I am enjoying the Babypips Forum and all the good information there is here. I am not new to trading, but, like a lot of traders, I fall into the 90% who try and don’t succeed. After about ten years of on and off trading, and a lot of growing up and eating humble pie, I decided that 2014 is the year to commit to Forex. I have mature and reasonable goals, as well as realistic expectations. I am now 41, so a lot has changed and I myself have grown as a person. I want to eventually make Forex my main means of income and I am committed to this long term.
So, after meeting a great coach and mentor (and after 5 months of demo and 2 months of lessons), I find that my technicals are good and it gives me good signals as to when to get in and out, however, I am seeing one problem keep cropping up and hope that the more seasoned traders here can share some advice as well as how you overcame this situation. Specifics will help me a lot.
What I have been finding is that the impulse to get into a trade, even where the signals are not “A” signals, seem to overcome me frequently. I don’t have problems finding quality trades, rather, I jump into low quality ones and I jump in often. So the result is predictable, I end up with a lot of trades where 3/4 of them are losers and only 1/4 of my trades are winners. Needless to say, this frustrates me a lot and I loose heart. It takes me a few days to regain my composure and confidence before I can sit at the computer again.
My question to the seasoned traders is:
How do you overcome the impulse to “win”?
What mental techniques do you apply to be patient?
How do you steady your own mind when the need arises to jump in when the timing is not right?
The main component to all this is that a good signal might not come (ever) so I better take what I can get “right now”!! So behind that sentiment is fear, mild panic and a sense of scarcity.
I would very much appreciate honest, intelligent feedback and thank you all in advance to your contributions. Cheers!!!
It’s just a test of discipline. If you know it’s not a great trade, don’t get in. If you can’t help yourself, turn off the PC and walk away. Do something else that you enjoy to distract yourself fora few hours until you are in the correct mindset again.
I too am a technical trader and I’ll do my best to provide some useful answers.
I found this hard myself. You can adjust your R:R ratio and lower your reward. This will increase your % chance of winning. You might up end up making less money than if your reward is higher, but if it’s psychologically optimal, then you might have to accept it.
If you do find yourself becoming impatient, open a demo account and try scalping the shorter timeframes, or closing trades prematurely before they hit your profit target. Burn yourself as much as you need to until you realise the folly of impatience. Visualise the money you could’ve saved (or made) if you only followed your rules.
TBH, I haven’t this problem. My advice would be to develop a strict set of rules that identify the setups you want to trade. If a setup falls outside those rules, even by a little bit, just ignore it. I’ve backtested strenuously so I know what setups work (and what don’t) so backtesting might help you here.
From my experience, the market can experience a drought of signals, and then suddenly deluge you with signals. I usually trade once or twice a week. Last month, I only traded one signal! Again, backtesting will help you here and give you an idea of how many signals you can expect per week, month etc. If you’re suffering from a ‘scarcity’ problem, you might need to develop even more strategies, or trade more pairs, so you’ll have more signals to pick from. That’s my ultimate goal.
Thanks for opening up and sharing your incredible story. Not many traders survive to tell the tale of some of the things you have experienced. Whether you know it or not, everyone who is a trader who reads your story has a lil more confidence you can come back from anything, even if we don’t know it right now.
The impulse to win is present in every trader, if you can’t defeat something, sometimes it’s best to try and avoid or combat in a different way. One thing I have learned from my experience as a Forex trader is once you get into that mode where you want to win, it is hard to stick to rules, whether they are the best rules or not. A good way to combat the need to be right and trade is to trade a demo account along with your live Forex account (this is really good for psychology). You obviously only trade what you perceive to be A signal trade setups on your live account. Anytime a setup comes along which is not accurate to your strategy, take it on the demo account and see how it goes. You may not realise it but you are actually releasing the emotion which is built up to win a trade.
I like to have the end goal of the trade, trading day etc in mind before and during the trading day. Also planning trades in advance by scouting levels etc helps with patience because you know specific levels etc you are waiting for. Setting orders could workaround this problem as well as you would not need to be present (takes all emotion out of the entry). (this also slightly answers question 3)
Another good technique I use is writing notes besides every trade in my trade journal. This allows me to write feelings I have while I took the trade. i also have a section for whether or not trading rules were followed. This allows you to realise the common mistakes in losing trades you make.
