TheChalleger's Journal - My Trading Journey

Trading The Market or Your P&L?

We seek immediate comfort and try to avoid things that may bring immediate discomfort. Understand this basic principle that guides much of our thinking and behavior. Trading involves discomfort e.g. the discomfort of watching a move without being on it, the discomfort of holding a winning trade while it stalls or pulls back, the discomfort of admitting the trade is not working, the discomfort of losing money, the discomfort of boredom or anxiety while waiting for a valid entry, etc.

In many ways learning to tolerate discomfort is the key to taking control over your actions so you can act on your analysis/plan/trade idea as opposed to acting on emotions.

When we trade our P&L we are trading to manage our discomfort. Good trading means we have to tolerate discomfort, not avoid it. Ask yourself, “Am I trading my P&L or am I trading my feelings?”

Are You Comfortable?

People will go to great lengths attempting to avoid discomfort. And as traders, much of what we do is in response to being uncomfortable. This is an extremely critical concept to understand and explains many trading problems and mistakes. The problem is not in being uncomfortable per se, the real problem is that our efforts to avoid discomfort can easily end up making us feel worse. If you can understand why you’re uncomfortable and what your typical default reaction is to being uncomfortable, you will be well on the road to trading success.

Here are a few sign posts along the road to get you started: You avoid the discomfort of boredom by taking marginal trades. You try to avoid the discomfort associated with the fear of missing out by chasing. You deal with the anger of getting stopped by taking a revenge trade. You try to avoid the discomfort of being wrong by hesitating or freezing, or holding the position past your stop to prove you were ‘right’.

See the pattern? Most trading mistakes can be viewed as behavior in response to some type of discomfort.

Mistakes must be seen as learning opportunities. And that’s not just a cliché. If you don’t learn from your mistakes, 1) they become emotional baggage that weighs you down, and 2) you will be destined to repeat them.
For this reason alone, it behooves you to learn about the patterns of your discomfort. Yes, discomfort often does come in patterns, but we are so focused outward on the chart that many people do not recognize the emotional sequence going on inside. You can’t eliminate your emotions but you can learn to control (or ‘re-condition’) your response (your reaction) to the discomfort by being aware of and understanding your emotions. Part of what I do with my coaching clients is teach them to be aware of their internal patterns and how these internal patterns correspond to what they see on their charts and in their actions.

I write my blog articles with the intention of helping as many traders as possible. I enjoy reading emails from people who benefit from my writing. And in that spirit (to help you and therefore give myself some enjoyment) I’m going to give you some important advice. At first glance this may seem ridiculous to you, but I know it is true based on my own personal trading experience and working with very large bank traders, hedge fund traders, and independent traders; many of them didn’t believe it at first but they do now. Here it is: Being motivated by money is necessary but often not enough by itself to make us better traders; motivation to understand oneself is often the missing piece. I’m not talking about contemplating your navel as a trading strategy; I am saying that expanded awareness leads to choice, which leads to personal efficacy. (The U.S. Defense Dept. hired me as a consultant many years ago to teach this to select groups and individuals.)

Here’s an example that you might be able to relate to. Most traders have set-ups or entry signals that are supposedly based on a probability of something happening; therefore most traders will say that you need to think in terms of probabilities. However, most people don’t really think in terms of probabilities, they think in ‘degrees of certainty’. To actually think in probabilities requires that you accept uncertainty; the word ‘should’ is not part of the definition of probability. The discomfort that naturally comes with uncertainty can become too much for a trader who may be lacking in self-understanding and therefore they either inject a ‘should’ into the probability and/or they end up hesitating or freezing at the moment when action is required. The ability to truly think and operate in probabilities requires that you become aware of your discomfort and your pattern of maladaptive response to it.

There are lots tools available to help you improve your trading including emotion analytics, various self-management systems, bio-feedback, mental rehearsal and visualization, Neuro Linguistic Programming (NLP), mindfulness, and others. In my coaching work I draw from a wide variety of tools to best match the unique personality and needs of the trader.

Ok, let's hug. :nerd:
well, man, did not you think about writing book on trading psychology?!
May be psychology in general. I think by the time you make it you will have sort of PHD in Psychology.
Disciplined Trader's author does not come close to what you are writing here.

I just do not get why so many emotions?
You should not give a damn about losing trades and especially pain from losing. winner is around the corner. just let it run.

Only copied and pasted articles.
By the way, have you ever read the book "Trade in the Zone". What do you think about it? It said the difference between successful traders and unsuccessful traders are purely mental.... Rubbish theory??? You don't think mental part of the game is important?
.

Yes, I have it in my Book folder. I have got a lot of books here but currently I am reading only various Market wizards editions and everything related to Trend Trading when it comes to FX.
Once you have the method that has some edge mental part is 99%.
for example, winners must be bigger than losers. it is easy to check. if you connect to myfxbook it will give you all statistics. I rarely see guys who has average winner bigger than average loser and it is mental part.
You gotta let profits be bigger.

in your case mental part seems like the biggest part. I wonder, do you have method and why are you trying to constantly day trade when you have no time?
I stopped day trading FX and only work on my longer term trading trend following. But day trading is ok as long as you trade right instruments for day trading which are futures and stocks. FX doe snot even has volumes and order flows. Day trader is always in the dark.

Yes, I have my method which gives me profit day in and day out, so mental part is my biggest part now. I spend much less time that I want on trading because of stress. Finally, I believe there are many daytraders consistently making money with forex.

have not met one. But I do know trend followers who make money or manage funds.