Monday, February 13, 2012
Freezing, inability to pull the trigger
Traders often complain that they are unable to enter what may be a good setup. Sometimes signal bars are weak or the move itself it hard to discern. Know first that these are extremely valid concerns. Your body has learnt to be cautious and will react vicerally causing you to pause due to the accumulated stress of prior mistakes. In principle, this is exactly like getting a static electric shock when you touch a metal surface. If done often enough, your body will refuse to touch the object even when you command your hand to do so.
You can reduce the impact of the reaction by reducing your trading size. Trade only 1c or trade 100 shares of SPY or even 10 shares. If you wish you could even trade on a simulator and risk no money at all in the beginning and slowly move to real money using very small size.
One way to work on eliminating the freezing reaction with this is to evaluate your setups objectively, rather than subjectively. In general no setup is perfect and waiting for very clear setups often means you rarely trade. This is actually not a bad thing for a new trader.
Alternatively, a trader may choose to let something else compensate for weakness. For example, you may choose to take a weak bar if the pattern is clear, such as the 1PB at b8. It was effectively an L2 at a lower high after a strong bar b3. Another strengthener is the ema, so the FF and W at b16 for example could be tradeable based on being at a strong place.
Conversely, a trader may choose to take a strong bar even if the pattern looks uncertain such as the 1Rev at b1 or the fBO at b65. So a weak pattern with a weak signal such as b39 can be ignored until you develop the experience to read them correctly. While b39 did work, this would save you from reading b33 as an A2 for example. But once you have an objective set of rules as to what is tradable, you should follow it.
The key to trading success is to follow your objective criteria with discipline and let the market stop you out if you are wrong. Without this, there is no way of measuring what setups work for you and what do not. Once you have the data, you can winnow your setups and trade only the ones that work best for you.
Don't focus on winning or losing. You are collecting data about your setups and losers are a necessary part of the data. Once you accept losing trades as part of what you seek, your freezing reaction will fade over time.
Labels:
psychology
Subscribe to:
Post Comments (Atom)
Cad,
ReplyDeletewhy isn't b4 a 1rev?
and did u enter the 1PB trade while your 1Rev trade from b1 was still open? (because the +2 target could not have been filled by b8)
thanks very much for your time,
Manuel
When the first attempt to close the gap is strong, there usually is a second attempt. A 1Rev on the first try can only be taken at some kind of support such as ema or HLC of prior day. However, even if you did enter above b4, you should reverse on the second attempt down at b8.
DeleteWould you have exited above 2 if it had triggered?
ReplyDeleteYes
Delete