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Trader Challenge: Keeping demons on leash

December 8, 2008

Excerpt from my thread:

I have often wondered and genuinely (still) striving to keep the emotional quotient of trades under a constant leash.

Opinions vary, on how to achieve this:Advices include, “treat-this-trade-as-just-another-trade” to “control-your-greed-and-fear”.

But as much as it is a challenging job, that much it is a self-exploratory journey.

Readers Caveat: I am not a ‘pro’ trader. Heck! seasoned guys over here will see me, asking for advice and help in equal measure. So, I think, I need not repeat that, take whatever I say with a pinch of salt.

Self-Exploratory it is, because Dr.Elder for whom, I have immense respect himself says, good traders graduate from school of ‘hard knocks’. I suspect the exploration came through the self-introspection arising from those pains. Apologies, I digress. But the crux of the matter is, how do real traders: keep their demons, fear and greed in leash.

For instance, methodology: watch the trend in a higher timeframe, take positions near the EMA,liquidate near the channel edge.
Overriding Signals: Watch out for divergences and falling volumes and weakness.

Is it guiding me? Hell yeah.

But as they say, ‘there’s many a slip twixt cup and the lip’

I am shackled by my own self-ignorance. Fear and Greed. Once the price starts moving from the, I am facing a dilemma, if it is near enough to the EMA to make it a value trade?Making me at times, dilly-dally and drag my feet. And when the trade does start moving in, I pyramid, making my total trade an effectively lesser ‘value-trade’.

I am sure, we all face problems. But the limelight is not on my trading methodology but on our trading discipline.

Dr. Brett Steenbarger, mentions in his book Enhancing Trader Performance, is that performers in all other fields are not devoid of emotions, but they leverage emotions or effects of emotions to focus them better. It is said, that Michael Jordan used to provoke, abuse his competitors before the game. So that they retaliate back and he gets charged up making him focus on the game better. Doc, says that it is the use of emotions to enter the ‘zone’ is what matters.

But my question is: How?

It has happened to me, that I was holding on a short position, anticipating an Hourly bearish divergence to take shape. What happened instead was there was a gap up the next morning itself and it rallied to a intraday high. Well, I was impaled!

But I still held on. But normally there is something which I never do. I started looking through the shoutbox. There was it! Emphatic bulls predicting a much higher close. Around 70 points higher.

Confidence wavered! Faith removed! And there was I, making a cover trade on the highest point of the day. What to say, its always easy to blame everybody other than self. If I would have held on my conviction then I would have closed that day with the minimal loss.

I am sure, we all had such lessons. I didnt have a plan B with me, the first fault of mine. I didnt have conviction on myself. The cardinal sin. ANd there you have it, the blasphemy of intelligent trading, I panicked. In that one moment, I let days and weeks of yog[as it is said in Sanskrit, an exercise in mental and emotional dexterity] was squared out.

I guess, I have a long road ahead of me. But it often make me curious, how did you do it?
How did you take your hard knocks? What did you tell yourself?

I am sure most of the people here, will find it difficult to mention the process. It just comes by perhaps… failing and discovering. Yet… just yet… given a chance to go back, what would you have done?

One Comment leave one →
  1. December 8, 2008 6:03 pm

    I guess, these lines from Bhagwad Gita might help us:

    (2.56) KarmYogis are not attached to anything. They are neither delighted by getting desired results nor upset by undesired results, because, their mind is always calm and steady.

    (2.57) One should learn to focus or fix one’s mind on God only after bringing the mind and senses under control. One’s intellect becomes sharp whose mind and senses are under control.

    (2.61) One develops a liking for harmful sensual pleasures by thinking about sense enjoyments. The desire for sense pleasures comes from thinking about sense pleasures. Anger comes when desire is not fulfilled, and greed (for more pleasures) comes after desire is fulfilled.

    (2.62) The uncontrolled mind steals away the intellect as the storm takes away a boat on the sea from its desti­nation. Therefore, a spiritual aspirant must control the mind and senses and never let the senses or the mind control you. (Material desires keep one away from Jnaan (Self-knowledge) that leads to nirvaan, or salvation) [/b]

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