Category: Risk Management

Distorted Thoughts and Cognitive Dissonance In Trading

Hey Guys welcome back!!

The last 4 weeks I have been in a Roller coaster whether it be my equity curve or emotions. I’ve had consistent states of cognitive dissonance.

Cognitive dissonance – the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.

In Trading this happens when your thoughts and belief contradict your behaviors/ actions. This has happened to me multiple times this week. whether its me saying I will not trade then continue to trade or me saying that I would take 3 trades but then proceed to take 17(seriously). These behaviors will definitely lead me to failure and crashing and burning earlier than later. I’ve told many people I do not want to make another deposit this year. What is the point of me trading if I’m continuously making deposits only to give it to the market and other traders. In the last 2 weeks alone I’ve doubled my account only take a big hit in 1 day from not being consistent and disciplined. After thinking and really trying to understand why I have these bad behaviors, what I found was that it was a result of my emotions, specifically GREED
Greed – A selfish and excessive desire for more of something (such as money) than is needed

Continue reading “Distorted Thoughts and Cognitive Dissonance In Trading” →

Greatest Challenges this week (FEB 23- 28)

Challenges

  • controlling the amount of trades I took
  • trading after hours
  • controlling the lot size
  • managing the risk (stop loss of a trade)

fixes!

  • follow my contract schedule!
  • dont trade after hours
  • keep stop loss less than $3

My goal this week will be to take 3 trades a day and accept the W or L. All I need to do is follow the plan and be consistent!!

The Mindset of a trader

Hi guys,

So last week was traumatic lol. L’s on L’s but that is okay, you know you blow up and come to a realization then blow up again then you need to re-build. I’ve been thinking about my whole idea of living off of trading and I feel like it is leaking into my day trading activities and creating issues for me managing my risk. I know I’ve said i am happy with 5-10% for the week but am I truly happy with that if I continue trading?? you see me continuing to trade contradicts the idea that I am happy with 5-10% for the week. then am I truly happy with that if I full margin after? I dont think so. so now the question is how do I change my mindset. Today during the FX review for the week this came up and I realized shit, I really do need to go to a mindset from living off of trading to earning additional income from trading. sure my job can give me x amount of dollars a year but if I can make even half my income trading then I am deemed successful. I may not be able to live off of it but over the long run I definitely will. peep this.. 50% on a 10K account is 15K end of the year then 50% again we are at 22.5K… 33.75K…. 50K…. 75K…. 113K. anyway you get the point in the long run consistency and small gains will grow your account exponentially and you will have more money to make more money. This is how you get to the point of living off your trading.

The other question I need to ask myself is why I trade? Continue reading “The Mindset of a trader” →

Am I ready?

Hey guys, this post is actually well over due, I had one of my best trading days this month and it may turn out to be my best week yet. My risk was consistent and lots size in control, everything on point. In addition to that I was sooo very close to break even (2K)curve(by the time I wrote this I was already 10% for the year 🙂  then back down to -40% and now coming back to this again 2 weeks later im 5% for the year after doing a huge YO-YO in my equity curve. below you’ll notice I had a good 2 days to start and then massive drawdown for the next 4 days. I hate when loses come, I feel loses are obviously inevitable in this business but one must always control the risk or you will blow the F up.

anyway I’ve been meaning to write this post since May 10. “Am I ready?” It’s funny because the post before this I talked about almost making it and essentially being ready. Next thing you know I blow 700 in a day. I think fear is always a good thing just not while trading. My biggest fear right now is to not be successful as trader once I decide to leave.

Can’t remember where I was going with this post so I will stop here.

My goals going into next week and to follow for the rest of the year:

  1. not trade on friday
  2. keep my risk consistent
  3. only take my BEST TRADES!!
  4. control my damn lot size for the day and my trade limits!

