I know, this is easier said than done. It's painful to accept trading losses.
So whenever I find myself in a string of losses, I would step away from my trading computer for a few days - basically trying to avoid internalizing the pain and feeling damaged emotionally.
Usually after a few days, I will see the losses for what they truly are - a great trading education that has been cleverly disguised as a great emotional pain.
Showing posts with label Trading Psychology. Show all posts
Showing posts with label Trading Psychology. Show all posts
Tuesday, April 13, 2010
The Holy Grail
Found a very interesting article on the web regarding the subject matter........something that I could definitely relate to.
I humbly admit that I too, was at one time always on the lookout for the next "kick-ass" Forex system since sliced bread.
Enjoy reading!
I humbly admit that I too, was at one time always on the lookout for the next "kick-ass" Forex system since sliced bread.
Enjoy reading!
Monday, February 22, 2010
Sitting on my hands
This has got to be one of those times where I just could not find any decent setups to trade.
This is also the time when there is a HUGE tendency to "force a trade", seeing non-existent trade setups simply because we just "want to trade"...........kind of like a water mirage in a desert.
I have to remind myself tto be patient during times like this.
Continue twiddling my thumb.......
This is also the time when there is a HUGE tendency to "force a trade", seeing non-existent trade setups simply because we just "want to trade"...........kind of like a water mirage in a desert.
I have to remind myself tto be patient during times like this.
Continue twiddling my thumb.......
Friday, January 8, 2010
Making Decisions Based On "Gut Feel"
There was an article in today's Star paper that struck a chord with me. The title was "Trust your gut."
When I was working as an engineer before, making decisions based on "gut feel" was something that was frowned about by the company's management. The management would, understandably, prefer decisions to be taken after a long, drawn-out process that usually involve meetings, reports, back-and-forth emails, etc.
In my trades however, I sometimes I make trading decisions based on gut feel. When I see certain price pattern on a chart that simply jumps out screaming "trade me", I would just place my trade and walk away.
More often than not, these "beautiful setups", although do not happen quite often, had produce more winners than losers.
So, "gut feel" decision making certainly has its place (to me, at least), although we should not equate gut feel with reckless decisions!
Here's what Jack Welch, the legendary ex-GE boss, has to say about this type of decision-making process (again, I quote this from the same article that was published in the Star today):
"Sometimes making a decision is hard not because it is unpopular, but because it comes from your gut and defies a "technical" rationale. Much has been written about the mystery of gut, but it's really just pattern recognition, isn't it. You've seen something so many times you just know what's going on this time. The facts may be incomplete or the data limited, but the situation feels very, very familiar to you."
Surely the type of gut decisions that Jack talked about is not reckless decisions, but decisions made after having seen similar "patterns" in the past.
So how do we relate this to trading?
It means trading based on certain price patterns that have worked well more often than not, thus giving you confidence to pull the trigger whenever you see similar trade setups.
It also means that you need to spend some screen time to discover these patterns, unfortunately, in order to gain that priceless confidence.
This is something that no trading books or trading gurus can give you. This is something that each of us have to get it ourselves, after spending some time in the trenches.
When I was working as an engineer before, making decisions based on "gut feel" was something that was frowned about by the company's management. The management would, understandably, prefer decisions to be taken after a long, drawn-out process that usually involve meetings, reports, back-and-forth emails, etc.
In my trades however, I sometimes I make trading decisions based on gut feel. When I see certain price pattern on a chart that simply jumps out screaming "trade me", I would just place my trade and walk away.
More often than not, these "beautiful setups", although do not happen quite often, had produce more winners than losers.
So, "gut feel" decision making certainly has its place (to me, at least), although we should not equate gut feel with reckless decisions!
Here's what Jack Welch, the legendary ex-GE boss, has to say about this type of decision-making process (again, I quote this from the same article that was published in the Star today):
"Sometimes making a decision is hard not because it is unpopular, but because it comes from your gut and defies a "technical" rationale. Much has been written about the mystery of gut, but it's really just pattern recognition, isn't it. You've seen something so many times you just know what's going on this time. The facts may be incomplete or the data limited, but the situation feels very, very familiar to you."
Surely the type of gut decisions that Jack talked about is not reckless decisions, but decisions made after having seen similar "patterns" in the past.
So how do we relate this to trading?
It means trading based on certain price patterns that have worked well more often than not, thus giving you confidence to pull the trigger whenever you see similar trade setups.
It also means that you need to spend some screen time to discover these patterns, unfortunately, in order to gain that priceless confidence.
This is something that no trading books or trading gurus can give you. This is something that each of us have to get it ourselves, after spending some time in the trenches.
Tuesday, October 13, 2009
5 Min Time Frame
I've done a couple of trades based on 5 minute time frame. They're all, of course, on demo.
And the results?
1 win, 2 losses, 3 break-even trades.
Perhaps I can tweak this further, but I think I'll stop here.
