I think the chances of a 50% drawdown are remote, given 2% max risk and cutting in half after a loss. After two consecutive losses it’s down to 0.5% so you’d have to have over 90 consecutive losses to have a drawdown like that. But that’s perhaps beside the point.
What I believe to be important is the question whether or not a severe drawdown is happening as a result of the flawless execution of your plan-with-an-edge or not. If it is, it’s ok objectively - the question remains if a person can handle it psychologically. If it isn’t, then the drawdown is the result of a multitude of failures.
If we rule out the last option and concentrate on the first, then the 1000 $ should indeed be pocket change in the sense that one can continue to live as before, just with 1000 $ less in the bank account. But it should above all be within the realm of the plan. Because without a plan, fearlessly losing 1000 $ is nothing but gambling.:58:
Yup, considering LTPP’s track record, I’d be pretty worried if the account got down to $900 even. But the thing is… fear is irrational! You do know that your risk managment is there, but if you’re used to winning, and you start LOSING, then you might start to stray from the plan. If you can stick to the plan, then there is no difference, and that’s why I know it IS possibible to continue on as before from the demo environment.
But the natural defenses of the mind will have a strong urge to “fix” the problem that is causing the drawdown. That’s when system rules can get changed or ignored. If you’re used to winning 90% of your trades, then all of a sudden you have 2 losses in row, you start to get fearful. You sense, whether real or not, that something is “going wrong”, and you should probably do something about… to defend yourself… it seems so rational! Defense can translate into “getting my money back” and then that can mean entering the market a THIRD time, and that’s when FEAR ramps up exponentially. And that exponential fear is taken right out of an ICT video, haha.
Basically that is the Loser cycle, and ICT has talked about that a number of times. It really blew me away when I first heard it, because he basically knew exactly how I had lost money in the past. And I realized… if ICT can see me making stupid decisions… so can the banks! Scary stuff, but at least I’ve got some army strong trading tools to work with
Absolutely. I was taught that humans have a limited capacity to process information. Most people can only remember 7 +/- 2 numbers. Stress (e.g. fear of losing) causes that capacity to go down even further. A way to contain that is by doing mental rehearsals: responses are programmed into the unconscious mind and become automatic. You’d have to visualise potential problems, dissociate from it, generate a solution, visualise and rehearse it. The brain doesn’t “know” the difference between visualising a situation (e.g. seeing price going against your trade and rapidly approaching your stop with large range candles) and being in that situation. That way you can contain stress.
That’s basically one of the 12 Top Tasks of Trading as per Van Tharp. Two others are using a low-risk idea and stalking - where have we seen that before… hmm let me think… :54:
If you google “12 Top Tasks of Trading Van Tharp” you’ll find a document with 10 of the 12 tasks - there have been two added since.
I wrote out this following note at work today, in my continuing effort to take my trading to the professional level…
[B]Professional Trading Mindset[/B]
*ANTICIPATE, DO NOT REACT (CHASE)
Observe and Stalk the market for setups.
Have a bias and key levels marked, but don’t commit to a particular action, instead [U]wait[/U] for the price action to setup when & where you classify as “high probability” with multiple confluences and a low risk stop placement opportunity.
Wait for the Market to come to YOU!
NEVER chase the price if you miss the low risk entry.
Essential stuff. We’re conditioned to actually “go do stuff” so as soon as we’re in front of the PC, we want to start clicking buttons and expect the market to deliver, but that’s not how it works…
That downloadable document lists the following 10 tasks:
Daily Self-Analysis
Daily Mental Rehearsal
Developing a Low-Risk Idea
Stalking
Action
Monitoring
Abort
Take Profits
Daily Debriefing
Periodic Review
To get to 12, add:
2.5 Focus and Intention
The premise is that thoughts matter, and thoughts become matter. You attract what you think about, so think about what you want through your higher self. You could focus on mistake free trading and the actual goals in terms of reward:risk you want to achieve. There are several techniques to actually do this.
9.5 Gratitude
Acknowledge and Give Thanks for all the things that went right, every day. That will reinforce good habits and reinforce the ability to use the Law of Attraction.
Also, trading is like top sports; many of the same techniques used in sports psychology are also applicable to trading. One way or another, you’ve got to make sure you are in the Now when executing a trade.
Jack Nicklaus used visualisation and mental rehearsal before every shot. This video is not quite what I was looking for, but it’s worthwhile to watch anyway:
Holy crap, this thread got to 900 pages… and it was 500 in december, yeesh.
Routine is the most important thing because we are creatures of habit, that is why I am patiently waiting for ICT to take us through the premarket bootcamps so I drive it into my being how I approach the markets everyday. Also why I avoid reading other peoples methods and filling my head and chart with stuff that will unnecessarily take me from this path.
This forum, and others have really good information available, but even though volume analysis works, it is not this method and adds unnecessary analysis to my routine. Just adds to second guessing in the beginning. With that being said, I bet the next thread gets to 1000pages in a year.
I had a very difficult time picking market direction during LO. It just seems much easier for me to let London price in the high or low for the day and trade according to that.
I only trade New York time and only ote with London hint on direction. I have made 973 pips this year already and using just one trade a day couple times a week. I feel comfortable just taking this trade because it makes most sense to me. I have had 4 losers and my 500 has turned into 1216 not sure how to say that in percent but I am feeling good. I don’t say it too much but the friends on here and material is second to none. ha-ha yea
[I]"It hit me that to really accept the risk of a trade, I need to think of the stop loss as the ante I need to pay to find out if the trade will work or not. Instead of defining it as a “worst case scenario that probably (in my head) won’t happen”, I need to think of it like the cost to buy a lotto ticket, or the chips required to pay the blinds in poker. Your stop loss and position size should represent the amount of money you are going to pay to see if this particular trade happens in the way that your edge predicts. As soon as you put on the trade, that money is spent. It’s gone. It’s not yours anymore. You don’t need to fear losing it any more than you fear losing the dollar you pay at a carnival to throw darts at balloons trying to win a prize. If you do fear that, you are trading too large. If you had to pay $1000 to throw that dart, you’d think twice. You’d measure the cost against what you might win. As a loser trader, you just put on any old trade and then hope it works out. That’s like paying the $1000 and then hoping you hit a balloon so you get the $1000 back to pay your rent, plus whatever extra winnings you get. You are going to make poor decisions, overpay for the chance to find out if you are right, and lose in the end. "[/I]
Remembers me of somebody who says that entering a trade is like paying a ticket to see the movie. If you don’t pay, you can’t see it (= if you don’t participate, there’s no chance to win, albeit that there’s no chance to lose either). If you pay for the ticket, you can see the movie. If you don’t like what you see, you can leave early and you can perhaps get a partial refund. If you like it, you stay until the end and reap the benefits.
Sorry guys , i went thru the video at the first page. really dun quite understand. ICT mentioned find key S/R for monthly, meaning monthly timeframe or other definition?
Initially i try just a few weeks of daily support and resistance, i.e 2 or 3 days previous high and low. success rate was more than 50% however can manage to catch 1 or 2 big winners which may turn into good profits as what ICT intro in his video on risk management on 3:1 reward to risk as better than 1:1.
Thank you so much for the great videos at post#1. I wish I have seen them much earlier. I have also read through the posts and learn a lot from the discussions and analysis posted.
There are a few videos such as the ICT daily trade preflight checklist which I have a problem to access. Can anyone tell me how I can access this video? Thank you.
