Things I Wish I Believed When I Started Trading

Although I've been involved with trading (i.e. survived) on and off for over 20 years, it has been 4 years since I've started actively trading again.  I'd be the first to admit -- although there are good moments, life of trading isn't always easy, especially when you're first starting.

For whatever reasons, I wanted to write some "things" I wish I believed when I first started trading.  Every time I see a new trader trader start to learn how to trade, I wonder if they really know what they're up against.  What most people don't tell you is that trading can be very difficult, especially mentally.

Don't get me wrong -- I love to read about peoples dreams and expectations, because it helps to remind me why I first decided to trade.  You MUST have those dreams, and they MUST burn a fire of passion deep within, or else it'll be too easy for for you to quit when the inevitable dark times come.  If you've been through the trading school of hard knocks, you know trading can get really brutal.

When I first started trading, I wish someone told had told me what to expect, and perhaps my journey would have been a little smoother, or totally different.  

Well, I take that back.  

Honestly, I probably wouldn't have listened or taken this type of message to heart.

Many of the "things" I list below are well known and no secret.  I would have said, "This doesn't apply to me."

We all need to learn the path ourselves, similar to how we need to discover what method and style of trading works best for us.

We're all different, so this list may not even apply to you.  But this is what I've experienced, and have also observed from many other traders on their (often failed) journey.  As they say, hindsight is 20/20.

You need to be a bit of a psychopath to do well as a trader

First of all, having certain psychopathic tendencies isn't necessarily a negative thing.  But on the other hand, if you are to become wildly successful from trading, you are not a normal person.  

The learning curve to trade successfully is brutal and takes a lot of time and energy.  Sure, when you're on a winning streak and on top of the world, trading seems so easy.  Get too confident, and the market will certainly punish you financially and mentally.

But to be able to keep pushing forward, when the chips are down, and you can't seem to do anything right when you book a loss after loss after loss.  It requires extraordinary effort, like psychopathic tendencies, to continue moving forward.

You can read an interesting article on psychopaths HERE.

Once you learn the basics, successful trading is mostly about behavioral modification / trading psychology

How many people do you know who have tried to diet or exercise or lose weight or quit smoking, or whatever, but couldn't succeed?  

Of those who are successful, how long have they been able to change their behavior?

Google up "Success rate for [smoking/losing weight/etc.]"  Is it coincidence that the % that fail are similar to those who fail as traders?

Chances are, you know many people who have tried to change their behavior, like a diet, achieve some level of success, then revert back to their old ways.

But I'm sure we all have seen success stories, long term success in some cases,  people who truly changed their ways.  

What were the successful people able to do?  They were able to modify their behaviors and habits.  It's very similar with trading, since natural human emotions are wired counter to successful trading habits.

Learn from other fields of study that require behavior modification or how to change your habits in order to succeed.

So in hindsight, what should I have done?

Learn as many trading setups and test them out, preferably live to work off the emotional charge of trading, but trade very small size.  Find ones that produce an edge for YOU over at least 50-100 trades, or more.

Pick your top 3 performing setups (or just ONE, per Trader-X below) and commit to them.  Get married to them, for better or for worse.  Continue trading super conservative risk management (RISK SMALL, risk well under 1/2-1/4% of your total account) and track how well you do with a more focused setups.

In the meantime, focus your energy on the behavioral and psychological side of trading, to see if you can simply remain consistent with your plan and execute properly.  If successful over time, this will build up consistency and confidence.

So, how do you work on your brain and make it stronger?

Self-hypnosis, NLP, meditation, mental exercises, sessions with a trading psychology coach, biofeedback, etc.  Like trading setups, there is no right or wrong way to work on this, only what works best for you.

Ultimately, finding what works best to strengthen and maintain your mental game will determine whether you succeed or fail as a trader.  It's not the setup or the strategy.  It's all in your mind.

If you're an adrenaline junkie looking for excitement, don't trade.  Find something else for excitement and keep trading "boring"

For a rush and excitement, perform in a musical band, compete in something whether it's chess or triathlon or to get on a game show like Jeopardy or a cooking show, go rock climbing, give public presentations, etc.  

Find a passion that will give you goals and excitement outside of trading.  But seeking excitement from trading will only make you lose money.  Because that's gambling.  And over time, you will certainly lose money if you gamble.

If your main goal is "I want to spend more time with family", don't daytrade.  Maybe consider swing trading. Or better yet, don't trade at all.

Active daytrading is more of a young person's endeavor.  When I was fresh out of college, I spent a considerable time learning to trade and I would easily spend 14-18 hours a day.  

There was no impact to family, since I was single.  I could blow up trading accounts, and oh well, no worries, since I have my whole life ahead of me.  

However, this not something as advisable if you have a family and are just learning to trade.  And are you over 30? [my hand is raised]  Then the odds are even more against you.

See an interesting article on about why there aren't many top traders over 30 years of age HERE.

Venture into the field of trading because you love it, not necessarily because you want to have more time for other things.  Learning how to trade successfully is all all encompassing and will take over your life. 

And if you treat trading as a hobby, then sure, that's fine, but it will likely be an expensive hobby.

Focus on mastering one setup

I should have listened to Trader-X, one of the original old school bloggers.  Read the articles HERE and HERE about "Chasing Success."  Read the comments, there's a lot of gold in there.

In the old school sushi restaurants in Japan, an aspiring sushi chef will spend years working in a restaurant and mastering various tasks, like simply making steamed rice for 2 years, before even being able prepare the fish.  

Seems a bit excessive, doesn't it?  But what a way to build discipline.  So what did I do?  

I went into stocks, then forex, then futures, then options, then stocks again, then options, then back to...

And within each of those asset classes, I tried discretionary trading, charts patterns, volume profile, Fibonacci levels, mechanical systems, quantitative/statistical outcomes, special situations, etc.  

A jack of all trades.

I have a personality that loves to research and to constantly learn.  So it's hard for me to just focus on one setup and only execute that for an extended period of time.  

Because it can be so...boring.  To just sit around waiting for one setup seems like such a drag, you know?  It's like a...job. 

BINGO!

When I've felt and treated like trading was a job -- you know, somewhat of a drag, somewhat boring (which trading can be much of the time), like something you didn't necessarily want to do (sitting around endlessly looking at a computer screen), but you know you have to do it and do it well -- those have been the times when I've executed my trades the best. 

Assuming you've successfully worked in the corporate world, don't immediately try and replace your salary

Before the latest return to trading several years ago, I was fortunate to be in the tech/financial space where 6 figure annual salaries are not a big deal.

So when I returned to short term trading, I wanted to replace that salary (AND MORE!) without really spending the time to develop a sound process and strategy that was in sync with my personality.

