, what we would like to implement next is this: Beginning in May, open a new Demo Account with a balance of $10,000.00. You'll continue to trade the same way you have been, but NeverAgain will give you some more details on position sizing and implement something to help with drawdowns. Is that right? (looking at NeverAgain).

NeverAgain: That's right. I'll fill you in on the details on Monday Subby. It shouldn't be too hard for you to add it to what you're already doing.

Subby: Okay. I'll set up the new Demo tonight. Will be interesting to see how the month of May goes.

DoingWell: I think you'll do just fine. Just be sure to give NeverAgain your login details so he can keep closer tabs on your progress.

Subby: Sure. Will email them to him when I set it up.

NeverAgain: Here comes the waitress again, but this time she's got our orders.

DoingWell: Great and she's got mine too (smiling). That's enough business talk for now. Let's enjoy dinner.


Subby is excited 'cause he feels as though he has graduated a bit in his training. What he doesn't know is that his new Demo Account will also be trading a Live Account with the same dollar amount. He won't know about that until maybe June 30th.


While they're having dessert, we'll get in on more of the conversation.

FX4

The trading trio is having dessert. Let's pick it up now...


DoingWell: This carrot cake is delicious: not too sweet. I don't have to hunt for the walnuts either.

NeverAgain: I have never had a dessert here that gave me that sugar rush. Even the brownies are the bomb, and they're not spiked with liqueur or anything.

DoingWell: Subby, NeverAgain mentioned that you were concerned about your drawdowns. I think it is something that would concern any trader. I think drawdowns have their genesis in a fear of loss...somewhere. What do you think NeverAgain?

NeverAgain: Very likely. You know traders don't like taking a loss for so many reasons. But, taking the loss as soon as the market shows you where you're wrong is the best place to do so. If you keep hanging on and hoping, you'll get many reasons to keep hanging on as the price action will give you retracement after retracement to fill your heart-mind with a false hope.

Subby: What clues me in to the fact that I am on the wrong side is that my P/L is trending the wrong way.

DoingWell: You P/L is trending the wrong way?

Subby: You know the basic definition of a trend: Higher highs and higher lows? Well if you're long, and your P/L is making lower highs and lower lows like...-7 then -3 (on a little bounce)...then -12 then -8, it should be a clue that the trade is trending the wrong way.

NeverAgain: I see what you mean. You can actually see what the market is really doing in reverse. I like it. It's like looking at the negative of a photograph to see the real picture.

Subby: Any other ideas on how I can tackle these drawdowns?

DoingWell: Just don't allow them, it's really that simple. I know it's easier said than done, but they won't be stopped without action on the part of the trader. You'll be amazed how better your trading (and you as a trader) will improve almost overnight just by acting to stop losses when you see them coming. I know some traders who actually had sessions in their Demo Account where they just took losses...one after the other...like target practice just to get used to doing it.

NeverAgain: There are so many different approaches. Some traders insist on stops. Some will never use them, but use their foreign capital. Some have EAs that would close the trade at a certain percentage loss in equity. Some platforms will even stop you from trading if you cross a drawdown level for the day. Others won't even let you place the trade if it violates any of their trading rules or method.

NeverAgain: What I would like to try next with you Subby is to add something to your platform so that when you're approaching a certain level, it will alert you giving you the opportunity to take charge and do the "right thing".

DoingWell: That sounds neat. What do you think Subby?

Subby: I think I'd like that 'cause it will help to train me to act and be responsible about managing my equity.

NeverAgain: Great! Wow, didn't realize it was getting so late, we're almost the last ones in here.

DoingWell: You're right. Okay...this one's on me guys.

NeverAgain and Subby: Wow. Thanks man.

Subby: Next time we meet it will be on me.


Subby and NeverAgain will get together on Monday to get him ready for May 1st. We'll pick things up then.

FX4