Friday, April 11, 2008

They want YOU

I have had always problems leaving my stops in the market when the market was moving against me, especially when it was doing so in a slow fashion always letting you think it will come back just in a minute.
The biggest losses I've had in my trading career occurred when I doubled down in such a market.
I know that letting the market take my Stop, if the trade is not working out, is imperative for my future as a trader. Still only after I stopped being calm while in a trade I was able to take a loss without moving the Stop order.
To the outside I was calm in the trade, but inside my emotions where boiling, often resulting in a canceled Stoporder or a doubled down trade.
Now I'm letting these emotions out, I swear at the market, if it goes against me, I talk to myself during the trade. And while I do that, I noticed I'm calm inside, I'm able to follow the market, letting it hit my stop or take my profits at a logical point. I'm taking less and less impulsive trades, because I found a way to let the emotions out instead of letting them boil inside.


LiggerPig said...

I find talking to oneself about the market action is very helpful especially if I can see where each side will add to positions.
Once in a trade it becomes even more important to keep talking. If you only i) stick, or ii) tighten stops while in a position and talk about them and what you'll do when they hit, you'll probably find it helps you too.
I have a rule not to re-enter the same area when I'm stopped out, this avoids another method of ignoring or moving stops, another bad aspect of trading to which I have been guilty.
Over the long term, by doubling down a losing position, the best you can hope for is taking a small win on the second position. Been there, done that too! It's bad risk/reward trading.
If you really feel a position is going to come good but the market is proving you wrong consider hedging part (or all), or cut position size until the market proves it's turned. Think of the hedge as 'insurance', because it can insure against big losses.

thelonelytrader said...

Just make sure you have a protective cage for your never know when you might lash out at the messenger!

Globetrader said...

True...but some of my losses were a lot higher than a smashed flatscreen would cost me...just the time to get a new one holds me back at times:-)
...and hitting my fist on the table is equally relaxing