I will end by saying, there will always be another trade.
Thanks for sharing your story. Hope you reach your goals.
Impulse to win sounds like your’re trigger happy. That’s not necessarily a bad thing, some new traders are afraid to pull the trigger. You just need to learn to trade your setup like an odds game, look for only the best setups and take them. Think of trading like playing poker.
Don’t forget post trade analysis can be just as important as other parts to your strategy. Identify what went wrong and if those “conditions” can be formalized into rules for future reference. Good luck pip hunting bro.
Godspeed, what you have said underscores the need to find a trading style that suits your personality or, at least, add a dimension to what works for you in order to round out the entertainment factor. I like to trade and I can be at my computer all day. Backtesting tells me to look for one or two trades a month with some of my longer timeframe methods (h4 and D1), which are more profitable than my short-term trades. However, if all I’m doing is waiting for those signals, I will pull the trigger out of pure sleepiness. Even though I usually shoot myself in the foot when I go scalping or shot-terming, I insist on it. The solution, for me, is fairly simple.
I play the long-termers for dollars and play the short-termers for pennies. I glance at the long-termers every four hours or eod, but I am active on the m1 or m5, keeping myself alert and having a great time. Call it your entertainment budget and probably a lot more educational than playing video games.
I have always told myself if I can’t profit at pennies, I sure can’t profit at dollars. So, if I ever satisfy myself that I have become a competent short-term trader, I will move that activity into one of my larger accounts. Meantime, my average loss on m1, m5, and m15 is something like 36 cents.
I overcame the itch to trade by just losing a lot. Heh. I’ve always been someone who got everything out of my system first, rather than taming it slowly. In college I would do all of my procrastination first. Every day I would open up alll the facebook, youtube, etc. tabs I would procrastinate on and give myself x amount of time to just binge on it. Then I could be productive and satisfied afterwards. In FX, I dabbled a bit, cautiously, before setting out to make every newbie mistake. Holding trades longer than I should have, trading without a stop, adding to a loser, over risking, the whole deal. Lessons that needed to be learned, and I sure paid for them in a literal sense.
Every successful trader has to overcome these things, and almost every one of them struggled with one or more of them at some point. The key, of course, is to realize that you can’t be a grown up until you stop making little kid mistakes. It’s why it’s my opinion that mechanical systems are superior in the sense that they’re followed quite easy to follow, or, it’s easier to ‘ignore the itch’. I will note, however, that these days, I don’t ignore the itch, I simply don’t have it. I see the signal, I take it. That’s it. My backtests are extremely through, so I never worry about the trade once I put it in, I just let the probabilities play out. Some people like to actively manage their trades; for me, I’ve adjusted my style to disengage myself as much as possible from the trade once it’s taken, and it certainly makes the psychology aspect of trading easy to do.
I suffered from the same stuff. I have developed, over the last three years of full-time study, a checksheet which I fill out before every trade!!! If I do not do this, thats when I fail! The checksheet contains technical checks which come from your chart and trading system; the conditions to fulfil your trading system. The remainder of the checks are qualitative checks, such as Flat Market? MA’s not too close? Market Erratic? Market ranging? No Long wicks? Trend lines drawn? Entry candle not too long? Lots calculated according to risk/stop loss? You can add some more. If I have not completed the check sheet, I do not enter a trade, and the times that I did not do this, I lost my trades!!!
Remember, the secret of forex is to know [B][U]when not to trade[/U][/B]. A trade avoided, is a trade won!
Hello Godspeed, lots of good ideas precede my response but I did want to offer a very simple alternative. My thesis is that checklists, trading the plan etc all require that you first solve the underlying discipline problem; the very nexus of what holds you back.
