General discussion : Trading for Newbies Part 7 - How to stay calm

A place to discuss anything.
Post Reply
User avatar
Posts: 1990
Joined: Sat Mar 21, 2009 10:06 am

Tue Sep 03, 2013 4:00 pm

Now we know that anger or any emotion is a problem in trading, how do we prevent it?

Well I think it was Le Tiss who said he goes for a walk. This is known as separation and is a known tactic to combat emotional issues.

So the key is to know when your emotions are climbing too high. As I said, this is personal so we will all have different thresholds.

Is it the loss that causes the issue? Well the truthful answer is NO. If the loss was the reason then everyone would be spitting the dummy! Now please do not be offended by that statement or anything I say in reference to emotion. I have suffered in exactly the same way so I speak from experience and not from a position of superiority.

If I am trading and the market moves against me I can stand a potential £40-£50 red before I would start to feel pain. Again that is not a boast, this is all relevant to each of us and this is what I am trying to explain. To some, a loss of £5 might be painful, it could be £1 £10 £100 etc. What is important is that you recognise your own pain threshold. So why is that important?

You will recall I said it is important to assess the market spot your opportunity and commit 100% with no fear of failure. If it goes wrong then close out* and if it goes for you then squeeze as much profit as possible.

* The close out point should be your pain threshold. That is because anything beyond that point is going to build your emotional state quickly. Once you tip over the threshold there is no coming back and crazy things can happen. So the pain is the reason for us spitting the dummy and this pain pushes and pushes until we reach our threshold - then it all goes pear shaped!

You must also understand that emotion can build up and be present from other situations. If you are unwell or in a bad mood then your emotional state is already high so even one bad trade can tip you over the edge. Never trade when you're ill, drunk or in a bad mood.

When you feel stress building from your emotions, you must create separation. You can sit back, close your eyes and take some deep breaths. This will help you to relax and may give you a chance to separate yourself from the issue. Some people will say they like to trade through it but please do not follow that path as you are only going to create problems further down the line.

You may not be able to take deep breaths to help you so you should walk away from the markets. Put the kettle on, have a walk, do anything that separates you from the situation. Now this is temporary relief, it is not a long term solution.

Now you need to add some logic to the situation and this is known as Injecting Logic. You need a simple phrase that will help you to concentrate properly and kick emotion into touch. This is personal to you so have an inspirational quote like "HE WHO HESITATES IS LOST - Swift and resolute action leads to success; self-doubt is a prelude to disaster" or something that will help you to forget the emotion and focus on correct trading.

Sometimes this is enough to keep you from going into meltdown but on occasions you may have to repeat the phrase with deep breaths etc to bring you back on an even keel. If NONE of this works - QUIT trading for the day. Leave it alone and come back another day, the harder you push to make it work when you're not emotionally stable the harder it is going to be in the long run for you to make it.

The next plan is to follow these steps

1. Write down the problem explaining what causes you to blow a gasket.

2. Ask yourself if your reaction is logical and really helps? This is hard because you are admitting to being wrong and as humans we're not wired that way.

3. Negative emotions are NOT a mental flaw. They happen for a reason so look at your reason and tell yourself it is temporary.

4. What works for you to stop this problem. Look at your separation techniques, what can you add to improve this further?

5. Finally ask yourself what difference your separation and logical statements do to improve your mental state? The more you feed this back into your mind, the more the mind will adapt them.

This is hard work and needs honesty from you and you alone. If you keep working at this you will see an improvement and given time you will not get so worked up and see it all as part of trading.

I hope this helps, please feel free to ask anything you want.

Posts: 44
Joined: Sun Jun 16, 2013 11:35 am

Sat Sep 07, 2013 8:02 am

Enjoying reading your posts JG thanks for taking the time!

Posts: 61
Joined: Sat Feb 25, 2012 11:15 am

Sat Sep 14, 2013 2:29 pm

I thought I'd add there are a lot of parrelels between trading and poker. Both are games of chance and the variance drives people nuts in both. In poker the bible of the mental game is this: ... 0615436137

The techniques in there I feel are applicable to trading so might be worth a read.

User avatar
Posts: 1990
Joined: Sat Mar 21, 2009 10:06 am

Sat Sep 14, 2013 6:43 pm

I like the look of that book I might have to buy a copy. Have you read it?

Posts: 61
Joined: Sat Feb 25, 2012 11:15 am

Sun Sep 15, 2013 10:29 am

Reading it back it makes it sound like I have read it! Sorry! Alas I haven't read it, but it is quite a tempting read. I think you can probably find detailed reviews on the net though as it is a popular read in poker circles.

User avatar
Posts: 1990
Joined: Sat Mar 21, 2009 10:06 am

Sun Sep 15, 2013 11:36 am

Tobedotty wrote:Reading it back it makes it sound like I have read it! Sorry! Alas I haven't read it, but it is quite a tempting read. I think you can probably find detailed reviews on the net though as it is a popular read in poker circles.
I had the honour of meeting the author at a PGA event in Florida, he was a sports coach then and was working with a number of golfers. When I say met him, I don't want to make it sound like we were best friends. We were part of a group talking about the mental approach to the game. It was pertinent because a Pro Golfer friend of mine was like a ticking time bomb. I didn't put two and two together until I read the review. I think I'll buy a copy now I realise who the author is.