Why would I want to limit my losses to $20 and possibly gain only $80 on a great trade?  That's peanuts!  Wuss!  C'mon, I don't play the $5 tables in the casinos, so why should I do the same in the stock market?  Now add a few zeros to that and then we're talking!

Bad mistake.  Ego was talking.

Get a solid strategy and process in place first.  RISK SMALL (less than 1/2-1/4% of your portfolio per trade).  Achieve consistency.  Work on getting through any emotional and mental issues trading live.  Then scale up, slowly.  Otherwise, you are likely just gambling.   Which means you'll lose.

Trading small -- easier said than done.  

Most people will initially have the discipline of risking small, but will eventually get tired of the grind.  When the realization that someone working at McDonald's is making more than you, going for the big win out of boredom and/or frustration of a bruised ego is easy to do.

Sure, you might get lucky betting and winning big, but eventually, if you don't follow a sound strategy and process with an edge, it's only time before you lose it all.  I've seen it happen to many people.  On twitter, keep track of those traders who go quiet and/or permanently disappear.

For the first year or two (or more), it shouldn't be about the money, but about finding the strategy that works best for you, and creating a process that you can repeat over and over.  Make it through that learning experience with minimal tuition (i.e. losses).

If you're coming into trading from a successful career making respectable $'s, it will be especially hard to bet only peanuts while you learn.  Whether you admit it or not, you have a big ego, although you might call it confidence.

The temptation to size up will be big.  And you'll be lucky at times, or for weeks or months, but if you don't practice prudent risk management, the market will take it all back.  It's only a matter of time.

Learn to walk before you run.  Don't think about the money, just whether you executed your plan properly.  And RISK SMALL, especially while you're learning.

Trading is all about money, but successful trading has nothing to do with money

Yes, the basis of trading revolves around money.  So it becomes easy to focus on profits and losses for every trade.  

But this is one of the best ways to get sidetracked and to go down that dangerous road of emotional trading.  Focusing on money (especially if you're losing) can quickly lead to FOMO (fear of missing out) trades, along with impulse and revenge trades.  Once you're in that frame of mind, it's pretty much game over, and there's a high probability you will kiss your $'s goodbye.

Those who are successful traders will usually have a different perspective of trading -- the outcome of any single trade doesn't really matter, as long as the proper execution and position sizing has taken place.  

In addition, the routines of the processes/routines necessary to be properly prepared for the next trading day are repeated consistently over and over and over.  In many ways, it's just one big constant grind to be a consistently successful trader.

It's a lot of work, which has nothing to do with money.  So you better love everything about trading, especially all hours of research and homework you'll need to do when the markets are closed.  Otherwise, find something else that captures your passion.

If you're starting with a small account expecting to make a decent living, then yes, you're gambling

Study trading long enough, and you'll hear endless stories and mantras about "Don't risk more than 1% (or 2% or whatever) of your portfolio per trade.  Risking small works for people with a big account in order to make a reasonable living.

It's one thing to have a $1 million dollar account to try and achieve a 10% return in order to make $100k a year

But it's another to start with $5,000 and think you can make $100,000/year, consistently, especially if you've only been trading for less than a few years.

And let's say you are one of the few that does it.  Still, you can not quickly build an account without either risking a big % of your account on a several "high conviction" trades, and/or have a unusually lucky series of consecutive wins.  

For those of us who start with a small account and build their account to a sizable amount, there was significant LUCK involved.  Making big $'s from a small account -- it can happen, I've seen it happen, and I truly hope it happens to you!  I've seen people win the MegaMillion lottery, too.

But it's not a good idea to base your business plan and trading career on luck. If you do start with a small account, consider it additional tuition expenses, not your ticket to the big time.  Because you will likely blow it up either via losses or commission/fees.

And in the meantime, work hard and hustle to save up enough to open a respectable sized trading account.  Then you can risk a minimal % of your account so that you can statistically reduce your risk of ruin, but still generate reasonable account growth.

After you have a lot of successful experience, then maybe you can decide if you want to trade like George Soros, where you put all your eggs (and more) in one trade based on your level of conviction.  

But for the rest of us, that method is not a good idea.  

Expect AT LEAST 3 to 5 years to become consistently profitable, assuming you don't quit or blow up first

Huh, WTF?  That's a really long time, c'mon, that's BS, man.

What about "Joe Super Star Twitter Trader" who started making $10k/week after 6 months?  Or all those other people banking big bucks and killin' it week after week within a year after taking a trading class?!?

Sure, it's absolutely true that you will start killin' it in under a year -- very possible, but very rare.  Most of the time, it's just a lot of it is BS from people trying to sell you something. 

If you've been around long enough, you'll understand the saying "Trading is the hardest way to make an easy living."

For every Lebron James that skips college and immediately becomes a elite superstar in the NBA, there are millions of others that don't make it.  And even though he's at the top, Lebron continues to work harder in than nearly everyone else.

Same with trading.  If you happen to be "the one" that makes it big, I'd seriously be the first one to cheer you on and congratulate you.  I love to see people succeed.  

I'm not trying to be a buzz kill, but there's a 90+% probability you won't succeed and be around in 3-5 years, that's just the cold hard facts about trading.  It's a tough grind for the majority, you have to be a little crazy to stick around.

Want to increase the chances to beat the odds?  

When you first start trading live, keep losses really really really small for a long long time. 

This will be very hard to maintain when you go on a losing streak and feel that you need to chase your losses.  Or when you think you need to cover certain financial expenses every day/month (like your daily fees or housing rent/mortgage).  That's when the downward spiral often begins.

So be prepared to give your blood, sweat, and tears, and but plan to GIVE IT YOUR BEST for at least A FEW YEARS.  It's a marathon, not sprint, so pace yourself!  

Find accountability partner(s)

When you're in a slump, trading can take you into some very dark corners of your mind, places where you may never have experienced.

Gurus are easy to find, but finding someone who will both be totally honest with you, have your best interests at heart, and have the TIME to spend with you, especially during the really tough times, are very difficult to find.  

But having such a partnership could make the difference between making it as a trader, or not.

When things just aren't going well, most of us become quiet.  We don't journal anymore.  We don't blog anymore.  We don't socialize anymore.  We clam up.

This is exactly the time when we really need to have a voice of reason, to make sure we stick with our process.  That we continue to grind away, journal and continue to study and review our trades.

We all need someone who can provide the intervention necessary to hold us accountable and remain true to ourselves.  Someone who will help keep us from being our own worst enemy.

Do you best to find a solid accountability partner.

