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Keeping My Trading Profits

Been trading for over 7 yrs parttime . Working on smoother consistent wining. My main problem is when I have a good week I try to beat the profit I made the week before. I start to take riskier trades and usually give back a good portion. I guess I get the euphoria of I can’t lose. Anyone has this problem and how they overcome it. Been meditating which helps a lot. and keeping a journal.

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Yes.

Setting incompatible goals

If I set a goal to be “increase profits”, my brain will try and get me profits at any cost - not a good state to be in. I find it is better to set targets around the specific and individual actions that make me a good trader rather than the outcome of bring a good trader (profit). Profit is ultimately determined by the market anyway, so setting a personal target to be based on something that is outside my control is demotivating and demoralising.

Psychology

I’m actually the opposite to you, and after a big win I will tend to be more risk averse and avoid putting on trades for fear of loss. This is an issue I’m currently working on but don’t have a clear answer yet. I find that the issue goes away the following day as my brain treats each day as a new start.

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@hoppy1,

You are not alone.
The idea of feeling empowered after a few good days is not uncommon in trading.

One of the techniques I use is Visualization & Comparison.

What I mean by that is:

Visualization:

I imagine in my head over the weekend after a good run, that I could actually
lose money next week, because the markets seem to show the randomness of
the outcome in the short term, and it keeps me more realistic.
Keeping a good journal and having 1000’s of trades logged in helps a lot to imagine
that a few red days DOES NOT mean your system is your are wrong really.
It’s the nature of this business.

COMPARISON.
I try really hard to imagine how it is to be working a real job. A job where you get a
paycheck every month.
It means I HAVE to wait to get paid.
I can’t just talk to my boss after a good week at work and say, I want my money today.
One must wait.
This is by comparison to income from trading making you realize that one must wait,
be patient and execute the plan as best as one can.
Keep trading at the same level after a good week.
Why would one want to increase the risk after a few good days?
Compare it to a regular job.
It would be like coming to work and starting to make more risky stuff but instead of
getting paid more in that week, we still get paid the same (at the end of the month)
while risking of getting fired.
Imagine a Pilot working for a major airline not keeping with the FAA rules after a week
of great landings and landing carelessly. One risks crashing the plane (worse then getting fired).
Imagine a professional truck driver, starting to speed at work because last week, he/she never
got a speeding ticket and this week the driver wants to get their load to the destination faster
in order to get paid faster.

How would that affect their bottom line?
It would be much worse then keeping the routine the same week after week.

That is pro trading.

Now, if you want to Visualize & Compare to a pro gambler (Poker player),
then one can say, in order to win he/she must aggressively raise their stakes,
but only if they have a certain EDGE. This is where 1000’s of trades come in.
One must be able to KNOW that they have an idea over the opponent or with their
strong hand or they will BLOW out and lose the game too.

So, a good rule is to stay calm, trade like a pro pilot or pro driver and trade
the same for a few weeks to a few months first.
A winning streak with the same size, feels very good, I assure you.

Raising size is the #1 reason traders get taken out of the trading arena (daily).

Happy Trading.
p11

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Also @autobahn,

I like when you said:

Blockquote

Setting incompatible goals

If I set a goal to be “increase profits”, my brain will try and get me profits at any cost - not a good state to be in. I find it is better to set targets around the specific and individual actions that make me a good trader rather than the outcome of bring a good trader (profit). Profit is ultimately determined by the market anyway, so setting a personal target to be based on something that is outside my control is demotivating and demoralizing.

Blockquote

And further to @hoppy1 's point:
If you absolutely MUST raise the risk after a good run, which is not the worse thing to do.
Raising size after a losing week should be “criminal” and most devasting.

I would suggest to couple your raising size with an IRON HAMMER rule that
you use “BREAKEVEN” rule very aggressively.

If one raises size, couple it with a breakeven strategy.
It will dramatically raise your reward and dramatically lower your overall risk.

How to do it?
Say if you trade 1 lot and made money this week.
And your targets were 2.5% and your risk was -1% (per trade)
then next week if you decide to raise your size and
now are targeting +5% and risk is now -2% then
one suggestion is to use the BREAKEVEN where
if you make +2.5% (which will happen 2x faster with double
size) then move your stop immediately to breakeven.

