This discussion is dedicated to your state of mind when you trade.
Are you Feeling Excited And Energized?
Is Trading Stressful And Depleting?
Controlling your trading emotions is vital!
Please describe how you feel before a trade, while in a trade and exiting the trade.
Please post daily your state of mind for these three modes.
*Do not discuss or mention your P&L (That is your business) but discuss your emotions and feelings in the context of your trading.
This discussion is dedicated to your state of mind when you trade.
I am Energised to trade - but want to be more disciplined
Yesā¦ and i still want to do itā¦ depletetingā¦ I do good then i do badā¦
Controlling your trading emotions is vital!
When I am in the tradeā¦ I get nervous ā¦ i feel anxiousā¦ not relaxed
when i exit a trade - if it is good i feelo greatā¦ ā¦whenit is badā¦ i also fell depressed. and have to motivate myself againā¦
I want to learn to master my emotional statedā¦
Please analyze your state of mental process daily that you are going through when you trade and record in this journal accordingly.
Here are the five steps:
Follow these steps daily and share how you handled them daily. You will see the āmagicā or exploring yourself as a trader and a human while exposing yourself to the market.
Matt,
I like this approach because when traders are all looking at the same info and coming up with completely different outlooks, it is imperative to ask what your mental state is but also the potential mental state of the market and other traders.
Same reason why sell offs are typically more violent than rallies, panic and fear.
Hereās my process and emotions (or rather emotional awareness) while I trade.
Sit down and breathe. Look at charts and observe while making sure Iām comfortable, hydrated and mentally clear.
Watch the market for at least 5-10 minutes, no trading or speculating. The idea here is to just absorb the information without bias or need. (How many times have you caught yourself saying things like āit HAS to sell off nowā or āI need to make this trade a winnerā?)
Top-down chart analysis to identify levels and overall trend while developing a strategy for the day.
When levels are identified and drawn, I start to focus on order flow and cluster charts to watch price action from sellers and buyers. I recently added the Nasdaq chart and DOM to gain some reference on how the markets are moving together.
Enter a trade that is inline with my strategy for the day. When I enter the market I may bid and offer multiple times to just get my feet wet. Then when my order is filled I start observing the market. I ask things like:
Many times I just talk out loud about what Iām seeing in the market. This step is super beneficial to me because when I say it out loud I can force myself to hear it as if another person is saying it.
Then when Iām short and I am saying āI see more active buying than selling. It seems price is hitting support at this area (go back in my charts to confirm). I feel tension in the market and the buyers are very strong right nowā, it helps me process that information more objectively and trade more objectively.
Even more importantly, I observe when Iām not clearly processing information and I can tell myself to sit out for a bit. This gives me a chance to get up and walk around, drink some water or look at charts.
At the same time, I also find it helpful to dive in on a smaller lot size to start monitoring my emotions and feelings.
Think of it like this, when you are in the market with a position on, itās almost like you are turning on a monitor that shows your emotions and thoughts. It makes it real. Visualize an actual screen that is showing your mind that turns on when you have a position on. If you can look at this and watch what your mind is doing youāll start to see many things that can easily be changed.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a āstop-lossā or āstop-limitā order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.
Iāve found the best trades are when Iām in the flow (also called āin the zoneā). Iām watching order flow and keeping track of who is long, who is short, and where each party is likely to stop out. It is like watching a film and quite engrossing to see the order flow play out. Entering/exiting trades almost becomes automatic. When Iām in this state, Iām generally achieving extremely low MAE (0-2 ticks) and am able to make good calls on when to take profit. Iām also aware of when Iām getting tired and losing flow, and it is time to take a break.
So my mission this month is to work on not trading unless I have spent enough time to build a picture of the current order flow situation. When I watch order flow intently to build the necessary picture, it is meditative and I get into flow state naturally.
The emotions I have that work against trading are:
Iāve been identifying specific actions that alert me to being in the wrong state. The one that is most noticeable is when I want to use a wider stop or no stop ābecause I know the trade is going to work but I donāt want to get stopped out by some short term market manipulation or volatilityā. This usually means Iām impatient/FOMO and am not waiting for the best entry. An example of this is entering on a breakout without a clear place to put a stop that is within my required stop distance. Usually, even if the trade does work out, I donāt have confidence in it because I canāt tell where Iām wrong.
Another noticeable action is when I start to take profits early because Iām scared of losing gains. This usually happens towards the end of the day when Iāve been pleased with progress so far and donāt want to mess up the day. Usually my strategy is good, with a tight stop and low MAE, but Iāll take profits much too early. The problem is I then get frustrated with my lack of performance and this takes me out of flow and the other negative emotions can then show.
The current emotion I will be working on this week is being acutely aware of the time Iām in a winning trade. Sometimes it will see like Iām in a trade for hours, then I look at the stats afterwards and see it was only seconds. So Iām going to use an analogue stopwatch with a solid click-click button to see if that helps me with this time distortion.
@autobahn Thank you for making an effort to write this lengthy post.
The points you have mentioned above should be the blueprint as far as what beginner traders should watch.
The ātrade executionā is one of the critical elements of an operation. Being aware of your minuses during trading keeps you alert, objective and may pave the way to improve the process for your trades.
