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     rockon
Member
Username: rockon
Post Number: 94
Registered: 08-2003Rating: N/A
Votes: 0
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| | Wednesday, November 22, 2006 - 11:53 am: |  
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Hello All,
Not quite sure on how to set this out in print so I'll treat it like a 'Fess Up' session and hopefully it may help others who may think that the psychology department doesn't matter.So here goes.
I recently was sucked into a shakeout with a fair plummet for no apparent reason being the first clue and my first mistake.Exiting on an intra-day point where my rules require a close below the stop point was my next mistake but panic is a powerful emotion. Although a long tail is easy to spot on a completed candle, it doesn't look so clinical while prices are jumping around during the day.Anyway, I was out and as I look back at the chart even now, I keep asking myself how could I have been so stupid to fall for that one.End of trade.... move on,you say....
My Freudian hiccup is that now I am having a little trouble acting on my stops.Twice since then have my rules required me to exit a position and both times my emotions overtook reality and I waited for the bounce that didn't come.I eventually did exit but at a much larger $$$ loss. That in itself has helped me to start getting over this temporary mental block.
So my rules require step A, followed by step B followed by step C and I now have a fair idea that to jumble these up or disregard one ends up with me loosing money.Hopefully, I'll remember that next time.
I hope this helps someone realise that as prepared as we might think we are for this game, it doesn't take a lot in order to dent our way of thinking and if one has a plan or some rules then one needs to stick to them.
Not much more to add to that. It's more of a statement than a discussion point anyway I think.
Regards......
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dug
Member
Username: dug
Post Number: 1747
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Wednesday, November 22, 2006 - 12:18 pm: |
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What particular share,rockon? you've described why you intra-day sold,what may aid.
Of course,you would have thought yourself decisive,quite d'hero,If it had kept downing to close lower or if If IF you'd bought more at a Bargain instead of selling.
One faces Options/weighs decisions if one doesn't just send their money off to some Managed Fund,hey?
cheers,
jr
Dig for the sake of it.
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macca888
Member
Username: macca888
Post Number: 34
Registered: 10-2002Rating: N/A
Votes: 0
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| | Wednesday, November 22, 2006 - 12:36 pm: |
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G'day rockon
Thanks for sharing your experience.
I would assume it's the nature of the markets you trade and your trading timeframe.
Some stocks or groups of stocks at particular stages of their trending have shown me a "nature" for spike lows.
My Trading Plan demands an exit on an intraday breach of my initial stop loss. At this point I have no profit to give back.
Intra day breaches of trailing stop-losses are handled differently (and have more than one way of being handled) but I have very little discretion as to what I can do.
Maybe this distinction is a consideration for yourself.
I wrote this morning in a email to a fellow contributor
"I believe that people don't need to be told how to trade/invest.
It's better that anyone be guided to their own conclusions and methods.
Wish I had someone to guide me then. I had one person who inspired me to begin but no one to continue with me down my long path.
Of course, I must credit all the contributors to the IC forum.
Some showed me what not to do and some provided guidance on what to do.All were helpful.
We have to own and believe in our personal trading plan.
Otherwise when things go against us (as they invariably do at times) we wont have the knowledge or the conviction to follow our plans."
Backtesting and papertrading as well as our history of live trading are the only elements to give me that knowledge and conviction.
Hope this helps
macca888
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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rockon
Member
Username: rockon
Post Number: 95
Registered: 08-2003Rating: N/A
Votes: 0
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| | Wednesday, November 22, 2006 - 02:24 pm: |
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Hello Dug,
Didn't want to get into the particular stock but I will in a sec.
What I was trying to get across was that I strayed from d'formula and I paid d'price because instead of it being a fair trade (wether the trade was a win or a loss)it became an emotional issue because after the dust had settled, I felt somewhat foolish.As a result of this,gremlins start to work on the brain and the resulting hesitations etc. end up costing dollars.
I have often looked at great long tails and thought what a great opportunity that would have been to buy into a particular stock but beleive me, on the day,there doesnt seem to be a bottom and when the buyer starts buying again then you can't help but think that he is just feeding the next wave of selling.
Hello Macca,
Yeah, I agree with what you are saying, and on this particular time, if I had of stuck to my plan then all would be o.k. now.
I don't do a great deal of backtesting, so maybee it's time for a review and maybee add and subtract a few things from the big picture.