Mental Game > Risk Management > Exits > Entries

When I first started trading (and even now at times), I was obsessed with finding the Holy Grail of trading, which meant finding a new way to enter trades.

So this is how I thought as a beginner:

Entries > Exits > Risk Management > Mental Game

But what I failed to realize was how important exits are (just as much as entries).  And how about position sizing and risk management?  Most don't realize the huge impact of position sizing to your longer term success.  

Assume you have the same exact system trading in 2 different accounts.  But you use a different position sizing method for each of the portfolios.  Let's say on one system, you risk 1% of the account.  And on the other, you risk 3%.

You will see a HUGE difference in performance between the 2 account simply based on the position sizing.

Ultimately, your mental game is critical to making sure you're able to take your trading plan, and execute properly.  That's the area most traders focus very little on.

I believe successfully working with your emotions is the holy grail of trading.

So whereas beginners and losing traders focus primarily on entries, successful traders will focus much more on improving their risk management and psychology of trading.  

Do what the successful traders do.  Focus on your mental game.

Develop other sources of income

Investigate any long time successful trader -- nearly all have other sources of income. Whether it's from a trading chatroom, real estate, business, corporate job, etc.  

This very helpful to reduce the amount of pressure you have to make enough from trading in order to pay your bills.  In general, income from trading can be a very cyclical, where you never know if you're going to have a good week/month/year, or not.

But with additional sources of income, you don't need to worry whether you'll have a good or a poor month from trading.  And don't forget the pressure from whether or not you'll have food on the table and a roof over your head.  

You'll be able to focus on trading from the perspective of having the valid setups.  And if they don't show up, fine, you'll have other non-trading areas to focus on and to help generate constant income, and thus reduce your overall stress.

As a result, this makes you a better trader.

The Grind NEVER Ends

I thought that once I figured out THE method with an edge, life will be easy, the money will flow endlessly, the sun will always be shining, the birds always singing...

Wrong.

Life happens.  As soon as you think you finally have it figured out, the market will let you know otherwise (i.e. will punish you mentally and financially).

Just when you think everything is going well, there will always be something happening that will ying and yang with our emotions and mental well being, thus messing with your ability to execute and to trade consistently.

Your holy grail/bread and butter/go-to strategy will one day, gulp, stop working.  Or your internet or PC will glitch on you right as the market is starting to go against you. 

That's why I've found that the amount of success is often equivalent to the amount of work you put into grinding away -- doing your journaling, doing your homework, doing your practice, doing new research for new strategies, and so on, especially when the market is closed.

This could amount to many hours a day, beyond just executing your plan during regular market hours.

But wait, this isn't what I signed up for, is it?  Didn't I want a life sitting on the beach, only working a few hours a day?

Sure, this could be achieved, but most of those people (assuming they're not BSing), have spent thousand upon thousands of hours grinding away, until eventually getting to that point where they're at peace with how they trade.

And even then, they're so used to the grind, that it becomes "normal" and they become lost in their routine.

If you truly love trading, the passion will keep you going, regardless of the good times or bad, till death do you part.

HEALTH is most important

When Paul Tudor Jones (legendary hedge fund manager featured in the first Market Wizards book) was in a slump, he signed up with Tony Robbins (for $1 million a year) to be his business coach.  

And Tony's first advice to Paul was to become his best, he had to get into his best physical shape.  See the article HERE.

Unless you're physically fit, your mind will not be operating at its peak, and all of the above won't matter.  And remember, you can't do much trading buried 6 feet under.

* * * * *

If you've read this far, thanks for reading.  As if you didn't notice already, the keys to consistent trading success is having a STRONG MENTAL GAME, along with RISKING SMALL / conservative risk management.

And surprise -- these are the topics least interesting by most developing traders.  Coincidence?

Best of luck on your journey!

2 Years of Trading - Lessons Learned (Part 3 of 3) - The Mental Game

This is a continuation of the prior posts in this series: 
LESSONS LEARNED (Part 1 of 3): TRADING FUNDAMENTALS
LESSONS LEARNED (Part 2 of 3): THE LEARNING PROCESS


LESSONS LEARNED (Part 3 of 3): THE MENTAL GAME

Once you're fortunate to find a style that works for you, it's all mental
Perhaps it's human nature to want to deviate from something you know works.  Let's say you have a trading system that's right 95% of the time and generates 5:1 reward/risk.  You've found the holy grail! 

Doesn't matter, our mind plays tricks on us.  It's easy to think we can do even better and get 100% accurate and/or generate a 10:1 reward/risk.  Or maybe the holy grail is a counter trend system but you like going with the trend and catching the big moves, so it doesn't quite fit your personality.  You tweak the system to the point where it's no longer the system that originally had an edge.

When we deviate from our system just that one time, the next rule break becomes just a little easier to do, and so on...  Your mental discipline starts to crack.  And if you don't watch out, it eventually snowballs into something very ugly. Yes, this has happened to me many times.

Even if you know you have a system that works and fits your personality, staying disciplined to consistently execute your trades, through the good times and bad, requires considerable psychological efforts.  This is especially true when you're not at your mental best due to lack of sleep, personal issues, illness, etc.  Awareness of the state of your mind and being able to act appropriately, is key criteria for success.

So once you've achieved a certain level of trading ability, managing your trading psychology becomes one of the biggest factors to successful trading. A great instructor of the mental aspects of trading is FuturesTrader71 (FT71) who is a part of Stage 5 Trading.  His webinar #3, available via a donation to charity, is something I consider a trading classic.  Recommended to all types of traders who have a solid understanding of trading fundamentals and want to get to the next level.

There are also a lot of great books about trading psychology available written by Brett Steenbarger, Mark Douglas, Ari Kiev, Ruth Barrons Roosevelt, Denise Shull, Steve Ward, to name a few.  But look in any other performance based field, such as golf, baseball, or even archery which I wrote about last year, and there are some real gems.

I have found the mental challenge of trading similar to dieting or exercise.  Once you find a type of diet or exercise program that works for you, it's a matter of "simply" sticking with the program, with slight tweaks along the way, day after day, week after week, and so on.  Much easier said than done!  I've accepted the fact that I will need to constantly work on my mental game in order help ensure my long term success.

"Successful" behavior in the corporate world, could lead to failure in trading

Those who cross over from the professional fields or corporate environments seem to have extra challenges with retail trading.  Those who have been successful in their respected fields are used to getting their ways by managing others to help accomplish your goals, always taking the initiative and action to make things happen, and knowing how to successfully politic (BS) and influence the origination.  When things go wrong, their ability to act and quickly do "something" gives the perception and aura of confidence and competency.

