Trading Psychology : What, if anything, tempts you into reckless behaviour?

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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SeaHorseRacing
Posts: 2806
Joined: Fri May 20, 2016 7:06 pm

Sun Aug 12, 2018 11:04 am

If I used to have a bad day.. I would start betting on horses.

How did I overcome that?

Stop looking at my trading balance and told myself a million times. Do the trade and move on.

I had a little card...
Which read as such..

I am so happy and grateful that I do not act recklessly if I have a losing trade.

I would read this on every race/market I opened and after I finished each trade

I also took the profit and loss column out of the ladder. Worked wonders.

Eventually you develop a new habit. It’s the repitition that changes you. I did this every day for every trade and it took a good 8 months to really start to work.

I had other things listed on my paradigm card but I probably read it 100,000 times.

I have done a lot of research into gamblers and physchology and I still continuously research it and it is very true that even for compulsive gamblers. If you assessed the risk before everything you did you would never do those things.

For example: compulsive gamblers are only them because they fail to accept there out come or even think of it.

Teach yourself the risk before you place the trade. Not just money terms.

Before each market, if you tell yourself that a loss of say of £50 is likely to get you to behave recklessly you’ve already given yourself a reminder. So when your in a £40 loss your brain now remembers. It’s now time to get out. When your in the moment it can be impossible to think this way but by preparing before so it can really change you.

Pressurising yourself to make money- just as bad.

You need to take opportunities in trading. Not trying to make them. For me another game changer.
Take each market as it comes and take what you can not what you’d like.

FrogThimble
Posts: 124
Joined: Mon Dec 11, 2017 6:26 pm

Sun Aug 12, 2018 2:28 pm

xtrader16 wrote:
Sun Aug 12, 2018 10:49 am


By far the reason for reckless behaviour for me is the inability to accept a loss at 3-4 ticks which goes to 7-10 ticks. Then, I let the race go in play with 20+ times more risk than the original 3-4 risk control.

Letting the race go in play is the road to ruin for 99% of traders. Easier long term to take the 4 tick loss and try to recover later on in the day.

A feature I've recently found (via Peter's Videos) is the cancel button at the top of the ladder can be highlighted to make you aware you have money in the market you may not be aware of. This is a fantastic addition, thanks Peter.
All of my trades are in-play. So not going in-play isn't an option for me. :lol:

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gutuami
Posts: 1655
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Sun Aug 12, 2018 2:42 pm

brimson25 wrote:
Sun Aug 12, 2018 10:00 am
I've just made one of those. (Sadly, I hate the sound of my own voice)
there's nothing sad in it. you're not pavarotti. you should get the emotional state from it not the sound.

FrogThimble
Posts: 124
Joined: Mon Dec 11, 2017 6:26 pm

Sun Aug 12, 2018 3:03 pm

SeaHorseRacing wrote:
Sun Aug 12, 2018 11:04 am
If I used to have a bad day.. I would start betting on horses.

How did I overcome that?

Stop looking at my trading balance and told myself a million times. Do the trade and move on.

I had a little card...
Which read as such..

I am so happy and grateful that I do not act recklessly if I have a losing trade.

I would read this on every race/market I opened and after I finished each trade

That's a great idea. I think I'll print something like that out for myself. As it happens I've just had a losing trade again of the kind that made me behave badly yesterday (took out the day's profits)... but I'm behaving myself this time and made a sensible normal trade on the next race.

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ShaunWhite
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Joined: Sat Sep 03, 2016 3:42 am

Sun Aug 12, 2018 4:29 pm

Preconditioning is fine but the triggers happen in the heat of the moment. The nature of the scenario means that you aren't going to stop and read notes or listen to recordings before you do something you shouldn't. If you had the presence of mind to do that you'd also be compos mentis enough to stick to your strategy.

But 3 practical tips.
Automation : If you have a maximum loss in mind (2%?) then just run a bot that closes the trade and locks you out for the rest of the race. That will give you a minute or two for the red mist to fade. Better still run that on a laptop in another room under a pile of books locked with a password only your partner knows.

Precocndioning: Screen print the huge losses and the big but OK losses. Look at them before a session and condition yourself to seeing the big but OK ones as being a hell of a lot better than the huge ones. Remember how each felt at the time. Remember how good taking the 'correct' loss felt by the end of the day.