Re. Chart:.... Which is this weeks' competition pick.... RFE...
My stop was supposed to be a close below.34.I don't normally watch the screen all day ...just have alerts etc. in place but the previous bearish days' range had started to put the wind up me.I was hoping for it to bounce off 34 and continue north but an open at 33 straight away starts to conjure up visions of collapse and further falls conjure up thoughts of Directors selling before they give you the bad news....By this time, panic is setting in and that's about it.End of story... well sort of... The next days close and the chart as a whole told the story and also gave a strong entry signal which I did on monday after reading Yogis' positive astrostuff.Stop has now mooved up to a close below .38 and looks like being mooved up again soon.Which shows that this mental block that I have at the moment is only affecting exits.
Regards
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dug
Member
Username: dug
Post Number: 1748
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Wednesday, November 22, 2006 - 03:05 pm: |
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well thanks for that,rockon.My mind honed in on your "fear" that the directors were on the Dump,you threw that in above,right?
well a little bit of knowledge is a dangerous thing and that's why one has to Go despite any worst case scenarios drifting thru your head.
Volume,Market Depth watch,d'Size of the Parcels "happening" at the Time,rockon."They" can give you a Clue but I don't think that can be back-tested into your Very Own System of a mechanical dream so basically I'm saying Don't get Paranoid."It" might not be that[eg a dark plot].
RFE might have blown off today but I been in 'n' out of it twice this month so I may be biased.
cheers,
jr
Dig for the sake of it.
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macca888
Member
Username: macca888
Post Number: 36
Registered: 10-2002Rating: N/A
Votes: 0
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| | Thursday, November 23, 2006 - 07:18 am: |
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G'day rockon
Had a couple of extra thoughts during and after dinner of morrocan lamb, cous cous and a warm carrot salad.
If this doesn't make sense blame it on the lack of remains of the perfectly matched cabernet-merlot.
Two things struck me about the trade mentioned other than your "psychological" problem.The position of your initial stop loss and your stock selection method.
This is a trade I didn't make.
My buy setup came on the 8-11-06 with the trigger entry on 9-11-06. Exit on 16-11-06 for a small loss.
Now it could be argued that the bottom of the rising window at $0.30 on 31-10-06 could be a position for an initial stop loss (not part of my plan). Harry Hindsight can show us a lot. Had I taken the trade I would have shared your concern about the spread and close of the
15-11-06. Lack of volume was the saving grace but the nature of the retracement was different to the previous one. The intraday breach of the support at $0.32 would have been troubling if I had still been in.
% gains and losses in stocks of this nature can be very large when they begin to trend. That's stating the bleeding obvious. As a consequence initial stop losses in percentage terms may have to be far from entry.
I haven't been able to come up with a stock selection process that only picks the profitable entries for my timeframe so position sizing ( one of my four pillars of Risk Management) sometimes suffers (or succeeds).
"Most traders would take a tip from a cab driver over a second-hand misquote of a broker's newsletter regurgitation of a Wall Street sales pitch."
I have chosen to not rely on the work of others to make my stock selections. I own and am responsible for my own stock selection. The last thing I need is someone whispering in my ear about the next great thing.
So my suggestions are to consider how close your initial stop loss is placed and to come up with a stock selection process that integrates with your style of trading.
Happy to discuss this further on the forum or by email.
Hope this helps
macca888
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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deanrosario
Member
Username: deanrosario
Post Number: 1153
Registered: 11-2002Rating: N/A
Votes: 0
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| | Thursday, November 23, 2006 - 11:28 am: |
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Hi Rockon
Believe me you are NOT alone.
It seems to be human nature to dwell on the "what ifs" when a trade moves into profit after hitting a stop loss; yet, what we should be doing is dwelling on the "what ifs" when our stop is hit and the trade keeps moving further against us.
I keep this note on my desktop:
"Control your emotions and never waver from the plan by trading on impulse. When an impulse-driven trade loses, you have to not only deal with the financial impact of losing money, but you also have to deal with the gut-wrenching reality of wavering from the plan".
Best wises
Dean
"Never commit yourself to anything you can't walk away from in 30 seconds." Neil McCauley (played by Robert de Niro) in 'Heat'.
"Hope is a dangerous thing. Hope can drive a man insane." Ellis Boyd "Red" Redding, played by Morgan Freeman, in 'The Shawshank Redemption'.