But utilize those behaviors within certain aspects of trading and it's good recipe for failure.  The market is always in charge, it's the ultimate boss, and it's never wrong.  You can't tell it what to do, you can only react and be submissive to it (price).  The market doesn't care how confident you appear to be, it just doesn't care about you, period.

If you constantly take the initiative to be in a trade so that it appears you're doing something (looking like you're working hard) instead of being patient waiting for your setup, it could mean you're overtrading or rogue trading.  And if you're "wrong" and lose money on a trade, then trying to take immediate action to fix the situation (without a plan) most likely means you're revenge trading.  We've seen this many times by politicians and corporate types as a "knee jerk" reaction to an event.  But do this to the markets, and it will most certainly punish you, if not this time, then later.

I come "brainwashed" from years in the corporate world, so I can now clearly see how many aspects of good corporate behavior can be so counter-intuitive to good trading behavior.  So the longer you've been successful in the corporate world, the longer it may take for you to truly change your behavior when you begin trading.  However, constantly being aware of your behavior is one step that could help shorten the learning curve.

Finding true mental breaks is important

Like most who are passionate (addicted?) about the markets, I find it tough to switch gears and focus on non-trading activities.  Without checks and balances, I could probably spend 16+ hours day, just about 7 days a week studying the markets (again, addicted?).  But I'm finding that having the ability to take a true mental break has been critical to create balance and prevent burnout (and prove to myself, I can stop anytime, unlike an addict, ha!).

Most have an activity they do regularly that will switch the focus of the mind from trading to something else.  If you're a daytrader, some traders find it helpful to have a diversion to help deal with the boredom of trading, or as a way to cool off after a bad losing streak.  Even a swing trader needs to help balance their days in order to stay sharp and ready for a setup.  Unlike a daytrader, swing setups happen much less often, so missing one could impact your overall performance with greater impact.

So what is a true mental break?  Examples I've heard include: meditation, listening to music, playing a musical instrument, triathlons, mountain bike racing, yoga, reading (non-trading) books, learning new languages, writing a blog, cleaning the house, yard work, etc.  The important part is that your mind gets completely engaged in some other activity completely devoid of anything trading related. In my case, also having a couple young kids most certainly helps to creates a break, whether I like it or not.

I've personally found that group exercise classes can be very motivating.  When you're in a kickboxing class with a few 60-70 year old grandma types demonstrating clearly that you don't want to get into a fight with them, it's quite the motivation to keep up and not look like a wimpy girly-man.  Consequently, unless you maintain maximum focus and get totally absorbed in the class, you will likely embarrass yourself.  So not only is it a great mental break, it's also great for your health.

A hobby I've had is to roast my own coffee, primarily for espresso shots.  Ever since moving away from the SF Bay Area where there were many amazing artisanal coffee roasters and cafes, I got spoiled and couldn't find the same level of quality and freshness in my current neighborhood.  Yes, I became a coffee snob.

So I started to roast coffee on my own and quickly realized that what seems so simple, is full of never ending complexity and nuances.  But most importantly, working on this hobby requires absolute concentration and focus, which for me, results in a complete mental break from trading.  Plus, having a great shot of espresso to get the day started is a huge positive benefit.

In the end, it's important that I take these true mental breaks so that I can maintain some semblance of a balanced life.  When that happens, my trading becomes more centered, clearer, and generally improves.  This also spills over throughout all aspects of my life in a very positive way.

Plan your breaks from trading...and DO IT
As mentioned above, I've learned that taking a true mental break throughout the day is important.  I seem to do better when I go exercise mid-morning, shortly after the market opens.  Since I'm primarily swing trading, this is not an issue, since I basically adjust my orders/positions shortly after the open.  However, even for daytraders, I believe it's very helpful to take a significant break during the lunch hour.

And more often than not, it's those days I do NOT feel like taking a break (because I'm feeling emotions about something market related), are the days when I truly need to force myself to get away.  Otherwise, I've become aware that I become too fixated about something, and lose sight of the bigger picture.

On a longer timeframe, such as every 2-3 months (or whatever works best for you), taking a week completely  away from trading seems essential for good mental health.  Otherwise, you'll be subject to burn out since trading (especially daytrading) can be so intense.  I find it's very hard to get completely away, but remind myself, the market will always be there. 

Explore, learn, push your boundaries...but know when to stop trying so hard.

It's no secret how some of the best players in the NBA (or any other sports) such as Kobe Bryant and Lebron James, have incredible work ethics.  At their elite levels, there's not much of a difference in physical abilities, so a lot of of their edge comes from honing their mental game through rigorous hard work and focused practice.

Growing up, I used to think that once someone became a superstar, they are simply so good that they can just kick back and continue to perform at peak levels.  Well, how wrong I was.  Being a superstar requires tremendous passion and dedication to never stop learning and pushing your boundaries, since everyone else is doing the same.  You have to keep pushing hard simply to maintain and/or improve, but it's so easy to let it all go.

Trading is similar.  When you first start learning, you need to constantly explore and learn everything you can so that you can eventually figure out what works for you (your strengths) and what doesn't.  It's OK to make mistakes, but for the sake of progress, you have to continue to focus hard on areas for improvement based on discovering your strengths and weaknesses gained through painful experience. 

I've gotten to a point where there's a certain style, timeframe, and setups that seem to work best for me.  However, I'm still lured at times to "chase success", although thank goodness it's no where near what it used to be.  In the past when I read about a successful trader, I wanted to quickly put aside what I was doing, and learn how to trade just them.

But now that I'm finally figuring out what works for me after trying (and failing) so many different trading styles and methodologies, my focus has become more on maintaining the proper focus as well as refining a process so that I can replicate it every day.  Now when I read about a successful trader, I understand what type of trader they are, and accept the fact that I can/can't trade like them because I've already explored it in the past.

Now that I don't need to work as hard to figure out what works for me, I realize it's becoming more important to know when and what specific areas to back off from (or stop chasing).  Like stop trying so hard to be like or be influenced by someone else, or stop trying to force a trade in market conditions that isn't suited for my style, or stop trading simply out of boredom.  I consider this a sign that I need to continue to work hard on my mental discipline, and most likely, this work work will never end.

Golf is a good analogy.  Getting good at the fundamentals of golf takes years.  But after a while, you will realize what type of player you are, and whether you are the type that can drive the ball 300+ yards.  You may really want to be a long drive golfer, but may never get there -- it's just not your strength.  At some point, you will realize that to improve, you need to focus on different aspect of your game.  And along the way when you stop trying to swing so hard, you realize that the ball actually goes farther with greater consistency and accuracy!

In trading, I've learned that I need to always push hard in many areas, but then also realize that I need to back off in other areas.  Knowing which area to focus on and to back away from requires a lot of awareness. 

