Michael B. made this comment on the last post, and I thought it was worth sharing:
"Interesting conversation, and I feel compelled to chime in because my shift to profitability finally happened in 2010 after I came to terms with what you guys are discussing. You talk about failed "Trader-X" setups, but when you reference them there is always something lacking, such as no support from moving averages, not a valid candle signal, or in the case of the 15-min chart you posted Grove, I would not even have considered that because of the long upper tail on the first bar. What I am saying is you can't call them failed Trader-X setups if they don't fit the criteria to begin with. Grasping this concept turned me profitable. In the past, I made 5-10 trades a day. Once I finally forced myself to get selective, I started making 5-10 trades a week. And 10 in very rare. Most weeks I average 5-8. And guess what? My winning percentage is well above 80% for over 10 months now. Being selective and not trading as much is the key. But it is hard to do when you are conditioned to making alot of trades. Can you go a day without making a trade? It was darn near impossible for me a year ago, and forcing myself to do that some days was the hardest thing I have had to do in my trading career. But once you overcome that obstable, that mental block, the success is there."
Michael B. follows up his comment with a few setups from Thursday's trading.
There are several dozen comments over the past few posts, including charts, analysis, and discussion. Make sure you are reading them.
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Overcoming Emotional Trading in Real Time
4 days ago
14 comments:
Good comment. Feel exactly the same.
Great comment and I think this is the holy grail, if there is one.
Cheers,
Roger
Thanks for giving me something to think about for the long weekend.
Trader-X / Michael B.:
In another of my extremely long winded comments under X's prior post (yeah, I'm still working on it, no Twitter for me), I wanted to repost the question to Michael B.'s great comment here so that it wouldn't get lost, and also address it to Trader-X for a potential future post idea:
QUESTIONS #1 - Repost to Michael B.
I know it was very difficult at the time for you to become selective and not overtrade, but how about now? Is it still a constant challenge to stay so disciplined?
Maybe this is a stupid question.
Because from nearly every world class athlete, artist, or people who are at the top in their respective field, you hear how much time they spend practicing and improving. A work ethic that is insane. Passion, discipline, love for the game. The challenge never ends.
QUESTIONS #2 - You hit a slump...
It's easy when times are good.
But what do you do when times get tough?
What goes through your mind and what's your action plan to get out of the slump?
And when times are good, how do you maintain your high level of performance?
Meditation was one key factor discussed recently.
ODDS ARE - You'll get EATEN ALIVE
When you're trading, you're literally up against the smartest, brightest, and most driven people in the world. It's equivalent to the average Joe playing against top athletes from the NFL, NBA, MLB, PGA, etc. or entering the World Series of Poker tournament. So odds are, you're going to get torn up, beaten up, and eaten alive trying to making money trading.
And speaking of odds, based on general statistics that I've read, I'd have to assume that a large percentage of people visiting this site are not making trading profits consistently. Most of us are limping along.
I want to learn to beat the odds, consistenly, long term. And I truly believe the holy grail is a mental challenge. So...
QUESTIONS #3 - Turning the corner
I'd love to others from the great Trader-X community regarding:
How have you been able to turn the corner to consistent profitability?
What challenges did you face and overcome?
And more importantly, how you have been able to maintain consistency?
I believe Trader-X proves that there are no secrets to trading. Just like there are no secrets to staying healthy and losing weight. But achieving consistent success is extremely difficult.
What's inspiring and motivating to me are stories of how people have overcome the great odds to become successful traders. And as a bonus, I believe those lessons can most definitely be used in other aspects of our lives.
UGH! Darn it, this turned into another long winded comment. But thanks again to Trader-X and everyone for listening and commenting!
thanks Grove Under
hahahah SLB very look like a porcupine, touch it, you get hurt
ya i have to agree with Michael, very hard to stop trading in a day, but once you over come it, i think that is another level of trading
everyone has great comments here
Grove,
The key to consistent money is knowing what you do best and executing only what you do best. I spent a good 5 hours writing that in my journal yesterday and it was amazing how much time I spent on executing things that aren't my strengths. Make your own private blog and post your most profitable trades every single day. Over time it will add up.
If you spend today writing in excruciating detail what you do best and execute exactly what you do best next week, your numbers are going to improve.
I don't think most traders overcome odds. I think they overcome themselves.
Spend some time on traderfeed.blogspot.com. Specifically read all his posts on "solution focused" trading.
Flowtastical makes some great points.