 

anyway wish me luck,

cheers,

 

I think I just might make it

Hey guys,

its been while since the last time I posted self destructed back in January. A lot has changed regarding how I trade. The biggest thing that shifted my trading has been risk management and also my mentality towards tradings and making gains. Not only do I follow my risk management plan more strictly but I got some help. My “Risk Manager” really helped me realize again and again that this is a long term game. Ya sure, you can make 20% in a day but it doesn’t make sense to lose that same 20% an hour later or during the week because of over trading or emotions. Thats why its important to set daily goals and limits on your trading so you can really control the downside.

So back in January I grew my account from 2K to 3.3K in 2 weeks time between January 9th to the 21st.  statistics below; you can see more details on forex factory.

January

now I will show you what happens when you stick to a plan that focuses on risk, controlling lot limit and having a daily/weekly DD. after January I made this drastic change and started to really focus on risk. below you will see my results from Ferbuary 1st to April 29. I had a whooping 164% return and a max drawdown of 36%( we are not all perfect, I’m definitely not proud of it but I did have 1 week of emotional trading. This actually made me lose out on 2 weeks of trading. Anyway on a week to week basis I will no longer had DD less that -10%.)Feb- april.JPG

cant remember where I was going with this but I feel like if I continue on this course of monthly gains I can at least be comfortable once I decide to leave me job.,

 

cheers,

Know your Risk….

Hey guys….

I know I constantly  talk about risk management and why it’s important. I believe one should never risk 50% of their account to only earn 25% or anything less than what your risking a matter of fact. Earlier this year I made a trader flow chart but after reflecting this week I realized that I was missing another question. The question would follow after “Calculate risk and setup position.” The question is “are you comfortable with the risk? if the answer is no then recalculate the risk and ask again. I realized knowing your risk and being comfortable with the risk are 2 different things.

“If you are too comfortable in a trade then you probably do not have enough size”
-GMan, ONE GOOD TRADE

This quote is kind of counter to what I am saying but I believe in it so much. Nothing is wrong with taking calculated risk as long as you realize the damage it can do and willing to setup the proper reward given the risk. My max risk for a day is 5% so I have the opportunity to make 15% if my risk:reward is on proper.

In addition, you also have to be willing to be have reasonable take profit. After reviewing a lot of my profitable trades I noticed that some never hit tp and I closed prematurely ruining my risk:reward ratio. over the long run this is no good because your SL will be hit and your wins will never out-weigh the losses. of the few that would hit Stop loss I need to determine if my TP is completely out of whack because I’m not trading the structure or if I’m forcing a specific risk:reward just so I can play the trade.

Anyway, trading this week begins on Wednesday and I’m so glad to be back.

More Trading, More Loses, More Risk, More Everything (back dated March 8th, 2018, NFP)

Hey guys, so I’m back after losing control and also after a week long work trip. The journey must continue though. Finally completed my first full trading week. I got back on the 28th of February and proceeded to break many of my rules into Friday, March 8th

Journal entry from Friday March 8th below: Continue reading “More Trading, More Loses, More Risk, More Everything (back dated March 8th, 2018, NFP)” →

I got Risk Manager Now

So this post is pretty self explanatory. I went and got myself a risk manager. At the moment I am having trouble remaining disciplined and keeping the course. I dont think I am a bad trader per se but once I am on a constant streak I manage to get over confident and over leverage and ultimate blow weeks of profit because of emotions (THE TILT)

Currently, My risk managers role is to help me manage my risk by locking my account if I do not follow my Risk management rules which have been modified a bit. I think this is the best approach because I can’t seem to discipline myself and take a day off once my risk limit for the day/ week has been hit. You see in trading if you dont create rules you are bound to fail and do some reckless things. The worst part too is that sometimes  you are rewarded for doing the wrong things and this creates bad habits.

For me the biggest thing is to maintain my lot limit and daily/weekly risk limit. This way I can really reduce my losses and focus on the process. Last friday, (February 9th, 2018) I was not suppose to trade at all. I even discussed the plan for friday with my risk manager,  I said “I won’t be trading until next Tuesday” But what did do?
Continue reading “I got Risk Manager Now” →