Feb 2018 Go-Live Support Group

[Robert H 455]

Ladies and Gentlemen (you know who you are),

 

Many of us recently went live in February and are experiencing some challenges trading with real money. I'm starting this post so we can motivate each other and share our experiences in hopes of improving our current situations. I feel that writing and speaking with others can definitely put things in perspective. It also helps to know that you're not alone. So I'll go first:

 

I went live on Valentine's day but the market showed me no love. My account is currently down 15% from my starting balance. After seeing how poorly I was trading, I've made the decision to alternate between real and sim. Going back to pure sim for 2 weeks feels like punishment and a step backwards. I'm hoping this structure will allow me to develop the psychology of trading live, while also training my emotions to return to the 'carefree' state it was in sim.

 

My day trading journal provides the following insight as to where I am going wrong:

1. Revenge trading - After a big loss at the open, I find myself trading the same choppy stock(s) in hopes of getting my money back. This is the definition of madness.

 

2. Over-trading - On day 2, I made 15 trades (not tickets). On day 3, I made another 13. This highlights the fact that I am taking very poor and low probability setups. My reward-to-risk average is nowhere near what it was in sim (~1.5 vs ~2.0) I believe my emotions are getting the better of me, and I am trying to make back prior losses (point 1 above).

 

3. Jumping the gun and chasing - Of my 32 total trades, 11 I have categorized as 'impulse trades'. These are where I don't wait for a candle to close at a certain technical level, or I end up chasing a stock where the risk/reward is not favourable.

 

4. Holding on to losers for too long - Back in sim, I wasn't afraid to exit a trade before my stop if the price action was telling me to. Things like engulfing patterns and lower-highs/lower-lows were signals that I actively watched for. In live, I seem to ignore these signs and just hang on until I am stopped out. This results in my losers being bigger than my winners.

 

5. Not stopping when I hit max loss - I had no problem walking away from sim when I was down big for the day. With real money, I can't seem to let those losses go. I keep trading until the close, only to realize that I would have been better off just taking a nap.

 

Here are my goals for how to improve in the coming weeks:

1. Be in a mindset to process the information that the market is providing. This means to stop being fearful of being wrong or losing money. Have laser-like focus and ignore the chat/Andrew if necessary.

 

2. Forget about P&L. I am trading with such small sizes that the dollar figures are really immaterial. If I can stop worrying about $25 here, or $50 there, I can pay attention to price action and trade management. What I make or lose in the beginning is irrelevant and I shouldn't beat myself up over it.

 

3. Focus on the process and execution. Profits are a by-product of good trading discipline and risk management. The money will come once I reduce the number of trading errors.

 

4. Lower share size when losing. I always get tempted to up my position size to recover losers. This is the gambler's fallacy! The other day I traded 400 shares of FOSL, which was twice the size I would normally take with this much buying power.

 

5. Only take A1 setups. Back in sim, I could finish my day by 10:30 AM with two or three really good trades. Instead, I am trading garbage for the full 6.5 hours and letting a series of small losses slowly eat away at my equity.

 

6. Ignore time-based profit goals. Having a daily profit goal this early on can be dangerous because I am putting too much pressure on myself. This leads to taking poor setups in hopes of hitting the target via quantity and not quality.

 

If anybody is reading this, I hope that the above was useful or helpful to you. I'd love to hear from the rest of the Feb 2018 cohort--again, you know who you are!

 

Now hold hands and repeat after me: I am a consistent trader. I know this for a fact because I've traded consistently before. Kumbaya My Lord, Kumbaya...

[Stanomatic 2]

Robert, I am right there with you on many points. I am now back in SIM because of heavy losses in my six months of trading as a new trader. In my early days I would have a couple good days in the SIM and then jump out and lose a huge chunk. Yes, I was stubborn and didn’t follow basic rules like trade for a couple of months in the SIM and when you go live, trade small share sizes. I am conquering my Fear of Missing Out (FOMO) and doing an excellent job staying in the SIM this February.

 

I want to share with you and the readers how I stopped over trading. I am a very hard worker. When I started trading I thought that the more stocks I traded the more I was working and thus would make more money. After data mining and reading my journal I found I would always make more money with less trades. Even though I found the connection of making more money with less trades I was still over trading. The loss of money did not change my behavior in this case.

 

The cure, journaling every single trade. OMG, I was so tired of tracking every single stock with images and commentary that I found myself passing on some really good trades. I would see a great setup after my third or fourth stock trade and then say to myself, I don’t want to journal that. Lol

 

I would say my average right now is about four trades a day. My profit each week has doubled or even tripled since I am now trading less. I would like to get my average down to two trades a day. In fact, who wouldn’t just want ONE great trade a day. One and Done!

