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I hate myself
Posted: Mon Oct 20, 2003 7:51 am
I'm trading a mechanical system of my own design and it relies purely on stop and limit orders to open and close positions. However, a couple of days ago one of my stop orders was declined by my broker as it was too close to the closing price and market sentiment was such that it was likely to gap on market open. Anyway, so I was going to have to buy at market.
All I had to do was wait for the price to hit my stop level and then hit the execute order button. If only.
So.... the market opened, my finger was resting lightly on the left mouse button. The price quivered a bit as it started to fall ever so slightly. No worries, stop level was just round the corner. The price halted its fall just shy of my stop and started to climb. Gently it reversed and steadily headed towards my stop level. As it approached my stop price, it gapped over it and rested. What did I do? Nothing! My finger was paralyzed! The price rose a bit and headed south. Finger still paralyzed! The price turned round did a courtesy bow and then headed south way beyond my stop level. Finally using my forehead as I was bashng my head on the table/mouse/keyboard I hit the execute button... Well the trade turned out to be a loser but I took a bigger hit than I should have.
I hate myself. One of the reasons I use stop and limit orders.
A warning to all, here be the head of a trader on a QWERTY keyboard. Ye have been warned!
Posted: Mon Oct 20, 2003 8:23 am
Could this scenario have played out differently if you were with another broker? Maybe your lack of personal discipline requires a broker with a different approach.
Posted: Mon Oct 20, 2003 8:42 am
Unfortunately the broker I use is the only broker that quotes for the instruments I trade. I use a spreadbetting service in the UK which is technically a betting service and therefore the broker in legal terms is a bookmaker. They are a good proxy to real futures trading but the instruments available can be limited. The disctinct advantage of using a spreadbetting service is that all gains are free from tax and since I pay 40% at my top rate it makes a big difference to my bottom line.
I'm working on the discipline side of things. It hasn't stopped me from generating profits but it does hobble me at times. I think I understand the root of my hesitation and I've made progress since I first started trading however incidents like I've described pops up on occasion just to remind me that it's not over yet.
Posted: Mon Oct 20, 2003 9:00 am
redbullpeter wrote:I'm working on the discipline side of things. It hasn't stopped me from generating profits but it does hobble me at times. I think I understand the root of my hesitation and I've made progress since I first started trading however incidents like I've described pops up on occasion just to remind me that it's not over yet.
Become a mechanical professional by following this simple path: See the signal
(i.e. stop price is hit, system signal is now active), recognize it is familiar
(i.e. all your rehearsal work prior to trading), feel good about it
("hot dog, here's a system signal, let's roll"), act
(place order exactly as specified by your system).
If you're doing other stuff than this, you should quit trading until you have proven to yourself that your system is both worthwhile and capable of being traded. If you're doing something other than the above, you are not trading your system.
Posted: Mon Oct 20, 2003 10:12 am
Chuck_B has certainly given a great response and I do not at all want to detract from it.
Having said that I will add an extra thought or two:
1. stop hating yourself,
2. allow yourself a little perverted joy for having experienced first hand just how powerful hope/fear can be, without having taken too much damage.
Now that you have had the feeling you can take it with you, sit down and study it. Hope/fear is your enemy. Study it well and become familiar with it and how it grasped you at the time. When it creeps up again you will see it, know it and deal with it.... like a mechanical trader trader.
Very good things can come from this stuff up.
Posted: Mon Oct 20, 2003 12:52 pm
Thanks Ted, Chuck, Damian, for your responses. I recognize the value of what you are saying. When I first started trading I might as well have gone down the street and handed out wads of cash. It's now over a year and things are different. I've stopped bleeding cash, I plan my trades and I sleep well at night. Then despite the progress, things like the above happens and catch you unawares. The "I hate myself" was more of a tongue in cheek headline grabber. I don't take lightly that I still have a long way to go and don't let these things hinder my quest. I'm glad to know that there are individuals like you who have reached a stable point and that gives me encouragement.
Posted: Mon Oct 20, 2003 5:08 pm
I enjoyed Chucks response and have to say he could have used the heading "Become a Professional Day Trader and:
The thing I have most learnt about by trading 1min bars is exactly the issue you faced (other than that c.f. was right and its often like watching the lawn grow while waiting for the odd helicopter to crash into your house).
A short term day trader who is good has a number of setups in his or her mind and very specific stop/target actions to take after entry. Very much like a computer. When you go from paper to money you discover that you are always tempted to "wait for a better entry" to "go early because this trigger will happen in 1 tick so early is good" and a hundred other bad things.
A trick someone taught me is to visualise someone you despise sitting on your shoulder whispering in your ear to "do all these bad things - the rule was made to be broken this time" and then rolling on the floor afterwards telling you what a prat you are. If you have to face this problem again and Chucks rational approach isnt working try this one. It is great. Only a couple of times watching that despicable individual rolling around getting joy at your expense
and you can cure all those bad habits.
I post this in case you or some other reader might be able to use the idea in future.
Posted: Mon Oct 20, 2003 5:43 pm
I think the gods have it in for me! Just finished calculating all the orders for tomorrow and guess what?! 10 of them are going to have to be market orders.
So I'll keep all your advices in mind, take a deep breath and follow the rules.
Posted: Tue Oct 21, 2003 10:53 am
Kiwi wrote:I enjoyed Chucks response and have to say he could have used the heading "Become a Professional Day Trader and: "
My response was basically what Van Tharp preaches in his seminars and course. I was just restating it to fit this situation. The important point in that sequence is the "feeling" part as it is almost impossible to act appropriately without the right feeling involved.
Posted: Tue Oct 21, 2003 7:42 pm
So how'd it go? Successfully implement the system ten times out of ten while feeling comfortably alert?
Posted: Wed Oct 22, 2003 4:48 am
It went pretty well. Keeping your words in mind I hit the execute button far more decisively than before. Of the 10, 6 of them I got at my stop level, 3 of them had upto 5 points slippage and 1 gapped my stop so far that it was not to traded.
Having thought about my preperation, I've reorganised the way I keep track of orders that need to placed at market. Before, I had to look at 3 different worksheets, I've consolidated that now.
I can see other things I can tweak and with a bit of practice I think I can get a good handle on this.
Posted: Wed Oct 22, 2003 6:12 pm
Hi Guys !
My approach is a little different. I don't pretend to know what's going to happen next, so it's really only a game (one that could be very expensive at times !!). When all's working out as per the script and I think I am odg, I remember that I could really be just odg in disguise. I chuckle at the thought, check for the tail and get on with it. The wins are great, the losses are painful, BUT it's just a game. It's not real.