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rockon
Member
Username: rockon
Post Number: 96
Registered: 08-2003Rating: N/A
Votes: 0
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| | Thursday, November 23, 2006 - 01:47 pm: |
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Thanks D, M and D for the comments/advice/ support and I'll probably keep coming back to read this thread just to keep myself honest.
Macca888.... I'll be thinking of you tonight while I'm at the salt mines hoeing into my cheese sandwiches....
Cheers to all.....R
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suemac
Member
Username: suemac
Post Number: 349
Registered: 01-2003Rating: N/A
Votes: 0
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| | Sunday, December 03, 2006 - 09:56 pm: |
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Just a thought Rockon: I'm not sure which timeframe you are trading, but if you look at a bar on a weekly chart, then check the daily moves that constitute that weekly bar, you can almost feel yourself squirming with the machinations that can occur over the five-day period. Then look back at the weekly bar chart and, for some strange reason, I find a sense of calm comes over me.
Stock prices seldom fall for days on end. Rather, they ebb and flow. If you find a stock has had a "fair plummet" you invariably get a rebound before any resumption of a down trend. I remember well a substantial fall in CPU some years back when I was in Melbourne and away from a computer. I received a message from my son to tell me it had dived and I would have been down 35% in one day, however by the time I located a computer it had recovered to a point where I was only down 10%.
Had I been watching the screen that day I can only imagine the turmoil in my head. If you're trading longer term, I find it best to keep decisionmaking based on weekly charts - and preferably when the market is closed!
Cheers!
Behold the turtle; he makes no progress unless he sticks his neck out!
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spider
Member
Username: spider
Post Number: 2517
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Wednesday, December 06, 2006 - 01:37 pm: |
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It's threads like this one that remind me why I spend time here.
A courageous first post by someone offering a painful experience in the hope that it might help someone else in a similar situation.
Then others come along with questions and suggestions.
It is worth going back and reading that first post again.
rockon is trying to tell us that his problem is not mechanical but one of eternally being aware that the battle with our mind is never over.
This is not to denigrate the suggestions made, only to make the point that the 'head space' stuff is ongoing, even for an experienced trader like rockon.
My compliments to all those that have participated in this discussion so far.
spider.
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macca888
Member
Username: macca888
Post Number: 87
Registered: 10-2002Rating: N/A
Votes: 0
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| | Thursday, December 07, 2006 - 11:12 am: |
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G'day Spider
Downloaded that mac thingy last night. Didn't that take a while! Listened to your podcast today. If you were cat lady I'd say that was an enormous furball. I'm unsure what arachnids suffer from.
I would have listened to it last night except a new recipe courtesy of Guillaume Brahimi intervened.
Barramundi with ratatouille and an olive, caper and anchovy vinaigrette took me back to humid nights on Nourlangie Billabongs No's 2+3 in Arnhem Land.
I'm thinking of writing a book titled "Macca's Meal Deals". Do you think it will have "street cred"?
I agree with you that the topic at hand was and still is the psych side of things. I also agree that the male approach is to come up with a mechanical fix. More to the point is that the male approach is to come up with a fix, mechanical or not. Comes from all that conditioning down in the shed with Dad.
In a forum like this I am at a loss sometimes to know what to say about the psych side of things. So much can go on between the ears, even in those nanoseconds before execution of a trade.
None of us are perfect. I used to be but thankfully I have improved.
I think the idea of a trading mate or just someone to talk to about these matters when they are happening has a lot of merit. Beyond that each of us has to continue to "fight the good fight" while ever we pursue our goals this way.
regards
888
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
"A prudent speculator never argues with the tape. Markets are never wrong - opinions often are". Jesse Livermore
"The only sound reason for buying a stock is that it is rising in price.
If that is happening, no other reason is required.
If that is not happening, no other reason is worth considering".Nicolas Darvas
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spider
Member
Username: spider
Post Number: 2518
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Thursday, December 07, 2006 - 01:51 pm: |
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Hi 888,
cook books sell very well in this country, and you obviously enjoy your tucker, so go for it.
I want a signed first edition please.
spider's voice has not improved much, but during the day there are not a lot of people to talk to, so that's OK, and the dog really does not care what I sound like, as long as she gets fed.
Continue to fight the good fight.
spider
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The battle of the 'head space' is never over. Eternal Vigilance is required.
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