 

Thank you for your honesty with your post. You are not alone!

Stan S.

 

[Robert H 455]

Stan, thank you for the reply and insight.

 

I've gotten so good at journaling, it takes very little time to document even after a day of reckless over-trading. Maybe I should make it a more dreadful experience lol.

 

Today I took my own advice and only made 4 trades. Let's see if I can keep it up tomorrow!

[Abraham 1]

@ Robert:

 

I really like this one: "Profits are a by-product of good trading discipline and risk management. The money will come once I reduce the number of trading errors."

 

It is very important to focus on a1 setups and not to think about the money. Sometimes its frustrating because everybody in the chat is talking about how much money they made. But you dont if it is true or how much risk they took etc.. So yeah as you said too sometimes it is neccassary to ignore the chat.

[Robert H 455]

Thank you, Abraham. The past two days I have been holding off trading the first 10 minutes and focusing on those A1's. Yesterday I hit my daily goal with 1 trade, and today with 2. Fingers crossed!

[Abraham 1]

I had a really good time since january but in the last 2 weeks I made a lot of mistakes. So I stopped trading in the first 5 minutes, reduce my share size, watched some video material from andrew and read some article. I feel way better now and had a really good day.

[Robert H 455]

Welp, this is embarrassing. I was doing so well alternating between real and sim this whole week. These were my results:

-Mon 4/4

-Tue 3/5 (green)

-Wed 1/1

-Thu 2/2

---------------------

10/12, hitting my daily goal, and feeling on top of the world

 

And today it all fell apart in spectacular fashion. I traded like a maniac and finished with a huge loss. It was all a blur, but this is my recollection of the events in question:

 

After two small losses 10 minutes after the open, I was a bit shook. Then on my 3rd trade, I made a hotkey mistake and doubled up my position rather than exiting. That ended in a huge loss. Shortly after that, I made another hotkey mistake and took another big hit. I was a psychological mess. Rather than walking away, I went on a rampage.

 

I started trading stocks not in play (JD, BABA, MU), and was reckless and vengeful. I said to myself 'f*ck it let's go!' (literally out loud) and fired away at my hotkeys like there was no tomorrow. By 10:30 AM EST, I was 0 for 7. By noon, I had made 13 trades. When the dust settled, I had made 20 trades total (not tickets). Only 2 of them turned out to be winners. Talk about lack of self-control...

 

I violated every single rule that I had been following religiously all week. I stopped caring about those A1 setups and took anything that looked marginally good. And since SPY was a roller coaster today, I got destroyed by questionable entries and make-belief strategies. I kept trading the same stocks over and over, even after admitting they were not in play. I was trading like it was going out of style. I thought I could outsmart the market and get back at it. It wasn't even about the money anymore. The losses were a foregone conclusion and had evaporated to currency heaven.

 

The sad part about this whole tirade was that I knew I was breaking the rules while violating them--and I didn't give a damn about it. In the moment, I turned into the Incredible Hulk and everything switched to auto-pilot mode. I smashed at my keyboard like a savage. Everything I had learned up to this point in my (short-lived) trading career was thrown out the window. I had literally unleashed an animal that I had no control of. I've never experienced such poor self-discipline in my normal life--ever. What an absolute lack of composure!

 

Today was a reminder of how fragile the trading mindset can be. All it takes is one moment--a FILG one--to send you spiraling out of control. All these rules and checklists I had been adhering to were useless in the face of such madness. They were nothing but delicate paper walls I had erected to trick myself into believing that my emotions were in check. They came crumbling down under the slightest pressure. It was all an illusion; I was delusional.

 

I have a lot of reflecting and contemplating to do this weekend. I might take a break from trading to rebuild my psyche. Maybe I'll visit a monastery to cleanse myself of all these trading sins. But first I need to forgive myself. Now I'm just rambling like a fool.

 

Thanks for reading, and remember--don't trade like a crackhead.

 

/rant

[Louis B 4]

@ Robert H

 

I just read this post twice... and realized after the 2nd time reading it .. that this happened today! I never would have guessed by your comments today... i hope youll pick yourself up and that your account didnt blow up!

[Louis B 4]

Im going to apply a saying to my future trading, and anyone else that wants to use it....

 

First you get good, then you get fast!

 

I used this line for many people ive trained in various positions over the years, and it sure as hell can apply to trading.. as ive found the biggest gains (and losses) happen in the first 30 mins... and you need to think and react very fast to make consistent gains right after the open... im thinking i want to get good first!

[Abiel 475]

Damn Robert! I hope you already finished journaling each and every of your 20 trades LOL!