Grove Under, here is my shot:
1.) Being selective is easy once you break the habit of overtrading. Michael B. said as much in his comment when he talked about being conditioned to make a lot of trades. It is all about discipline...you have to develop it and maintain it. But it is easier to maintain when you are making money from being selective as opposed to losing money from overtrading, and trading even more to try and get it back.
2.) Slumps - I don't think X hits them with his win rate. It doesn't sound like Michael B. does either. For me, a slump is a few break-even days but I have not had a losing week since mid-2010. That is what being selective does for you. And I don't view myself in competition with the best and brightest. I trade setups that I know work. I don't know what other people are doing, and I don't really care. I see something, I execute, and I take profits...usually in a very short time period.
I think the slumps go away (or, are redefined) once you learn to focus. Again, a slump for me is a few b-e days...so it doesn't carry the same weight mentally.
3.) Turning the corner - I think you get the answer to this question every day on this site, and you certainly did from Michael B.'s comment. Focus. Be selective. Don't overtrade. Don't force trades. I think X posted once that his job was to eliminate the bad setups...once you look at it that way, you have won half the battle. Eliminate the bad, take the good regardless of when they happen, and at the end of the day you will be in the green.
Flowtastical:
Great idea on starting a journal. I'm only taking screenshots with some notes now, but need to do more work and dig much deeper into my psyche.
Your quote that traders "overcome themselves" to become successful is great. Unlike sports, there's nothing physical involved -- nearly all of our challenges and obstacles are within our own mental state of mind.
I remember briefly going to Steenbarger's website a long time ago thinking I have to come back. But now I see it's very much aligned with this topic. Thanks for the lead.
Ken:
Thanks for the great feedback on my questions, as well as the words of advice.
Very impressive that your "slumps" are breakeven days. It now makes more sense how taking the "going for high percentage singles" approach to trading can drastically smooth out the emotional roller coaster rides...Prevent the slumps from even getting a chance of starting. I like that.
And your perspective on how you don't see yourself being in competition with the best and brightest is valuable and was an "oh duhh" moment for me. That means as traders, we're much more likely to be in battle with ourselves vs. those taking the other side of our trades. I should rewrite the section as "ODDS ARE - You'll shoot yourself in the foot!"
Thanks again to you both for your valuable feedback.
Lots of great comments on this post and the last one. I have not had time to process them all yet. I am always learning from everyone.
Grove,
Check this link out.
http://traderfeed.blogspot.com/2009/05/focusing-on-trading-solutions.html
If you read his blog/books he focuses on "learning loops" which are execution of trades and high quality feedback on those trades. This link is a nice start because it focuses on your highest quality attributes and enhances your learning loops at high velocity.
Try doing this exercise once Monday and writing more as the week progresses. Over a week/month you are going to have something amazing.
Flowtastical:
I went to Steenbarger's post via your link, and as I began reading the questions, I started thinking, yes, uh huh, that's right...
Then I got thrown the curve ball that those are the wrong questions for his "solution focused perspective." That got my attention!
Thanks for helping me to see things from a different perspective, this is very interesting. My discovery process never ends. I'm looking forward to hearing more about your strength based approach.
This week I will be mostly out, but looking forward to starting with a new plan and perspectives in a week.
MichaelB,
How to you overcome the boredom that comes with not trading? That seems to be part of my problem. At first, trading was mesmerizing, fun, exciting. Red, green lights flashing everywhere. Now, I realize how slow and boring it can be. When you are just trying for 6 1/2 hours to find the one perfect setup. How do you stay focused and keep from being bored?
here is my nugget of wisdom for you folks with google reader or maybe any reader. to follow all the great comments add this feed to your reader
http://traderx.blogspot.com/feeds/comments/default?orderby=published
joshua:
I totally understand your question to Michael B. regarding how to deal with the boredom of not taking a trade. Having the discipline to only take a perfect trade is almost like...
...going to the best steakhouse and NOT being allowed to order a steak, only salad because you're on a diet. Then you watch everyone else eat a big juicy steak.
Maybe after you've been in the zone long enough as a successful trader (avoiding bad setups and only taking the good), you just do your job every day and not think much about it. Just like brushing your teeth.
For me, going through the slow and boring times have always been a challenge. In the business world, you have to drive and initiate action for success. In the trading world, you have to wait for the markets to tell you when the odds are in your favor for success. Learning to overcome this consistently over a long period of time will be one of my bigger successes.
Much of the current discussions regarding focusing on your strengths, setting goals, meditation, etc., are all so very helpful (and not just for trading). As with anything else worth accomplishing, I'll have to discover what works best for me, and stick with it.
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