Now your odds of success increased, because you are now RISKING NOTHING
to potentially make +5%.
It may sound like a tiny edge, but trust the statistics.
Run 10,000 tests and you would see how powerful
this could be in the long run.

This way, if you feel the rush to increase,
feel the power to enforce strict BREAKEVEN rules too.

Otherwise, one is closer to a random distribution of events
and that means, closer to blowing your account (or losing
your job as per the previous post).

Happy Trading,
p11

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If I may weigh in and try this: Instead of thinking of your issues in terms of a psychological issue, think of it in terms of math and odds problem. It’s the emotions that make us do things, but the solutions may come about by understanding the actual odds.

First, you have to understand that each trade is an opportunity of risk, not reward.
When you take “riskier trades,” it means you either increase your size or make random trades.
The larger sizes could kill the profits relatively fast because your errors are made on a more considerable notional amount. On the other hand, random trades have no practical risk management, and since they are managed based on a “feel,” they would most likely end up in a loss.

So, understand that your current behavior would keep you pegged to the same constact result.
If you want to progress, you need to understand how your trading (from an odds perspective) is holding you back. Try to close your trading platform once you are done trading the “right” way. Be conscious of where you are messing up, and at that point, walk away. Try that. Small changes in behavior may bring changes in your habits.

Good Luck!
Matt Z
Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

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@Project11 moving to breakeven is a powerful strategy if the signal to move to breakeven is based on a calculated risk/reward or other back-test or edge.

I don’t think it makes sense to trade differently with larger size. The signal to move to breakeven should be consistent between small and large size. So if it is truly beneficial to move to breakeven on a larger size, I would suggest that the same would be true on the smaller size as well.

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Great Stuff guys thanks . Its amazing i own a automotive service shop . We make sure we do quality work because if we do good work we get repeat customers and the money comes with the repeat cuxtomers. We dont come in the shop in the morning i am going to make $5k today . We do the work and tally up the sales at the end of day . . But in trading i seem to put money 1st and the process last . It weird not sure why thats so . Maybe because we start out trading we are told we can make a ton of money with little work . When i work the process i make money and keep my greed under control everything works great . Working on my mindfullness and being aware when my greed starts creeping in to the front of my mind . Great stuff guys .

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You are spot on. People think $$ and not the implementation of the process.
Developing the process, following it, and not deviating from it, is the challenge in itself.

Yes, there isn’t a lack of “easy money” promoters, and when it comes to those…RUN.
Anyone who has traded and trading will not present trading as easy. Sadly, there are many newbies each day that choose to believe this. The ones who present trading as an easy task, rarely trade, and have a theoretical knowledge of the market-They know enough to impress a beginner but not enough to have the skill to trade.

Seek practical advice from people that recognize trading challenges, and have developed practical solutions to overcome them. This typically comes with advice where they recognize their own faults and develop ways to overcome certain bad habits. They don’t sell “magic indicators” and force all to recognize a medical method that fits all. As you develop real-time trading skills, you should recognize theoretical versus pragmatical solutions.

Matt Z
Optimus Futures

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Well said @autobahn,
I was merely making a suggestion as to a trader who feels the rush to increase
size after a good week.
True, the breakeven should be part of the overall strategy at all times, at all
trading size.

But there must be an additional balancing feature that makes the trader even
more accountable and more precise if one raises their stake.

It acts as a buffer and a psychological layer of help.

If one doesn’t change something to somehow lower and mitigate the overall risk
with larger size, then the psychological damage if the week doesn’t work out as expected is
even greater and one is left with hopes while in reality larger size (almost always) has the psychological and financial risk of ruin increased due to most likely undercapitalization of the said trader.

Most well capitalized traders raise their size not only because of a good weekly run,
but because they have a clear indication of their “edge” present in the market, and it
not always mean being up for the week. It could be a targeted instrument volatility,
clearly defined ranges, account equity staying above certain averages etc… or other risk/reward scenarios that play out favorably and sufficing for a trader to increase size.

Stay creative at all steps of the process but most of all minimize risk wherever you can
for risk management is one of the true ways to survive.

We need all the tricks in the book to make this career work.

Happy Trading,
p11

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