The more you can learn from your past mistakes, the less likely they will come back to haunt you down the line.
It is only a matter of time before we encounter various limitations. These are the areas where we need to be careful and (again) remain alert at all times.
Myself, I have to deal with the āI Get Itā aggressiveness that followed after good decision-making. I learned to exhale and potentially avoid any decision-making until this feeling goes away entirely.
Matt Z
Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
Hi Matt, again let me thank you for the trapped traders video, it has made me think and concentrate on the way I feel. Yesterday for instance I had made a nice profit for the day but then decided to do ājust one more tradeā when I was tired, a bit tetchy after an argument with my son and a little distracted. I blew my profit and made a significant loss on the day. It was not a good time to trade but did it anyway. So its this inability to stop when necessary that I need to conquer.
When Im alert and making good trades, I am referring back to longer time frames, reasoning proper risk management and taking small profits with the possibility of extending into larger ones. I am good at seeing the trends from market shape and wait until there is a confirming move before opening a position.
When Im trading badly, I reduce my referring back, stop drawing on trend lines, am horribly tense and even when going well am anxious. This is a compulsion but I have, I think, recognised it for what it is and now try to think through what I have been through. Sometimes it takes a weekend break for me to break through the disappointment and rationalise where i am. In this case your seminar video has prompted me to be reflective. Its tempting to hide from myself and pick up where I left off next week. That I think is the most dangerous. I think that as far as recognising a good profitable trade I am now good enough to make money, but ā¦ and its a big but, I am still concerned that when in a bad place to be trading, that mood has me at my keyboard making bad decisions.
Work in progress! Money spent worth every penny, but at a point of decision as to whether to carry on as without committing a little more into my account It may make me even more anxious. I have committed to this and am nowhere near what I was prepared to put in, but at the same time dont want to go down the path of concealment and my fear of becoming a compulsive gamblerā¦hence this reply!
2/23/2021
Today I feel:
Calm
Aware
Confident
Patient
Flexible
Tired but clear-minded
Picking my spots carefully and being patient.
being discilpline is trading comes down to being mindfull . I notice i am profitable between 8-12 . After that i am like in a daze . Making stupid mistakes . Also another thing a started last year is being away from computer checking it every 30 minutes . And levels i like i put in an alert that texts me . So when i come to the computer i am more open-minded to the trade . Where before staring at the computer you seem to be very bias to your analysis.
My mental state is āhopefulā, ācautiousā and sometimes āimpatientā. Rome was not built in a day and either the market will be there tomorrow for me, or I will be in the afterlife where the market does not matter anyway. I need to slow my roll, relax and BE PICKY about trades that I will chose to enter.
The Key is to trade when the method tells you to trade. Not when you āfeelā, not when you experience FOMO, and let the setup complete itself.
I would say it has usually been a nervous energy, and a lot of uncertainty. I hope that now I have sharpened by plans, that it will be more of an exciting energy.
I always aim to be calm and level-headed when I trade. Of course itās not always that simple, feeling nervous is something that often happen, and outcomes affect my mood, too. I think whatās important is that I only work as long as I feel that my emotions donāt mess with the process.
My state of mind when I trade is focused and always balancing being optimistic and realistic. Trading certainly can be stressful and depleting if you have bad days but knowing and identifying this emotion when it happens is crucial because if you donāt, you will chase the dragon with more bad trades.
Before a trade I feel excited and fully focused on what is in front of me. While in a trade its a roller coaster of emotions depending on how the trade goes. No matter what good or bad, I always try to reel that emotion in and stay grounded and rational. Exiting a trade is relief for the most part. Relief that I got out of a bad trade with good risk management and now I get to go back and see where and how it went wrong and learn a lesson. Also relief that I profited and get to stack the account.
This sounds like a really good mindset to trade with. Do you use any strategy for stress management in general? Being able to put your emotions aside and staying rational while trading is a very important skill, but it can make the stress accumulate on the long run - at least thatās my experience.
Its certainly something I have not mastered but what I found out that helps a lot is separate the wins and loss from your mind altogether. If I lose a trade, then it was a lost trade and nothing more. Good risk management in place, I planned to lose that amountā¦now lets look for lessons on the loss and look forward to finding the winning trade.
Just some way to stay focused on the jiob at hand but training myself not to feel with emotion every win and loss. Its more of a learned long term skill that i am still working on
My mental state of mind is excited, yet slightly stressed. Excited to see if my thesis will pan out and slightly stressed because I am looking for indicators for my trade to fail and what risk management tools will be needed. Looking at the order flow to determine buyer/seller exhaustion or counter trend price action.
Before a trade, I feel anxious because I know how important a good entry is for a profitable trade. We cannot completely remove risk, but can have more breathing room with a good entry point.
While in a trade, I try to stay calm but also slightly on edge. If my trade setup and entry was good, then there is no need to micromanage the charts and trust my trading plan. Slightly on edge because I need to be nimble and ready to adapt if the market goes against my trade.
And finally, while exiting a trade I feel hyper focused and somewhat nervous if the price action can reach my profit-taker or will it turn against me. Once the trade is done, I do my best to not look at hypotheticals whether I exited too early/late. The trade is done and I need to look for the next opportunity.