 

Remember Spock?

 

 

Well, we´re not Vulcans… so welcome to the emotional rollercoaster of trading!

 

This week I had two episodes of negative emotions while trading (sim). From the first one I get my lessons, so in the second I recognized the pattern and quickly interrupted it turning off my screens and pausing for a 15 min guided meditation. This break helped to clear and calm down my mind.

 

“In critical moments, men sometimes see exactly what they wish to see.” - Spock

 

As for an emergency procedure to deal with a fire or earthquake, traders need a plan to quickly and effectively respond to emotional outbursts… I know, easier said than done, but it takes time and discipline to master it. I mean, it´s better to have a predefined plan than leave our responses to chance or luck in those critical moments…

 

“Insufficient facts always invite danger.” -Spock

 

So what traders can do once they recognize an emotional outburst it´s coming or they are already in one? Just stop / pause trading… and remember all the pain and shame (and loses) our outburst brought to us. Take a walk, a break, play a video game, whatever help to clear your mind…

 

What could be a preventive action plan while trading?

 

Some ideas:

-Take a break after each trade to make sure our emotions are in check.

-Stop / pause trading after three consecutive wins or losses. Wins also could send us in euphoric outburst clouding our minds to think and decide clearly.

-We all know this but we don´t take our own advice: “Don’t look at your profit and loss while you are trading”.

-And of course, accept that some things are simply well beyond our control…

 

Dr. Elder says that to succeed in trading, you need both confidence and caution: having only one is dangerous. If you’re confident but not cautious, you’ll be arrogant, and that’s a deadly trait for traders. If you are cautious but have no confidence, you will not be able to pull the trigger.

 

What other ideas do you have to deal with outbursts and to prevent them?

 

"Live long and prosper”....

 

 

[Robert H 455]

Thanks Louis, Abiel, and Spock for your kind words.

[Anders 5]

Those are great suggestions for handling emotions while in the middle of trading. I'm also finding that the big-picture emotions need managing when it comes to trading as well. I've had many frustrating days (even weeks) when the end result has been days with losses far outnumbering the days with profits; many more trades that I executed poorly, rather than well; a pattern of larger losers and smaller winners; etc, etc. At times at the end of the day or week I've felt frustrated/helpless/defeated/you-name-it. But, I'm trying to step back and find the positives (as difficult as they may be to see sometimes). For me, I had another negative month in February (brief summary is that I went live in January with some big losses, then stepped back to SIM for a few weeks, then back live in February with much lower and more realistic expectations). Rather than let the losing month get me down, I'm choosing to reflect on the positives: I lost far less in Feb than in Jan, I'm making far fewer bad trades by trying to focus on good setups only, I'm learning a TON every single day.

 

I was out skateboarding with my 8 year old son this weekend and after a small spill off the board he blurted out "failure leads to success!". I'm choosing to focus on that this week (and going forward). I also really like Louis' quote about first getting good, then getting fast. I've had many days that start off with a bad loss or two in the first 15 minutes of trading that make it hard to come back from (and often ending my day early to go back to the simulator). While often tempting to trade the open because of the potential for profit, I'm going to use that quote to help me stay cautious at the open for the time being. There'll always be time for the big home-runs at the open after I (we) become good.

 

Oh, and Robert, don't sweat it about Friday...I took 20 trades and lost $ that day too!

 

Good luck to all the new-year newbies (and everyone else)!

[Dima 10]

I did exactly what you described, Robert, after having 9/10 green days last month; aiming for $100/day with a $50/trade risk, I was comfortable every day until I had one where I couldn't stop trading after getting into a few bad trades and ended the day -$600, effectively wiping out all my success from the days before. I hope it helps soften the blow to realize you're not alone in having this happen and that as long as you use it as a lesson to stop yourself the next time you realize your head's not in it, one bad day is still better than people who lose $10k their first time daytrading.

[Robert H 455]

Thanks Anders and Dima for the comforting words. Last week I rotated in/out of sim. On one of the live days, I hit max loss and stopped. I guess that's some form of progress lol. One day at a time!

[Skye 28]

Robert H, it's so great that you are willing to share your experiences so graphically! I was genuinely LOL (WITH YOU brother, not at you). I am brand new and find the psychology of going live quite fascinating. I am considering myself forwarned. After watching Andrew this morning I thought "holy hell, I definitely don't want to be doing that!" While he was good enough to pull it back I knew I would have been rolled bad. It made me think about what you all have been saying; I want to be SLOW and stay away from the open. I think it could be useful to maybe give ourselves a limit of x trades per day. Might be much easier focus on only taking the best setups.