I'm still as passionate as ever about trading, but feeling more detached about every trade
Maybe it's the 1,000+ revenge and rogue trades I've taken over the past couple years that have finally gotten much of the overtrading out of my system.  After seeing time and time again how taking trades based on negative emotions results in a negative P&L, common sense might finally be making it through my thick skull. 

It's common to hear some say that you should not feel any emotions when you're trading.  I don't completely agree with that, since we're all different, and since we all react to situations in our own personal ways.  Have you ever watched how Paul Tudor Jones traded back in the '80s?   He's far from emotionless when he's trading, that's for certain!

Although I've always known, I have finally started to believe and accept that the outcome of each individual trade is essentially random.  We don't truly know how a particular trade will turn out, however, we have total control over whether we enter the trade, at what point the trade is wrong so that we exit with a loss, as well as where we exit if the trade is profitable.

Assuming we have a plan, there's simply not much else we can do after we're in a trade, other than to follow the trade plan.  When you first start trading, this is the most exciting part, being in the trade.  But these days, it's relatively boring, and that's good because being emotionally detached helps me to better ensure that I follow my plan.  And over time, it seems like I'm becoming both more detached as well as intuitive, which then helps me to follow my process and trade plan..

Here's another quirky way I've come to understand and accept this particular type of detachment.  After decades of making hundreds of boxes of mac & cheese in my life, I'm still as passionate as ever about it.  But unlike the first few exciting times I made it all by myself, carefully following the directions, I'm detached and unemotional when I'm preparing it now.  I don't even need to read the directions on the box anymore, the process is pretty much intuitive and on autopilot.  It just took a lot of time and experience to reach this stage.

Develop your sense of awareness, and more importantly, be able to act on it

Knowing when NOT to trade because you're not in the right frame of mind, AND most importantly, being able to take action to stop trading, is one of the most important risk management tools.  This was inspired by a video of Denise Shull, and I wrote a blog post about this last year. 

Recently, @thetradingwife said she passed up a good trade setup, simply because she felt emotions about that particular stock.  She recognized that due to a bad experience with the stock, she felt a level of emotion beyond her normal threshold, recognized it, and acted on it by making the decision not to take the trade.  It was simple and decisive.  For whatever reason, this was one of those defining moments that I'll always remember.

There have been so many times when I know I shouldn't trade, whether it's because I started the day with 2 losses in a row (a big daytrading revenge trigger for me), or because I'm sick, or my kids are causing trouble, or lack of sleep, or whatever.

Most of the time, I'm completely aware of my negative condition(s).  I tell myself exactly why I should not be trading.  However, in my mind, my mental chatter says, "I know I shouldn't take this trade, but screw it, I'm going to do it, I really don't care.  I'm going to make up my 3 previous losses with a huge winner.  So I'm going to do it.  [Click]"  That attitude is extremely toxic to trading.  Especially when your "screw it" attitude results in a winning trade, which further reinforces bad behavior.

Once those emotions are bubbling under the surface, that's a sign of danger to your P&L.  Having the awareness is one thing, but taking action so that you back off and actually stop trading is huge accomplishment.  To be able to stop trading means that means you have the ultimate risk management control over yourself.

Those with a I'M NOT A QUITTER attitude have an especially tough time, since taking this action of walking away feels like quitting.  I fall into that category and have had my fair share of P&L damaging revenge trades.  Roughly 25% of my 4,000+ trades in the past 2 years were revenge and/or rogue trades.  My statistics show that these were very poor trades.  Imagine if I had simply walked away from taking these trades. 

When under mental conditions of emotional distress where you've lost nearly all sense of self control (it's akin to driving drunk), backing away from trading is not quitting, it's protecting yourself (your capital) from harm's way. And protecting your capital is one of the most important goals of trading.

I have found that building awareness is key to gaining control of the mental game.  Awareness of: revenge triggers, strengths, trading style, best timeframe, any heightened emotions, when not to trade, and so on.  The ability to differentiate between impulse and revenge trades vs. intiutive trades is also a big milestone.  Initially, I thought there was a fine line between them.  In many ways, they are very similar, but factor in awareness, and there is a huge gap between them.

I've found that as I continue to become more aware of my own emotional triggers, and consequently more aware of the respective outcomes, a greater ability to take action based on my awareness is gained.  And because of that increased level of control over myself, I've become a lot more emotionally detached and accepting to many other aspects of trading.

The end result?  I've experienced improvement to my overall trading P&L and consistency.  But I still have a long journey ahead of me.  I'm looking forward the 3rd year. 

*  *  *  *  *

I'm looking forward to rereading these posts in 2 years and telling myself, "If I only knew back then what I know now."

ZERO = progress

The month of September has been groundbreaking in that my propensity to overtrade seems to have slowed considerably, almost overnight.  It reminds me of the time when my son was almost 3 years old.  He constantly sucked his thumb and no matter what we tried, we couldn't stop him.  So we eventually gave up. 

But then not too long after we backed off, we realized that he had stopped, cold turkey, kaput.  I had fears of a relapse, a fakeout phase, but no, he never sucked his thumb ever again. 

I can only hope that I have the same experience with my history of rogue/revenge/over-trading, but I'm pretty sure it'll be something that I'll need to work on for as long as I trade.  But as of now, here is how I'm doing from the perspective of number of trades per day:

DATE   # TRADES
====   ========
5/5       5
5/6       1
5/7       7    <- 4 rogue trades, narrow range day
5/10      1
5/11      3
5/12      3
5/13     ZERO  <- Big trend day, but no trades     
5/14      9    <- Went overboard after ZERO day
5/17     ZERO 
5/18     ZERO      
5/19     ZERO      
5/20      3   

AVG/DAY = 2.7 trades   <- Big success, last month was 7.3!
GROSS P&L = +7.75      <- Big underperformance, but this metric 
                          is currently irrelevant

I started the month of September back from vacation with some of my old habits in place.  But on a good note, the trend in the number of trades per day has continued to decline steadily.  I'm quite surprised how many ZERO trade days I've had.

After sitting out of the big trend day on May 13th, I probably felt like I missed out and ended up going a bit overboard the following day on May 14th.  Shame on me.  But then I stepped up, and there were 3 ZERO days in a row -- I don' t think that's ever happened before.  Patience is working.

Interestingly, I haven't experienced withdrawal symptoms from reducing the number of trades.  I'm sure the chatroom I've joined as of this month has been a big factor.  I'll write more about it at another time, but the key has been the similar outlook and style that the moderators and many of the members have with my own.

