I started live trading for almost 5 months already. I have followed the basic steps in order to become consistent in gaining profit and to minimize loss by creating trading plan, however I have this attitude that is very hard to control once I start trading. I Don’t follow my trading plan, which resulted to loss instead of having profit. I always said to myself that if i will win or loss this certain amount of money I will stop my trade for a while and continue trading on the next day, but it’s really hard to control and it keeps on repeating over and over again. Am i the only one who experienced this kind of mistake in trading. Is there any way to avoid this kind of mistake.
You have to trust your system. Go back to demo testing it and run two demo trades side by side every time you would have gone into the market - one that follows your system rules and the other on which you exercise your personal discretion.
You must convince yourself that the system works, and sometimes you just have to give your “self” time to accept what your brain already knows.
Believe me you are not alone I’ve been there done that. It’s an obsessive compulsive type of behaviour that isn’t going to change by force.
Firstly are you day trading? If you are all your emotional responses are going to be that much stronger.
There is something about losing money so quickly that brings out the inner caveman.
The dream of making money on a daily basis just isn’t a real one - there is the wall street sucker who think he can trade at all times - thats a quote from Jesse Livermore and although written nearly 100 yrs ago is just as applicable today as it was in his day.
Second point - if you haven’t yet developed a probability mindset it’s high time you do. Trading in the Zone by Mark Douglas talks alot about this
Thirdly you need to eliminate the fear of losses. The best way is to develop a sideline business that completely takes away the desperation associated with losing trades.
If you work on a sideline business hopefully the losses you have in trading will start to feel insignificant.
Fourthly take a trading break - maybe even a few months. Let the losses and bad habits you’ve experienced fade from your mind.
You will come back to trading with a fresh perspective and will be able to implement your trading skill set without the clouded judgement of past trades.
As a trader who excelled at bad trading for so long I know a thing or two about what your going through.
always know that you have to take a loss sometiems, you cantwin all the time, even if you are a super experienced trader etc. just take your time to learn while you earn and my advice is keep a demo alongside the live so you can go back and practice strategies etc if you are unsure
You created a trading plan and went straight to open a live Account? If so, are you testing the trading plan using your live account balance? Please answer and I will conclude.
My suggestion would be to focus on the process of executing trades instead of the outcome.
The psychological element in trading is a real component that must be mastered as well. its not just about trading systems and risking a small percent of your account.
You will stop these self defeating habits by practicing better ones that will replace them over time.
Each candle you see on the chart represents certain period of time.
If that period is set to H1 it means each candle had duration of 1 hour.
When 1 hour passes another candle will open.
If you take a look on a period of 24h you will see 24 x 1H candles.
If you change time frame on the chart to 4H it means each candle will represent 4 hour period.
If you check 24 hour period on the chart you will see 6 x 4H candles.
So, if you have D1 time frame, which is daily, it means you will have 1 x candle per day.
How much money you want to make on each trade so you are satisfied
First answer to those two questions and then continue reading.
I will use simple example but you change amounts based on your answer. The trading I am doing is based on intraday trading or trading for few days with open trade.
How much I have on my account? I have $1,000
How much I want to make on each trade so I am satisfied? I want to make $200-$500 on each trade and that will satisfy me.
Mentor: Why you do not want to make $10,00 or $50,00 so you can make steady gains?
Me: Well, I want to make money by trading.
Mentor: But you will have to take large loss if the market moves against you because in order to make so much money in a short period you need to open trade with large lot size.
Me: I know, but I want to make money.
I have trading strategy that says I should set stop loss with 1-2% but with small stop loss I can make only $20,00 -$50,00 per trade which is not so much.
Mentor: Well, if you do not follow your trading strategy and you open the trades with such large lot size you will eventually destroy your account.
When you open the trade and you end with a loss you will feel sorry because you did not follow your trading strategy.
I know you want to make money but you need to do something to solve the problem.
You have two problems:
You want to make a lot of money with small account balance which forces you to not follow your trading strategy
You cannot control yourself and follow your trading strategy
There are two solutions:
Have large account where 3-6% of gain will give you $200-$500 of profit and 1%-2% will be acceptable loss so you do not lose to much on each trade
Change yourself and be patient, disciplined
I hope this helps and to add to this topic you should read all others mistakes that are holding traders back.
Plan to trade and trade the plan. Once you’ve set your plan and opened your trade walk away and let it play out. That’s why we use limits and stop losses. It’s a way to ‘automate’ the trade and take the emotion out of the equation. If you’ve built a good plan and trust it then let it do it’s job. If you lose now and then but you still trust the plan then it isn’t your fault. The market will do it’s own thing and you can’t control that, you can only control your trade. Always be vigilant! Check the plan and adjust if necessary but you won’t always win. Depending on the platform you use there may be an option to turn off the trade data on screen, (IG allows this). That way you can’t see what’s happening so no emotional response, but be warned, your system needs to work!!