In the moment: When you're looking at a £50 loss that should have been 10. Instead of letting your £200 stake ride on it now for a quick fix, tell yourself that you're going to find a good thing later and have £20 quid on it. Why risk and extra 150 when 20 should be enough. You'll wipe out the loss no problem. Chimp brain will like that idea. BUT and here's the essential part...by the time that good thing comes around you should be focused enough again to not actually do it. If you still do it once you've had a cuppa and calmed down, then you seriously need to think about whether this style of trading is your thing.

Having said all of the above I have to also say I'm a pretty bad cold ladder trader, 50yrs of being impulsive is bloody difficult to change. That's why I'm looking elsewhere more now at things that suit my nature more. You don't have to be a steady Eddie to ladder trade, but if you're not one naturally then you certainly need to act like one for hours on end, that's not easy if your default wiring just isn't like that. There's enough types of trading to try without getting bogged down by one style if it's not working out for you.

FrogThimble
Posts: 124
Joined: Mon Dec 11, 2017 6:26 pm

Sun Aug 12, 2018 5:46 pm

I like your 2nd and 3rd tips, ShaunWhite. They are well worth thinking about. Your 1st tip isn't quite so much use to me as I don't have a partner. :lol: Anyway, you're right that the smaller losses are well worth putting up with.

Today I'm ending the day about 7% up with my lowest point of the day being when I was 3.5% down. This compares to yesterday when I finished the day about 8% up with my lowest point of that day being when I was 14% down and running the real risk of being 33% down.

Was it worth me risking a 3rd of my bank yesterday to finish 8% up when I did almost as well today without taking drastic risks? Clearly not. Being 7% up with no big scares beats being 8% up with big scares.

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ShaunWhite
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Joined: Sat Sep 03, 2016 3:42 am

Sun Aug 12, 2018 6:19 pm

FrogThimble wrote:
Sun Aug 12, 2018 5:46 pm
Today I'm ending the day about 7% up with my lowest point of the day being when I was 3.5% down.
You need to stop micro managing your P&L. Without knowing the variability of your strategy you could be seeing negative days as bad things when they're just part and parcel of your process. If you knock up a spreadsheet randomised on your strike rate for 1000 races, you'll see some pretty long runs of ups and downs I suspect.

Instead of looking at the p&l, keep a notbook where you rate your execution for each race from 1-5. 1=fool, 5=ninja. THAT is the figure that shoud be improving. The P&L is misleading. You might have a 10% growth on one day, but should that have been 20% and you were poor? Or should it have been 5% and you played a blinder? And how will you be able to compare strategies if you don't know how well you were executing them? I'm convinced that Profit = Strategy * Execution rather than it being Profit = Strategy + Execution.

So, forget the P&L, that will take care of itself if you execute better and are refining your strategy on the way. If you're a losing ninja you can always find a new strategy, if you're a winning fool it's just a matter of time before the you-know-what hits that fan.

FrogThimble
Posts: 124
Joined: Mon Dec 11, 2017 6:26 pm

Sun Aug 12, 2018 7:19 pm

ShaunWhite wrote:
Sun Aug 12, 2018 6:19 pm


Instead of looking at the p&l, keep a notbook where you rate your execution for each race from 1-5. 1=fool, 5=ninja. THAT is the figure that shoud be improving. The P&L is misleading. You might have a 10% growth on one day, but should that have been 20% and you were poor? Or should it have been 5% and you played a blinder? And how will you be able to compare strategies if you don't know how well you were executing them? I'm convinced that Profit = Strategy * Execution rather than it being Profit = Strategy + Execution.
I don't know about that. Rating my execution of each race sounds like a dangerously subjective thing for me to engage in - I don't think that would work for me.

JTEDL
Posts: 229
Joined: Wed Aug 23, 2017 2:21 pm

Sun Aug 12, 2018 8:37 pm

this thread reminds me of going 'on tilt' in poker, it's only a natural response, but must be controlled and only 1 person who can do that.

@Euler - Women? you talking trading or something else? :)

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mcgoo
Posts: 392
Joined: Thu Jul 18, 2013 12:30 pm

Mon Aug 13, 2018 12:49 am

As usual great advice here. ' Seems to have crystallized even more after my morning snorkel over a Fijian coral reef this morning :lol:
I stopped going in play some time back and recently managed to stop chasing losses(didn't even realise i was doing that at one point) these were my biggest issues and tilted me for sure. Leaving the automation running while on holiday (except to update markets) while on an island ;) with limited internet has been an eye opener psychologically too. The mentioned points about daily profit and waiting for opportunities have struck a chord. Bula and Vinaka everybody. Off to look at big yachts and dream about big profits over cocktails. Cheers :mrgreen:

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