Discipline issues while trading live

[Jose Rodrigo Escobar 2]

Hey guys,

I've been in my trading journey for some months now and I think I have found some strategies that work better for me. How do I know that? Journaling: reviewing the trades I took and see how they fit in a strategy.

However I'm having serious issues in terms of doing trades without setups, I end up my day with a couple of good trades, well thought and some good execution, but then there is another ton of trades that are literally nothing and always take me to my max daily loss.

Here's an example of how my day goes:

Plan for the day:

• No more than 3 trades
• Risk per trade $10
• Max daily risk $30 (a little bit more due to commissions) 
• Use those 3 trades into a strategy that I've proven that work for me

End of the day:

• Ended up doing 18 trades
• Max day loss -$35
• 2-3 trades that would fit in a strategy from my plabook
• 15 trades that are literally non-sense and don't fit into any strategy or set up

This is getting frustrating, I guess this would fall into some discipline matter, but I have no idea how to approach this. The funny thing is that if I take out those trades that are nothing, I'm always profitable with my trades that fall into a set up.

 

Any recommendations on how to approach this?

 

[Abiel 475]

Hi Rodrigo, I can be wrong, but seems to me like you developed a bad habit in sim, the habit of taking trades without a setup. To get rid of bad habits you need to develop good habits, in this case, only take trades with a clear setup or trades that fit your tradebook. You can define some consequences if you don't comply, like going back to sim until you reach X days taking only trades with a clear setup. 

Also, you can develop a process to take a trade, if all criteria are met, you are allowed to take the trade.  You can use or adapt the OODA loop, a practical concept designed to be the foundation of rational thinking in confusing or chaotic situations, developed by strategist and U.S. Air Force Colonel John Boyd for fighter pilots. 

Deep within us, we know what we should do and what we should not do, it is just a matter of act accordingly. 

[cjsimon07 16]

I have struggled with this on and off throughout my trading career... First thing is to remember this is a marathon, not a sprint. The goal is to make money consistently, not hit home runs every day. Try to focus your energy on what you do well and not get down on yourself for your struggles. Do the best you can today and try to do better tomorrow. You've identified a problem and you are trying to fix it.

One thing I would do is constantly remind yourself of what you already know. You will be more successful only taking good setups. More trades does not equal more success. I start every day with just my computer, a blank sheet of paper for notes and a pen on my desk. When I was struggling with over trading I would start each day by writing on the top of my paper "I will only take good setups today." I did that everyday for over a month until my average number of trades per day was back around 8 (seems to be my sweet spot).

Two: Be accountable for your trades. Find someone positive and encouraging to talk to about your trades. I used to talk to my dad since he follows the stock market and understands the ups and downs. However, anytime I had a bad day or bad trade he would say something like, "this is why day trading is dangerous" or "day trading is just gambling your money away." This was not helpful (other than motivating me more to make it work). I started telling my wife about my trades. She has no interest in stocks, the markets or trading, but she does want me to be successful. I have found it helps keep me accountable knowing that I will have to tell my wife, "I lost money on an impulsive trade today." I prefer to say, "I didn't make my goal, but I stuck to my rules and made good decisions. This career is going to work out." I don't do this everyday anymore. Usually only if I have a really good day I'm proud of or if I take more than 2 bad setups. The thing that is most helpful is her response. It's either "good job" or "well, you'll do better tomorrow." I don't want advice or criticism. I really think just the act of reviewing my trades out loud to another person is what's helpful. I've even told my two year old about my trades! Saying it out loud helps me stay accountable and learn from myself. 

Third: Track your good setups, bad management, and bad decisions. I track my P&L in a separate spreadsheet to track my daily, weekly, and monthly P&L. On the daily I added columns for good setup, max stop loss, bad management (partialing out too soon) and Bad decisions (impulsive trades or trades with no setup). I can see right on the screen that bigger profits coincide with good setups.  

