dealing with whipsaws

Discussions about personal psychology for the individual trader.
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billpritjr
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dealing with whipsaws

Post by billpritjr » Thu Jul 01, 2004 8:55 pm

How do you people deal with whipsaws, from an emotional standpoint.

Lately I have been "whipped around" alot and we all know that maybe 3 or 4 trades a year will make up for all the whipsaws and still put money on the table.

Nonetheless, when trade #5 out of 5 ends up being stopped out, due to whipsaw, I have trouble moving to Trade 6, even tho I know in my heart that this trade could result in huge profits.

anyone else share these sentiments concerning whipsaws?

thanks

p8
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Post by p8 » Thu Jul 01, 2004 9:23 pm

Been there done that. I told myself that emotion is like muscle. It needs good conditioning and practice. If I emotionally couldn't do certain thing that should have been done it usually meant that I was not ready. At least intellectually we know what should be done, so it is a good thing. What else can we do other than to accept the fact that we are not ready, be easy on ourselves, and try again?

That line of thinking has helped me overcame some emotional blocks in the past. There are still other blocks that I work on. I am doing it one at a time. As long as we don't give up sooner of later we will be able to do what we wanted to do just like that. My challenge at this point is to remove the anxiety when I double/increase my position size in order to be more in line with my risk management rule.

If anyone has other suggestions, I am all ears too.

stancramer
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Post by stancramer » Thu Jul 01, 2004 11:07 pm

two words: Robo Broker

Jake Carriker
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Post by Jake Carriker » Fri Jul 02, 2004 12:24 am

www.tradingtribe.com

Only a suggestion. Everyone has their own way of dealing with such issues.

Jake

leonardo
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Post by leonardo » Fri Jul 02, 2004 1:21 am

Or you could do what the traders in Chicago do.

Drink lots of beer. And then take the next trade.

:lol:

Leonardo---

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Post by Forum Mgmnt » Fri Jul 02, 2004 7:01 am

Having grown up in the Chicago area, and cut my teeth trading there, I really resent that comment! :evil:

Some of us also like scotch, whiskey, or a good bottle of wine.

- Forum Mgmnt

p8
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Post by p8 » Fri Jul 02, 2004 9:52 am

There is AA (Alcoholics Anonymous). Then, there is TA, nope not technical analysis, Traders Anonymous :wink: Isn't the tribe sort of like a TA?

Jake Carriker
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Post by Jake Carriker » Fri Jul 02, 2004 10:08 am

Sort of, yes.

FrankWala
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Post by FrankWala » Fri Jul 02, 2004 4:00 pm

I call it quits for the day; ( even knowing that its the wrong thing to do); Watching the EurUSD go 1.2315 with me not aboard it and I did not have the heart to put the next trade on.

A few years ago, I used to buy a nice bottle of wine when I had a good day (timing mutual funds); and do some more homework when I had a bad day. It just made matters worse.

A few authors I like ( Tharp etc.) comment that this business is 20 % system and 80 % pychological. But isnt life like that.
Back to the drawing board. I have to test till I have absolute faith in the system.

Frank
San Diego

p8
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Post by p8 » Fri Jul 02, 2004 4:27 pm

Yep, most major currencies jumped through the roof this morning :shock:

I read someone said, maybe Seykota, that the choice of your system parameters (or perhaps even the choice of the system itself) is a manifestation of your psychological make up. So, maybe it's more like 100% psychological :roll:

leonardo
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Post by leonardo » Fri Jul 02, 2004 5:44 pm

If I miss a trade--see it too late or didn't place a stop in time--I take the trade anyway with a lower risk position.

Example: if I was supposed to have on 5 contracts at 1.2316 with $2000/contract risk, I will put on 3 contracts higher (Like 1.2375, the "missed" sensation fully in bloom) with protective stops at the original area, as long as the total risk is substantially less than the total of $10k (probably $8k) Then you aren't missing the trade.

If your system is a one lot trader, then buy a couple of out of the money calls or puts with small deltas just to make sure that you are not missing the trade. If the market screams, like it can, you will pat yourself on the back for the rest of the year. If it turns out to be a losing trade, big deal.

And then take a drink and promise yourself that you will not miss any more.

The reason for this "not missing trades" concept is that if you are not in you are not a trader who is following his system and if you can't do that then you need to take up something else which you can do. Believe me, I've had this talk with myself already, many times. And I love trading.

The markets are amazingly unforgiving on the day when you miss trades. When you've missed it, apparently others have too.

I've missed trades. But, I've found out that the entry price that you "missed" isn't magic.

Not to sound disjointed after what I've just written above; but, the markets are also amazingly forgiving. The market really doesn't care much about the prices in between when it is going somewhere. Our entries are just risk-adjusted places where statistics indicate a good risk for us. They aren't the only and last time you can possibly get in to milk a good trend.

Enough from me.

Leonardo---

Kiwi
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Post by Kiwi » Fri Jul 02, 2004 9:52 pm

Excellent post Leonardo. Very valuable lessons.

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Post by BARLI » Wed Jun 01, 2005 7:14 pm

i also been looking for the answer about where to take courage to get into the markets again after have been "whipped around" alot... after watching Ari Kiev's talk on NYMEX symposium and he said there:"after a losing streak, when taking your next trade thikn about those big winners you had and of your greatest trade so far it will give you confidence", this advice really helped me :P

finlay
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Post by finlay » Thu Feb 22, 2007 7:15 pm

BARLI wrote:i also been looking for the answer about where to take courage to get into the markets again after have been "whipped around" alot... after watching Ari Kiev's talk on NYMEX symposium and he said there:"after a losing streak, when taking your next trade thikn about those big winners you had and of your greatest trade so far it will give you confidence", this advice really helped me :P
Barli, I think the answer is in that Livermore quote in your sig line. I think the answer is to be very selective about entry and exit. If I buy on a strong buy signal, why should I sell again unless I see an equally strong or better sell signal? I know --- easy to say, hard to do. I like the guy in this thread who mentioned all the firm talks he'd had with himself. LOL. Me too. I pep talk myself all the time!

BARLI
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Post by BARLI » Thu Feb 22, 2007 11:44 pm

finlay, I agree. Its the same thing I've experienced when I was trading my short term system and took short signals in a strong uptrend, that was completely wrong and taught me a good lesson.

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