Like you, I love to trade. Like me, you’ve probably read everything about trading over the course of your journey from Elder to Douglas, Pretcher to Livermore passing via books on algos and automation all stress the mind or discipline component or in the case of algorithmic trading the benefits of machines in not having them. As a real life & real time example, after a fantastic start to the month, coincidence has it that I am travelling today on an important day for EURUSD fundamentals. I’m sitting in a Starbucks in Mall of the Emirates having just opened and closed 3 trades exiting with small scalp profits having satisfied the need to pull the trigger. My simple trick… A sandbox account; a fraction of the equity I have in my primary account and a max leverage of 2:1 (constrained at account level, not by my watchful awareness recalculating as I add to a position). I use this account in cases like today when I am uneasy about the possibility of fundamentals temporarily overwhelming my technicals, uncertain about the quality of internet connections on offer, uncertain about my wife’s willingness to let me watch a trading screen, when I’m unfamiliar with my physical environment, following a big move as I wait for a pair to fall into a range or when I have any reason to doubt the robustness of my state of mind (tiredness, confidence niggles, crankiness, feeling aggressive etc). It works for me. By the way, I move profits from that little account to primary so my sandbox account remains more or less a constant size. If I lose money in the account it is just a small cost of operations, like a magazine subscription (disclaimer my only subscription is to the economist one which I maintain for my general knowledge. I have no paid subscriptions to anything forex related)
About me, I’m 36 years old, I’ve been trading for 3 years and I am profitable but don’t take that as a God given right. Even though I am well paid by most standards, the bulk of my learning was done in year 1 using a 100 dollar live account. “Caring” for such a trivial sum of money helped me cement my commitment to trading.
I trade a lot, I read a lot and, unless I am mistaken, this is the first time I have replied to any post irrespective of whether it be it on Babypips or forex factory. I don’t plan to make a habit of doing so. The forums are my lower level distraction useful after closing trades or as part of a routine before I start to do my various analyses and as an alternative to my small account when I start to feel the itch.
I could have kept my reply to a single line saying “churn a small second account”. My verbose reply on this unusual day is probably subconsciously connected with how I manage my efforts in the business of forex… Or perhaps it is just the jet lag.
Thanks to everyone who took some time and penned your thoughts. I appreciate how fully you shared your knowledge as well as your own experienced. Some made me chuckle and some made me nod as I could relate very much to what you were saying or the point you were making.
As far as my progress is concerned, I am very optimistic. When I started demo trading in Feb (till about April), I was mostly in the minuses. Then from May till present, I am at break-even-ish. I am very happy with my results, the techniques I’ve got to hone and the state of mind I find myself in. Forex is definitely a long game and I certainly in it for the long haul. Looking forward to sharing more news and meeting like minded people. Thanks again all.
Shane, thank you for your eloquent thoughts and sharing your personal journey. I appreciate that you did not post just a verbose reply (lol) as is so common in forums where anonymity breeds courage if not arrogance.
I have found that the education in forex teaches more than just about trading, it certainly includes deeper life lessons on handling my own mind and emotions which is why I gravitate toward it to so much. I find that many (not all) who succeed in forex have a very well rounded life where money is not the crux of existence and their identity is not fixed in their bank accounts. As we all know, accounts come and go, and if that is the basis for identifying oneself with, then it will be one hell of a roller coaster ride.
I am very encouraged to see that there are many successful traders, it is always good to keep good positive company and be surrounded by intelligent people. Cheers!
Nicely said! I am glad to hear this re-affirmation. I too keep a daily journal as well as a technical journal. I print my charts out after every good or bad trade and make lots of notes as to what went well and what did not. This has been essential in my growth as it very quickly points out where and what needs attention.
Knowing when not to trade, as you said, is part and parcel of account growth. Capital preservation, as I have come to see, is the key to success, not just how many pips I can make. So, thanks for reaching out and sharing and safe trading to you!
Yes, I have found over these last 6 months of demo trading how my own personal tastes and personality is revealing itself int terms of how I want to trade and my own personal tolerances. I have taken to heart a lot of the good advice in the tutorial as well as in the forums. After reading so many threads, a few things start to stick out again and again. One being, sticking to one currency pair. I find that it allows me to really get intimate with movement of the pair as well as its personality when it rises, falls and ranges. Its very cool to see how good advice starts to become direct experience and is not just intellectual. It is becoming mine now. I am very motivated and look forward to this new venture.
I can very much relate! When it comes to gadgets, programs and just something I am interested in, I always dive in head first and open the instruction manual later. I find direct experience a much fast learning style than reading about everything before doing. Fortunately, I, we, all have access to demo accounts where I’ve had the opportunity to learn quickly by making mistakes and then being able to question then and reflect later. It has really forwarded my learning process and revealed all the places where common psychological tendencies show themselves. Those that are positive, I keep, those that i impeding, I leaning to overcome and redirect. It has been a very progressive time!
