Overcoming fear when you increase your position size ...

Discussions about personal psychology for the individual trader.
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PTCM
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Overcoming fear when you increase your position size ...

Post by PTCM » Thu Oct 13, 2005 5:43 am

How do you overcome your fear when you increase your position size ?

Dr. Steenbarger experienced this psychological deficiency in his early trading career. His solved it by doing this....


http://www.brettsteenbarger.com/Overcom ... 0Panic.doc

A floor trader on www.trading-naked.com solved the same problem by hypnotizing himself.

How about you ?

Let's share your successful experience.

Roscoe
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Post by Roscoe » Thu Oct 13, 2005 7:06 am

I find alcohol to be very useful in situations such as these. Place the trade then sink a few cold ones and relaaaxxxx... But then I am Australian - your experience may vary.

damian
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Post by damian » Thu Oct 13, 2005 8:07 am

Not just Australian, but a Queenslander (evidently).

;)

Paul King
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Don't think about the money

Post by Paul King » Thu Oct 13, 2005 8:52 am

Here are a few techniques I found useful:

1) Don't display currency symbols in any trade-monitoring documentation/system/method/code - just use 'unemotional' numbers. This helps to stop you thinking about the dollars, pounds, whatever you are making (or losing). Try to think of your trading as a game for points, not money.

2) Calculate all results using R multiples (i.e. profit per unit risk). These numbers should stay approximately the same regardless what size you trade, which helps you limit any fear due to increased position sizes.

3) Automate as much as possible (especially exits). If the computer is in charge then it is easier to 'just walk away' from a large (relative to previous trades) winning position you really want to exit that has not hit your stop.

4) Increase position sizes gradually wherever possible (even if you suddenly have more capital available). Ideally you should only increase position size because you have been recently profitable i.e. only use anti-Martingale position sizing techniques, not because 'you feel you can handle it'.

Hope this helps

Paul

walshyboy
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Post by walshyboy » Tue Apr 25, 2006 6:18 pm

Dear All,
This is my first post on what I can only say is an incredible site, and incredible resource.
I've been touched and amazed at the honesty and humility with which posters freely give on this site.
Anyway, what I wanted to say is thanks for the great link to 'Overcoming Market Panic' posted in the original question, which itself led onto another great resource at http://www.brettsteenbarger.com/
In that site, I've just been reading the 'Trader Performance' article, and I have to say that there is so much of use in just this one article.

I'm sorry to go on in my first post, but these few lines jumped out at me from that Overcoming Panic article, which I'm sure we could apply to many situations in our everyday lives. A question put forward in the article asks to how one could identify what's going wrong in one situation with respect to a previous similar situation which went well, ie trading from one poor day to another good day:
"Depressed people aren’t always depressed, so how about finding out what they’re doing when they’re feeling better about themselves? Couples with problems don’t always argue; what are they doing right when they’re getting along? And our trader is not always panicking in the market, even when markets don’t always move his way. It would be worth identifying what he’s doing during those times"

I thought that this was food for thought.
All the best,
John

PS sorry I haven't sorted out some witty sign off line, such as "I don't like to forget a face, but in your case I'll make an exception" etc.

RedRock
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Choose wisely, grasshopper...

Post by RedRock » Tue Apr 25, 2006 7:34 pm

walshyboy wrote:... poor day to another good day:
"Depressed people aren’t always depressed, so how about finding out what they’re doing when they’re feeling better about themselves? Couples with problems don’t always argue; what are they doing right when they’re getting along? And our trader is not always panicking in the market, even when markets don’t always move his way. It would be worth identifying what he’s doing during those times"
Psychiatric advice…. .02

Everything is a choice. Whether we make it consciously, or are unable to do so. To panic is a choice. To stoically hold fast in the face of a storm, is a choice. Happiness is a choice. To become emotional after a large gain, or loss, is a choice. To stay with a partner who has proven to make one feel sad and unfulfilled, a choice... Whether or not to add another example here... a choice.

We may not be able to control what comes at us in life. Yet we always have the power to choose how we respond to it.


I would add the novel Atlas Shrugged by Ayn Rand to any list of material aimed at the study of proactive decision-making.

AFJ Garner
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Post by AFJ Garner » Tue Apr 25, 2006 8:00 pm

I do very much agree with Red Rock. I have found it to be so in my own life, albeit only in recent years. I think some of us do need to be TOLD that we can choose - I certainly did. I happen to think this a very profound and important gift - the ability to choose.

I have to say though that there are some events which can still overwhelm me like a tidal wave for a few days. The emotions surge so high and so hard that no amount of thought seems able to staunch them. And then gradually, reason re-asserts itself and the small, calm voice of choice takes over once again.

daveineagan
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Mechanical systems only

Post by daveineagan » Wed Apr 26, 2006 12:55 am

Roscoe,

I too, find alcohol to be very useful, but only occasionally. Rattles my nerves the next day. :lol: But, I'm from Minnesota and we have different issues up here. And…as far as the price of oil goes, we may be using our stash of Crown Royale to run the Honda if things keep up as they are.

I simply follow my system which tells me when to increase in size. I have a few manual gyrations to get to the numbers which keeps me interested in the process but really, it's all on autopilot and I'm just a witness. So position size increases/decreases are no more emotionally charged than buy or sell stops. All markets look the same....I could care less what the name of the market is. I just follow the system.

Which I might add was thoroughly back tested and I am completely committed to.

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