Monday, November 7, 2011


Well it looks like the ugly gremlins from my big owie day last week ended up coming back today.  And this time, they brought reinforcements.  It resulted in a day worthy of this:

Today will be an example to all of what NOT to do when trading.  Following Renato and the Diamond Setups would have resulted in essentially a scratch or small profit day on a very few trades.  He lead the room properly and those that listened, didn't get hurt.

I've read countless articles from others regarding overtrading, revenge trading, going on tilt, lack of discipline, [insert ways to self-destruct here], etc.  And like many other developing traders that eventually become consistently profitable, it looks like the rocky path is what I must also endure while working through my challenges before it all finally hits home, or until I run out of money.

I was fully aware that I was not in the right frame of mind from the onset of today, but I took this as yet an additional challenge to face -- as if successful trading itself isn't enough already!  In the morning session, I was doing well given the circumstances, scratching instead of being slightly profitable due to some missed opportunities.  But I was generally following the rules.

The Trigger
When the markets shot up after lunch stopping me out of a short position, that triggered my tilt.  I noted to myself that the trend had changed, and that I shouldn't fight the trend -- it uses up your emotional capital, so I should only look to be buying.  However, when your thoughts don't sink into your actionable consciousness, and you also combine that with fatigue, it's a real death spiral in the making.

Emotionless Trading - The Wrong Way
Whether it was partially due to the fatigue, I experienced little in terms of heightened emotions.  It was just a matter of getting back up mindlessly after getting stopped out.  A zombie with a mission.  For those who have raised children, it's a similar feeling to being awoken in the middle of the night countless times to sooth a crying baby...night after night after night....until you're so numb, you're in a state of autopilot.
To SIM, or Not To SIM -- Revisited
My account is now down net 15% in a span of less than a week.  Red flags are waving everywhere.

So the big question now is whether I need to go back to SIM.  I'm leaning towards it.  However, here's the quirk -- I have reason to believe that I respect the SIM account more than the live account.  Huh?  Yes, for whatever reason, it's easier for me to trade the live account with less discipline vs. the SIM account.  I have no reason why, but maybe it's some deep seeded programming bug deep within my brain that only a voodoo doctor can remove. 

Therefore, going back to a SIM account might only result in a false sense of confidence once again, only to see me fall off the tracks once I go back to trading a live account.  But then again, trading a SIM account will not results in losses to my real capital (nor will there be actual gains).  Best for me to just sleep on it, and decide in the morning on a clear and hopefully well rested head. 

Patience and Discipline
Renato has made countless comments that it takes discipline and patience of following your trading rules to become a successful trader.  On days like this, I know I have failed on both counts.  I feel as though he's speaking directly to me, the guilty party, although I know it applies to everyone. 

I still strongly believe that I can make it as a trader.  Whether it's futures, stocks, or forex, it's clear that when I follow the rules, the profits are there.  Simple as that.  So what is keeping me from achieving consistency?  My mind.  Similar to how athletes or others in various performance fields have coaches, perhaps I need to consider working with a trading psychologist.  I'm sure it's not cheap, but then again, the losses I'm currently enduring ain't pocket change, either!

Defeated and feeling the pain today, but I'll be back at the game tomorrow -- everything starts new again and the score is back to 0.  There's nothing else I'd rather be doing. 

Monday, November 7
Total gross profits:  -1,612.50
Total trades:  22
Accuracy:  31.8%
Contracts per trade: 2

NOTES:  Uhhhh...WTF just happened?


Matt said...

There are 2 things that in my opinion (for whatever its worth)stand out that you need to do.

1.Daily stop limit, you have to know when to say its just not your day and tomorrow you can start fresh. I haven't decided what mine will be with this system, as I have always kept it a bit too small, but what I am thinking is a good daily stop limit would be your full size (2 cars for you) times 2 full stops (3.5 points) and if you get down that amount for the day you are done, turn off the screens and get up and leave. I am thinking 2 full stops would be good because with a 70ish% win rate and only taking around 5 trades a day statistically you shouldn't hit it often, and if you had a full stop on the first trade you still can fight back and try again.

2. You win when you take the system's trades, so time to get out the post-it notes and write on them "I will only take DS trades" stick them on your monitors and read them out loud before every entry.

Grove Under said...

Hi Matt:
Thanks for the great points. I've always struggled with the daily account stop loss, and that's something I will have to address.

What I might do is to see if I can set a limit with my broker to lock up my account after a certain loss amount. So your calculation as well as what Greg has commented on in the past will really give me a way to determine the amount that works best.

It's time I finally do this and to get my trade selection finally in order. Thanks again!

Matt said...

Thats a great idea to have your broker cut you off, that is what FT71 suggest to people who have a hard tie stopping themselves

jblanco said...

Another possibility would be to use 2 accounts:

The real account ONLY for the conservative trades that Renato takes and SIM account for all other.

That would allow you to practice while earning money ;)

A max loss for trade and max daily loss must be defined.

Renato explains this at


Grove Under said...

Thanks for the tip makes a lot of sense. I've now received several suggestions regarding using the live account only for Renato's proven DS trades, and either just track or trade via SIM the other strategies.

Time to make up a new plan to tighten up the ship and get better focus. And as you mention, it's very important to protect my capital while learning! Thanks again.