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[RT] Re: Trading System/psychology.


  • To: <realtraders@xxxxxxxxxxxxxxx>
  • Subject: [RT] Re: Trading System/psychology.
  • From: Dennis Holverstott <dennis@xxxxxxxxxx>
  • Date: Wed, 12 Jul 2000 07:50:56 -0700
  • In-reply-to: <LPBBIKLFNLAMNNMLDELPMEJBCEAA.JW@xxxxxxxxxxxx>

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Earl wrote:
> Perhaps managing emotions is a more practical objective than detaching
> emotions. If fear grips you at the very thought of pulling the trigger,
> scale trades down in size until the consequence of loss will have
> nominal financial impact.

Yup, trading small really helps the emotions as well as dramatically
increasing your probability of surviving a drawdown. Small decreases in
position size make a huge difference in your risk of ruin.

There's another thing that, on the surface, sounds really silly but it's
helped me deal with the emotions of trading the S&P. I've trained myself
to think in terms of points rather than dollars. I have Tradestation set
up with BigPointValue = 1 so the system reports are in points, not
dollars. All my Excel worksheets and my daily strategy printouts are in
points as well. After I exit a trade, if you were to ask me how much I
made or lost, I would have to do a mental calc to tell you the number in
dollars. Somehow it's easier for me to deal with a drawdown of xx points
than to remind myself that I just lost the price of a new car. :-)

-- 
  Dennis