Thanks for the heads up!

Posts: 449
Joined: Thu Aug 05, 2010 9:36 am

Sun Oct 27, 2013 1:22 pm

Now we know that anger or any emotion is a problem in trading, how do we prevent it? Well I think it was Le Tiss who said he goes for a walk.
I've had a lot of problems to do with not letting anger and emotion take over me. When you look at trading psychology there is a lot of fascinating stuff out there.

I have a similar tactic where I recognize the emotion/anger and then trade out, switch everything off and like Le Tiss go for a walk. The minute I walk out the door, I know the next few hours are going to be tough, because its almost impossible to break out of that emotion until your in a different head space. But this period of pain will save you money. You'll wake up the next day with your balance in tact and start the day fresh. The other option is your balance will be gone.

Posts: 231
Joined: Wed Mar 20, 2013 11:01 am

Fri Jan 17, 2014 7:30 pm

This is Fantastic stuff in this thread, pure gold, I really needed this today after last nights chaos, now let me tell you what happened.

Prior to trading last nights tennis I was messing about with the simple tennis automation file from Peter's blog, I'd had some success with it the previous night and thought I'd change some parameters, check some markets and turn off the bloody annoying bet notification :oops: , it had gone midnight and Pennetta was starting she was one I had down as value and didn't want to miss the price so off I went and forgot all about the automation.

Pennetta was cruising just as I thought, as Barthel was carrying a shoulder injury, happy days.. Looking at the scores in the other matches I could see amongst other things Mayer had taken the first set against Janowicz it was then I noticed 20% of my bank gone WTF!!!! Checking guardian it told me that I'd somehow left the automation running on the Mayer Janowicz match and it had layed Mayer 10 times just as he was taking the 1st set, not a good position to be in, so what did I do, wait for a Janowicz hold instead of removing at least half of my liability, mistake!!! He was broken, that's when the tourettes kicked in and I took the 15% of bank hit and moved on. I went to make some herb tea to calm the nerves, took a few deep breaths and noticed Li was starting, surely this was a good opportunity to get some back as Li's going to be to strong for Safarova and I took a price on Li well beneath what I would normally do, and I thought I was calm and in control ;) . Li lost the 1st set 1-6, her forehand was horrible and I had a nasty red, right i'm flipping onto Safarova, she's in the zone and Li's well out of sorts the 2nd set was tight with a few breaks and at 5-6 on Li's serve Safarova has match point, she choked :cry: and Li took the set, another horrible red. I didn't play the 3rd set as my confidence had gone and I was looking at -30% of bank.

Now what i'm trying to say is I thought I was calm after the automation disaster I'd walked away, accepted it as my fault, a school-boy error for not scrolling up to the top in guardian and checking it was off all matches(Mayer v Janowicz was at the top and I didn't notice it was still on) but I still took too short a price on Li which was the catalyst for the bad trade in that match, I also didn't cut when I could of to minimise losses, basically I ended up gambling on Safarova taking the 2nd set.

So -30% I'm back in the markets tonight, I'm feeling calm as I'm confident in my edge but in the back of my mind I feel doubt and I'm questioning myself about what if situations, like what if the first few trades go against me how am I going to react? This feels like a real test of character and if I can get through it in one piece calling all the right shots I will feel like I've made a big leap forward on my trading journey.

Posts: 195
Joined: Mon Apr 02, 2012 6:09 pm

Sat Jan 18, 2014 5:09 pm

Redhead - I wouldnt normally get involved with a thread like this as I cannot bring myself down for days after a loss as it normally is a big one as I get all hot headed and start chasing a loss. I am sorry to say but thats exactly what you did. Ask yourself this question, if your first calculated trade had been successful, and you hadnt made the mistake with the automation on the other match would you have took the positions on the other matches. I think not. I know its hard, and I am certainly not in a position to preach, but you should have just accepted what you had lost and just concentrated on your calculated, first off position, even if it meant a further loss. Please dont take this the wrong way as I have been in your boat so many times and I am just simply offering a shoulder to cry on. ;)

Posts: 231
Joined: Wed Mar 20, 2013 11:01 am

Sat Jan 18, 2014 9:43 pm

Thanks for the words of wisdom Rog :D , much appreciated and your right I did chase losses, it doesn't matter how I dress it up, the bottom line is that's what I was doing, and I can see that now. Last night went well, looking back I started with two reds, cut well within my comfort zone which I was very pleased about, because this proves that my discipline hadn't left me completely and I was still in control, the rest of the night I had another two reds and four greens but a nice profit to show(it would of been more if Wozniacki hadn't imploded)so I can't grumble, but more importantly I had proved to myself again that I know what i'm doing, can do well and I do have discipline.

Thinking about it, it was strange how I behaved on Friday morning when I was in a tailspin as I regarded myself as no longer a novice trader but my actions were that of a novice, we live and learn and it reminds me of that famous Iron Mike Tyson quote "Everybody has a plan until they get punched in the face". :lol:

Post Reply
  • Information
  • Who is online

    Users browsing this forum: No registered users and 3 guests