I've also tried my best to increase the level of awareness regarding how I am feeling, and more importantly, removing myself from trading when I get those feelings of revenge or from bored twitchy fingers.  Constantly being aware of my overall psychological and physical state is something I've been working on for the past few months.  But it seems as though I am now better able to take action.  That's a big step.

One internal dialog I've started is to ask myself "How will I feel if I get stopped out of this trade?" before entering a trade.  If I know I'll be completely at peace with the outcome if I get stopped out, then I know it's a decent setup.  Otherwise, I'll pass up on the trade.  And if I impulsively entered a trade, I will exit it immediately.  I haven't counted the number of times I've avoided an entry this month, but it's significant.  That's good sign of progress.

All in all, this focus on considerably reducing the number of trades and becoming much more selective with my trade selection feels good.  As least to me, those days of ZERO trades indicate big progress.  I'm know I haven't been behaving this way long enough to turn it into a habit, so I'll continue to focus on: 1) minimizing number of trades, 2) maximizing trade selection quality, and 3) minimizing attention to P&L.

So ZERO = progress.  My behavior is changing for the better.  But I still have a lot more work to do...

Back on the grid...back in $AUDUSD...and archery

After being mostly off the grid for the past week, it's good to be back.  But since I'll be in single parent mode for the rest of the week, my trading related activities will be significantly curtailed until next week.

Trading SIM on ES
I'm continuing to trade the ES on SIM, since I realize that I haven't yet completely bought in and committed myself to a specific trading plan that meets my personality and style.  That's probably one of the biggest factors of why I'm having discipline issues (i.e. overtrading).  Therefore, I'm back to the basics, doing homework, trying to figure out what type of timeframe, setups, style, etc., work best for me.  This may continue for quite a while.

Trading live on AUDUSD
However, I'm much more comfortable on the swing trading forex side, and I posted the observation last week of watching the .9665 to .9700 levels for AUDUSD, which continues to be respected.

The entry
After seeing a good setup on AUDUSD earlier today that took place above the .9700 level, I entered a long position at .9716 with a stop at .9690.  At this time, the trade is nearly 2R and once it approaches 3R, I will consider raising the stop to b/e or another appropriate location.

$AUDUSD 15 min

The target(s)
My target is still TBD, although I see some significant levels at the whole numbers of .9800,  .9900, and 1.0000, so I will watch the price action at those areas.  However, I realize that this is a contra-trend trade going against the bearish trend, and that any pullback higher may be very short lived.

$AUDUSD 4 hour

Archery and Trading
While on vacation, I took a short introductory class on archery.  What's very interesting about archery is how similar it is to golf as well as trading.  It's not a reactive sport, so it's up to you when you choose to engage.  But it was pretty clear to see that after you learn the basics and master the fundamentals, the biggest obstacle is then mental.

So when I asked the instructor how critical the mental game is to archery, it wasn't a surprise when he said it's the most critical component during competition.  He brought up an author named Lanny Bassham who wrote a highly rated book called With Winning in Mind: The Mental Management System.

Lanny competed in the International Rifle Shooting event in the 1972 Olympics and came up short with a silver medal.  So he spent the next few years studying Olympic gold medalists, developed his mental management system, and won the gold medal in 1976. 

I have not read the book yet, but I have seen some summary notes online.  It appears that many of the exercises and theories are very similar to what you commonly read in the trading or other sports psychology type books.

I'm getting to the point where everything I read regarding performance psychology makes me feel as if I'm walking around in a big circle -- been there, done that.  Everything is a variation of a few key themes, presented in different ways.  Nothing I read now seems to be truly new or groundbreaking.

So whether it's archery, golf, trading, or any other performance field, there are no secrets on what it takes to become an elite performer. However, just because I know a lot about what I'm supposed to do to improve my mental game, doesn't mean that I'm doing what I'm supposed to do.  There's a big gap.  So it's time to start planning and executing.

View from the time out box

Since the family life has gotten a bit busier, I've gotten a bit behind with updates to this blog.  However, this post is something I wrote mostly late last week, and just completed the final edits today. 

*****

There have been a few times in the past when I knew taking a time out was the right thing to do.  Once again, I reached that point last week.  My psychological capital is running low, my day trading has gotten impulsive and undisciplined, and a "I don't care" attitude has taken hold a surprising number of times.  I feel good that I had enough self awareness to simply STOP.

Now that I've made that decision, I'm finally in the cool down mode and am at peace.  My goal is to take a couple weeks off to regain a clear mind, and work on my mental game as well as revisit and revise my goals and plans for the next chapter.

There were many warning signs.

• Although my forex swing trading continues to perform well at over a 100% return year to date, my larger ES daytrading portfolio has lost over 50%, a big chunk of it from this month.  This is red flag #1.  The P&L speaks for itself that something was not going well.
  
• Possibly due to boredom and greed, I started to experiment with scalping again.  I've always wanted to be able to put myself into and out of "scalp mode" on demand.  While I've found some setups that I've been able to execute well on the fast moving tick charts, the momentum of taking so many trades opened the door for revenge trading. 
• I started to focus on recovering my losses (i.e. the money) instead of following the proper process to simply trade well.  I got fixated on getting +10 ES point days, which I did accomplish a few times.  But it's a recipe for disaster, because when the markets weren't moving, I still tried to force home runs, and struck out to the tune of more than 20 ES points.
• Efforts on my daily journaling and overall analysis of my trades during this period went downhill.  It's as if I didn't care anymore.  I only wanted to hit home runs, and nothing else mattered.
• When I started to look at my bread and butter forex setups, I started to feel impulsive and tried to justify and force setups that weren't there.  Or tighten up on stops way before my rules and get stopped out.  I had a completely different mindset and process vs. the successful process I used most of this year.
  
• And worst of all, I could feel some trading stress spilling over into my primary role as father and husband.  I feel fortunate that I was able to catch this situation and stop it well before any flash point was reached.  Because that would have been absolutely inexcusable -- a clear deal breaker in my life.

A great relevant webinar
When I expressed my time out to some fellow traders, I received a great link to FT71's "Trader Intervention" webinar from Matt.  It's about a futures trader with about 2 years of experience who started with a $100k account only to see it get crushed down to $20k in several months. 

He regrouped by trading on SIM for a few months, and went back live to become consistently profitable for 2 months resulting in his $20k account growing to $33k.  Then he lost $32k in 2 days, leaving behind a $1k balance.  OUCH!  The monkey took control and won. 

Listening to this webinar was eye opening and somewhat painful, since many of the trader's challenges are so similar to mine, except my losses are peanuts compared to his. 