During the trading day try stopping after each trade to take notes. Was this a good setup? If not, walk away from your computer and don't come back until you are focused on only taking good setups. Try printing out your playbook and reading it at least once until you go back to trade. This was (and is) really hard for me. Honestly, it still usually takes 2,3,4 impulsive trades (red or green) before I can say to myself, "you need to stop until you can calm your mind and focus on good trades." I usually need a decent length break. I'll go for a walk, eat lunch, and occasionally just stop for the day. I have to walk away from my computer (sometimes shut it down too) in order to stop myself from over trading and refocus. 

Have you watched Thor's "The when, the where and the How" webinar? Make a rule that you must identify these three things before entering a trade. This can be hard at the open since things move really fast. I have a rule that if I enter a trade without a strategy I must stop out immediately, no matter what the trade is doing. 

Try to focus on your 1 or 2 best strategies. I look for ORB's at the open since they are well defined by my playbook. I have a signal for entry, stop loss and profit targets. After 9:45 I look for reversals and BHOD/BLOD trades. I am most successful when I stick to those strategies. When I deviate from my playbook I usually break even at best. Focusing on these 3 strategies helps me know whether I'm taking good setups or not.

The hardest thing to do is be patient! Screen time and journaling are the best teachers for your personal success. I think most people learn more from their mistakes, so try to look at them as learning opportunities. Keep trying to do a little better every day and don't beat yourself up when you struggle. 

Finally, I have found Thor's Thorsday mentoring to be super helpful. We all have similar struggles. You have to find what works for you.     

[CarloNe 4]

Hi Jose,

I can feel your pain!! 

I am suffering the same issue although most of the trades I am doing are in SIM. As Abiel is saying when you move live you may inherit all the habits developed in SIM.

I'll move Live next month if I can improve this bad habit.

I am applying in SIM the same criteria of Risk, MaxDayLoss, you set for yourself, to prepare the go live. I aim to have no differences if not for the emotions. Like you, I have been suffering a high number of trades that, once I look at them later, are a totally waste of time, money and great source of negative emotions.

Lately I did set a "Number of MAX consecutive RED trades" for which I stop trading. If I have X consecutive Red Trades there is something wrong and need to be reviewed. 

I am slowly correcting the issue by reviewing in deep ALL trades I make, and for each of them I ask myself WHY have I taken it? WHAT did I see to make me thinking it was a good trade to take?

Further, I take notes of each trade (prior and while in progress) and focusing on what make me thinking to enter the trade (L2, SPY, pattern, ranges, pivots). This helps me to reconcile later the review of each of them.

I discovered a pattern I go through when I enter the "waste" trades. Most of the time I rush the entry and not waiting for a confirmation that absolutely critical to reduce the "gambling factor". I fustigate myself each time I do that, which is my way to ensure I won't forget.

As result, I  am a bit more patient and tend to plan more and act less.

Changing habits is a slow process.

Hope that helps a bit.

 

[JS 10]

Hi,

New trader here as well and also using $10 per trade risk. I have been trading for the last 5 months. 

I had decent July, August and September and I think I was mainly being lucky. Had a few bad days in October and early November (-8Rs) and those bad days basically wiped out all the gains I had in the first few months. Had some reflection on myself a few weeks ago and I finally saw some consistency in the last few of weeks.

What I did is pretty simple and I try my best to follow these rules:

1. Only trade A or A+ setups. ( reminding myself this before every trade)

2. Keep my daily goal realistic @ 1R  (once I reach or am close to my daily goal, switch to SIM to trade. This also needs discipline as it is so easy to attempt to use real money) 

3. manage my risk @-2R+ commission with hard stops set up in Das. I also have set a mental reminder each morning that I am expect to lose 2 R today and getting myself used to the idea of losing money.

I try the best to be mindful during the trade so that I do not "lose" myself by trading mindlessly. 

All the best and good luck.