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My ideas to help "mental" aspect of trading:
Don't trade real money until you have a system that you belive in so
strongly that your belief approaches the level of "knowing" that it will
work in the long run. For me, that meant developing and testing a 100%
mechanical system that was based on some fundamental economic rational such
as extracting the inherent return of the futures markets. This helps
mentally because when it comes time to execute, you feel like you "know" you
are doing the right thing, in the long run, by executing this trade.
Mentally tell yourself that the outcome of this next trade I am about to
execute has absolutely no meaning regarding the long term success of my
system. What is vital is that you execute your system like a robot, not
whether the next trade is a winner or loser.
Use a computer to enter orders rather than a human. This eliminates any
embarrasment factor you may feel when taking a loss and talking to a human.
Before you start trading, set aside your trading capital in a seperate
account for some amount of time until it is no longer a part of you mental
accounting of your net worth. In effect, you have already mentally lost that
money, so when you start trading, it does not feel like your own money (or
anybody elses for that matter.)
Do everything you can to suppress any euphoria you feel after a big win.
This just increases the level of pain you will feel when the inevitable
drawdown comes. Don't voluntarily get on the emotional roller coaster
thinking that you can only ride it when it is fun.
Know your personal tolerance for risk. Make sure your trading level always
passes the "tummy test"...meaning that if you have any anxiety about the
money you have at risk, you are trading too big.
Mark Douglas' book "Disciplined Trader" or something like that, was some
help to me when I first started.
SH
----- Original Message -----
From: "John Bowles" <johnbowles@xxxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Tuesday, April 16, 2002 11:24 AM
Subject: Under financed trader seeking solutions to trigger pulling issue
> Hi.
>
> I am in the situation I suspect many traders may find themselves. If I
> remember correctly from the Jack Schwager books, even the great traders
> find it very difficult to trade when they are under financed as I am. I
> suspect it relates to the statement made by several in the book "When
> the trader thinks of the money they are dead". When I read that I did
> not know exactly what it meant. Now I believe it means the trader will
> hesitate and miss good trades as well as sell too soon rather than hold
> until their targets based upon their record keeping. I have come to this
> conclusion because this is my situation (especially the hesitation). It
> is interesting because 4 times with fairly large sample sizes (80, 100,
> 150 and unknown) I tested myself doing strict paper trading and found my
> win/loss ratio hovered about 75% to 83%. Apply real money and it nose
> dives simply because I hesitate and miss many opportunities and refuse
> to chase. I have attempted applying a belief-based psychology I know
> called REBT as well as using the paper trading to build confidence and I
> still have difficulty. My current efforts are to specialize by
> restricting my market, time of trading, and patterns.
>
> I am wondering if someone else may have gone through this and managed to
> resolve the issue. Maybe a particular book may be worth reading or
> something I had not considered.
>
> I am also considering finding part time contract programming work
> hopefully related to trading. The idea being that the additional income
> would reduce the pressure and actually improve my trading which I would
> do during the morning trading session. With 19 years computer
> programming experience in 11 programming languages including VBA for MS
> access and some experience in TradeStation programming I am wondering if
> anyone might have suggestions on where I would find part time
> contracting programming work related to trading. With courses on stocks,
> options futures and a small bit of finance as well as my own trading
> experience I figure I can provide some value in this regard.
>
> Thanks for any suggestions,
>
> John.
>
>
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