FT71's comments and coaching in this webinar was spot on -- including his first recommendation that he just needs to stop trading.  And FT71's question about how he was doing with his journaling during his binge made me crack up (because his assumption was right, the trader's journaling was nearly non-existent, as was mine).  It felt like FT71 was talking to me and his recommendations in the webinar further reinforced my decision to take a time out and regroup.

Where to from here?
Over the next 2 weeks, I'll be working on cooling down -- no more live trading.  That will open up the day so that I'll be revisiting my goals and plans.  Working on my mental game will also be one of the key areas of focus -- self-hypnosis, meditation, yoga, etc.

Another question I need to seriously consider is, if I'm doing so well with forex, why not just swing trade forex, size up, and forget about everything else?  That style of trading seems to flow naturally and is a strength of mine.  So yes, that's also in the picture.

And on a related note, I need to consider whether the method I'm using to daytrade the ES is in sync with my personality and style.  Maybe all this mental stuff is a symptom, not the cause.  Because if I felt 100% comfortable and confident with a system, would I be breaking the rules so often?  Something else I'll be evaluating.

I look forward to returning from my time out in June, a little wiser and better prepared.  And especially a step closer to becoming a consistently profitable trader.

From the comments

"Bud Fox" posted a comment under a prior post.  And since my response was too long for the comments section, I've posted it here.

In the comment section you sound so confident in your system. You speak of a "positive outcome" over time. So why do you get so tilted when you take a losing trade or multiple losing trades? Are you being honest with yourself about believing in your system? Or are you just saying it to yourself in an attempt to convince yourself?

IMO you are focusing too much on the psychological aspects of trading. This is a trap that I think a lot of newbie traders are falling into in recent years. It's like a Little League ball player seeking out a sports psychologist to help with hitting woes. The problem is not in the Little League'rs head, it's in mechanics and technique. Therefore working on the mental aspect is not going to help.

Based on your blog entries I'd say that your system does not work. Either that or you are not following it at all. 

Hi Bud:

Thanks for the feedback, you have very valid points.

Yes, I am absolutely confident that certain setups I trade have an edge.  After meticulously going through and honestly analyzing thousands of actual trades with a strong no-BS filter to help understand the probabilities of various setups (see examples here, or here, or here), I am very confident that certain setups I trade work well over time.

But you are absolutely correct, I am NOT following the system since I'm also taking unauthorized revenge/rogue trades that crush my profitable trades.  If I was miraculously able to eliminate ALL my impulse trades, I would be a consistently profitable trader.  The data proves it and I have a high degree of confidence in my analysis.

After the markets have closed and the dust has long settled, I review/grade my performance trade by trade, and it's quite easy to look back and see those revenge trades -- trades that just don't fit valid setup rules and usually take place shortly after I was stopped out of the prior trade.  They really stick out, and they also stink bad.  Some people have the inability to enter trades, but I have the inability to stay out of trades. 

So the easy answer is, "If you have a system that makes money, then just follow the darn system and don't take any invalid trades!!!"

Yes, I have tried, and based on my ES daytrading P&L so far, I have not yet been successful.  I can follow the system for short stretches of time successfully as I did here, and then I fall off the wagon.  It's like telling a alcoholic, just don't drink.  Or a smoker, just don't smoke.  Or a gambler, just don't gamble. 

I'm honest enough with myself to admit that it's likely some "wiring" in my mind needs to be modified before I truly become consistently successful.  And that I might not be able to "fix it" myself.  When you hit the wall enough times, making the same mistakes over and over and over, it starts to hurt.  So even though it was just a couple revenge trades this week, the camels back broke.


Ultimately, what really bothers me is that trading is one of the very few areas in my life where I do not feel as though I have complete control over my actions and emotions.  So at this point, my biggest motivation is not necessarily the P&L (although the P&L will reflect my success in how well I control my actions), but I'm motivated to learn and conquer how to gain better control of my actions.  This is perhaps one of the biggest challenges I have faced, and welcome the opportunity to improve myself.

This is why I'm looking for help on the psychological side of trading.  At a certain point, it's no longer about the mechanics and the fundamentals.  It's all about the ability to execute consistently over time.  Similar to how even the elite and best figures in the performance fields of sports, acting, or concert violinists have coaches / instructors / teachers / mentors, I'm looking to get the best possible help so that I know I'm doing everything I can maximize my success. 

In the end, I want to know in my heart that I've given and did my absolute best.

Thanks again for your comment, it really helps to keep me honest.  This also helps me to think through and better understand my current challenges, or at least what I think they are.  And if there are certain experiences that you [or anyone else reading this far down] can share that helped you to overcome your challenges, I would really appreciate hearing about them.

Not yet ready for prime time

This week had a lot more family related challenges than usual, including a sick kid as well as having to be a single parent.  And whenever I'm in single parent mode, I do my best not to trade at all.  I've had too many bad experiences in the past.

However, I did get a few trades in yesterday (tisk, tisk) and I did something I've never really done before.  After reading Denise Shull's book Market Mind Games about really doing your best to feel your emotions, I did that -- especially when I got into the impulsive (revenge) state of mind.

And wow, not sure what happened, but it sure did touch a nerve.

In the relatively short time I traded, I had a few semi-revenge related trades.  And although my loss for the day yesterday was far from the worst, it was probably one of the worse days I've ever had in terms of how I felt.  Strong feelings lingered on well into the evening.  It was not pleasant.

Opening myself up to really feel what's going on seems to have opened up a can of worms.  Perhaps I've been repressing my feeling for far too long? 

I can only hope that this is one of the first steps to transform myself into an effective trader.  Similar to the various states that water goes through -- ice, water, steam, water, ice -- I believe in the end, it's good to shake up and really change my mental state of mind and being so that I can better explore what's there, shape it, and put it back in better condition.

What does this all mean? 

My mental game is not ready for prime time.  No matter how many great trading strategies I'm knowledgeable about, if I can not maintain the proper state of mind, I will not be able to execution the strategy properly. 

There have been many instances where Renato would call out one great trade after another based on his Diamond Setups system, and I would either be too selective on which signals to take, or mismanage them once entered.

I have tons of data via my trading journal on Tradervue of all the revenge trades I have taken and it's clear to see the significant harm I've done to my P&L on those trades alone.  This simply shows a great lack of respect for my money trading. 

Believe it or not, I actually used to do better back in the days when I was playing blackjack, since I respected and feared the casinos!  If I can simply cut just half of my revenge trades, I would be a halfway decent trader.

So once again, it's time to continue what I was doing on Spring break and to reevaluate everything I'm doing, create a plan, and follow that plan to achieve my goal of becoming a consistently profitable trader. 

One year down, many more to go...

End of Spring break, beginning of a new dawn

As Spring break comes to an end, it's now time for a new dawn.  It's time to start the engines back up and to get back into the groove of the markets with a new outlook.