I just don't feel comfortable trading this way. Trading decisions have to be made quick.
I feel that I need to rush when making trading decisions with 5m, and I can't say that I'm comfortable doing things this way.
In other words, this time frame simply does not fit my own psych profile.
Charts attached.
Thursday, August 20, 2009
Licking my wounds
I learn more from my losing trades than the ones that I win.
In the case of my previous losses, it wasn't due to lack of knowledge. I was able to analyze my trades and pinpoint where I did wrong.
The problem was my psychology - I was trying to "force" the market to give what I want, rather than what the market could realistically offer me.
Time to move on to the next trade.
In the case of my previous losses, it wasn't due to lack of knowledge. I was able to analyze my trades and pinpoint where I did wrong.
The problem was my psychology - I was trying to "force" the market to give what I want, rather than what the market could realistically offer me.
Time to move on to the next trade.
Tuesday, June 23, 2009
Watching Dollars Turn To Dust
Nothing riles me up more than watching a winning trade (paper profit) turns into a loss (real loss), once the original stop loss point is hit. Many of my previous trades (especially during my stock trading days) were like this.
Needless to say, I found this pattern extremely distressing.
As traders, we learn from our experience and evolve. In my case, I am now more risk averse.
This is reflected in my trade management style, where I would quickly move my stops to Break Even level (I usually add/substract 1 pip to lock in a few loose change) whenever I get the opportunity to do so.
The recent NZD.JPY trade that I took recently is a good example of my approach to this aspect of trade management.
As you can see, my trade management style is somewhat influenced by my own psychology as well. That's the reason why no two traders trade the same way, because of the way their own unique psychology influence the way they trade.
That is why even though Trader A & Trader B enter the same trade at the same time, how and when they exit their respective trades would be very different from one another.
After all, your trading performance in the long run depends on HOW you exit your trades!
Because our own psychology exerts great influence on how we manage our trades, I personally find trade management to be one of the most difficult trading aspect to master.
And just how do you come to grips with trade management?
By doing lots of backward/forward testings.
Yep, it means lots of screen time!
Needless to say, I found this pattern extremely distressing.
As traders, we learn from our experience and evolve. In my case, I am now more risk averse.
This is reflected in my trade management style, where I would quickly move my stops to Break Even level (I usually add/substract 1 pip to lock in a few loose change) whenever I get the opportunity to do so.
The recent NZD.JPY trade that I took recently is a good example of my approach to this aspect of trade management.
As you can see, my trade management style is somewhat influenced by my own psychology as well. That's the reason why no two traders trade the same way, because of the way their own unique psychology influence the way they trade.
That is why even though Trader A & Trader B enter the same trade at the same time, how and when they exit their respective trades would be very different from one another.
After all, your trading performance in the long run depends on HOW you exit your trades!
Because our own psychology exerts great influence on how we manage our trades, I personally find trade management to be one of the most difficult trading aspect to master.
And just how do you come to grips with trade management?
By doing lots of backward/forward testings.
Yep, it means lots of screen time!
Monday, June 15, 2009
Psychology & Trading
I used to wonder what the fuss is all about when people talk about trading and psychology in the same breath. It's only after I've traded for a while when I finally saw the relevancy of psychology to trading.
Specifically, it's all about tailoring (or matching) trading plans to suit YOUR OWN personal traits. Or taking someone else trading techniques and modifying it to suit to your own style.
Confused?
OK, let me give an example.
When I first started becoming a full time trader, I thought that I could trade 5 min charts and scalp my way to financial nirvana. I figured that since I can ogle at the charts all day long, I should have plenty of opportunity to rake in the pips.
Or so I thought.....
In the end, I found out that what I had originally wanted to do as a trader (which is to trade using 5m chart) and what I've actually found good at doing (which is trading using longer time frames), are entirely two DIFFERENT things!
No matter how hard I tried, I just could not get good results when I trade using 5m chart. I guess I am just not cut out to be a pip scalper.
Now how do I know that I'm more at ease trading longer time frames?
By doing lots of back testings & forward testings. In other words, lots of chart times.
Specifically, it's all about tailoring (or matching) trading plans to suit YOUR OWN personal traits. Or taking someone else trading techniques and modifying it to suit to your own style.
Confused?
OK, let me give an example.
When I first started becoming a full time trader, I thought that I could trade 5 min charts and scalp my way to financial nirvana. I figured that since I can ogle at the charts all day long, I should have plenty of opportunity to rake in the pips.
Or so I thought.....
In the end, I found out that what I had originally wanted to do as a trader (which is to trade using 5m chart) and what I've actually found good at doing (which is trading using longer time frames), are entirely two DIFFERENT things!
No matter how hard I tried, I just could not get good results when I trade using 5m chart. I guess I am just not cut out to be a pip scalper.
Now how do I know that I'm more at ease trading longer time frames?
By doing lots of back testings & forward testings. In other words, lots of chart times.
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