One of my key goals was to not trade and to not even follow the markets.  But I have to admit, I had mixed results. 

Although I did not trade, I did start to put on some SIM trades starting Thursday night and a few trades on Friday.  However, I only focused about 20% of my time on the markets and ended up having one of my best SIM days ever.  In hindsight, I think there was a reason for that.

KEY GOALS DURING THE BREAK

MIND

• Read (or re-read) the following books on increasing my mental game:
• Heads Up Baseball by Ken Ravizza and Tom Hanson
  
• Inner Voice of Trading by Michael Martin
• Market Mind Games by Denise Shull
  
• High Performance Trading by Steve Ward
  

• I'm finally beginning to understand why I have run into many of the psychological challenges from trading (primarily revenge trading)
  
• One of the very interesting exercises Denise Shull recommends is one in which makes you think back your childhood, as well as your relationship with your mother and father.  I'll need much more time to really dig into those.
• So my understanding and control is far from complete -- I've only just begun that journey, and it may take a lifetime to master.
• Simply becoming aware of your emotions and recording them is key.  That then becomes a new data source, arguably more important than price!

BODY

• Increase my physical health
  
• Continued to attend cardio classes, at least 2-3 times a week.
  
• Made a commitment by signing up for yoga classes 2 days a week during lunch.
• Improve my diet
• Increase intake of fruits and vegetables, partially by juicing, as well as new grocery lists.
  

SOUL

• (Re)discover other passions and interests outside of trading
• I don't have a good counterbalance to trading.  So finding those other interesting may take longer time, but it is critical to my mental well being that I have a somewhat good balance of interests.
  
• Clarify higher level goals and reasons for why I trade
• Most of these goals eventually revolve around my family.  But I did not spend enough time during my break to clarify these goals to the level of detail that becomes crystal clear and invokes the properly level of emotion.
  

THE BOTTOM LINE
I was surprised that I didn't have enough time during this prior week to accomplish the many other goals that I had planned. 

But one big takeaway seems to be that by removing myself from the markets and reducing the number of trading decisions during the day, I will stay better "centered" so that I can better understand and listen to my emotional state of being. 

If my SIM experience on Friday was any indication of how trading could be from the mental perspective, I believe it will increase my overall success rate on all key metrics -- especially by NOT taking those dreaded and impulsive revenge trades. 

Now it's time to consistently put all the pieces into action, brick by brick, day by day...

Rogue trading day hangover - monkey was in control

Total gross profits:  $-250.00  -5.00 ES points
Total trades:  17 [2 scratch]
  <- Scalp mode but 
      mostly overtrading
Accuracy:  47.7%
Execution score: 38.2%
  <- 5 trades were rogue :(
Opportunity cost: $-150.00  -3.00 ES points 
  <- But did better by 
       breaking rules

Earlier on Friday morning before the trading day began, I caught my self thinking, I'm really going to crush it today and make some serious P&L.  I've been reading the markets well the past couple days, but I just wasn't executing well based on what was possible, so things were gonna change. 

Then I caught myself -- I'm thinking only of P&L, tisk tisk.  The best mindset is to know that I have to patiently wait for the right setups according to my trading plan and simply execute it well.  Still, there was a certain sense of anxiousness I couldn't ignore, but I thought I could maintain my cool.

I was treading water during the morning, doing relatively well from the execution perspective, until I got a full stop out on a valid setup.  It should have been something that was just another trade, but I took it personally.  A full stop loss is usually a trigger for bad behavior, especially if it's the first trade of the day, or if I get two full stop losses in a row.

The stop loss was a direct hit against my mission (and ego) to maximize my P&L.  Ooops, I'm not supposed to be thinking like that.  That's when I knew the wheels started to wobble, especially when I started to double up or scale into some trades.

At around 10:50 AM, I wrote notes on the high likelihood of a V bottom day with new HOD as long as 1396.00 holds.  Not sure why, but it was one of those subconscious calls.  Another read that ended up being "right" in hindsight.  I was long from 1397.50 but I got stopped out by a tick with a trailing stop that was way too tight -- one of my weaknesses.

Within minutes, I started going short against my bigger picture scenario, again and again.  I was shorting against a move that I thought was going to new HOD's.  Conflict.

HUH?!?  Then why did I keep shorting against my bigger picture view?

I really don't know why, other than to get back at the market for stopping me out by a tick?  And before you know it, I was down about -10 ES points.

It was comeback time. 

I made some progress, recovered about 8 points, so with 10 minutes left in the cash trading day, I was down only about -2 points at one point. 

Do I stop now, or see what I'm made of? 

Then I thought, it's a quarter end Friday, so we should see some fireworks at the close.  Gambler Grove was was clearly heard from way up in the peanut gallery.  And he had a few monkeys sitting next to him.

OK, bring it on.

On the very next trade, I double clicked the DOM by accident.  Dohhh!  I didn't have confirmation turned on and since I was entering a 2 contract order, I was suddenly in a 4 contract trade -- way over my risk plan. 

After seeing what price action was doing, it wasn't moving in my favor so I panicked, ejected.  Lost 2 ticks (for a total of -2.00 points) within seconds.  Thud!  Bad start to the comeback.  Ouch.

After a few more trades, I ended the day with a loss of -5.00 ES points.  Better than the -10 I was down earlier.  Worse than the -2 I had just a short time ago.  It just wasn't meant to be a glorious comeback day where I ended the day solidly green.

Now as I reflect with a "rouge trading day hangover", it's back to trying to figure out, why? And what's with all these banana peels around here?

Trading is conceptually very simple -- just wait for those setups that have a good edge and execute the trade according to plan, period.  I've done my homework to know there are certain setups that have an edge over time, so combine that with good money and risk management.  I've proven that my method works over stretches of 1 to 2 weeks, assuming I execute properly.

But what is it that keeps me from doing the right thing, consistently, all the time?  Are my expectation too high?  Is my trading plan for ES not suited to my personality?  Why is it that my "comeback mode" turns me into a different type of trader?  Or are my comeback days just an illusion?  Why do revenge trades keep coming back after I was sure I had them under control?  How come it feels like I continue to run into the same brick wall over and over and over again? 

What can I do to improve?

The mental aspect trading is one of the biggest challenges I have faced in of my life.  And that's what keeps me so motivated -- the tougher the challenge, the more I rise to the occasion.  Another weekend to reflect and figure out the plan for next week.

* * * * *
Addendum: Since writing the majority of this post on Friday night and Saturday morning, I've since discovered a big gap in my overall process.  This may also help to explain the recent shifts in execution scores and opportunity costs.  Still working on it.