Communique from Trader W

#1 (Wed, April 1): There surely can’t be anything worse in trading, than setting up a trade… entering it…. but then getting psyched out to close it with a small loss… minutes before it drops 60 pts and does exactly what you forecast. Like shorting YM at 7706. (Always enjoy your blogs)

ME: Would you like me to post this to the blog?

#2 (Later, April 1): Would it need to include me yelling and beating the steering wheel of my truck as I drove away post 4:00 close?

ME: It would be more interesting if it did

#3 (Even later, April 1): Sure, I actually did that after I emailed you… LOL. But the reason I continued with it, was your teaching on “verbalizing the emotion”. I consciously remember thinking that…

Point being? Counter-intuitively and certainly counter pop psychology is the power of being totally aware of what emotions are occurring. Putting them into words serves as the best risk management tool for derailing impulsive trades which are born out of acting out feelings that aren’t so conscious or are being purposely “controlled”.

To the Tpsyches way of unconventional thinking, this is the advanced trader psychology of managing psychological capital as carefully, if not more carefully, that you manage your cash capital. Addressing the first automatically takes care of the second.

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  1. The above post reminds me of the CL trade late Thursday night and early Friday morning. The first comment is that I was so concentrating on the crude that when I saw Gold at $910 and wanted to short it I didn’t have the concentration (and I was tired it being very late) to quickly short it and then it started to drop immediately and I felt I had missed the entry.

    Back to the crude. I bought one at 52.04 and when it dropped to 51.79 I bought another. This is my strategy if it hasn’t broken MAJOR support.
    I took a nap but woke up about 3:00am to see how I stood. It was starting to stabilize and when it got back to my average price I got out with a $30 profit, only to watch it run all the way to 53.90 in the next half hour. After all those buy stops had been hit I thought it was a good short and so sold at 53.49 and given that I was tired and wanted to go back to bed I covered at 53.37. Later I found out it dropped to below 51.50 before stabilizing. Finding good entry points is much easier than managing the psychological capital. Aside, because the European traders can move crude so much I’m thinking of sleeping 8pm to 3am so I can get up when they do. THIS WILL TAKE DISCIPLINE.

    Trader Mark

  2. The above post reminds me of the CL trade late Thursday night and early Friday morning. The first comment is that I was so concentrating on the crude that when I saw Gold at $910 and wanted to short it I didn’t have the concentration (and I was tired it being very late) to quickly short it and then it started to drop immediately and I felt I had missed the entry.

    Back to the crude. I bought one at 52.04 and when it dropped to 51.79 I bought another. This is my strategy if it hasn’t broken MAJOR support.
    I took a nap but woke up about 3:00am to see how I stood. It was starting to stabilize and when it got back to my average price I got out with a $30 profit, only to watch it run all the way to 53.90 in the next half hour. After all those buy stops had been hit I thought it was a good short and so sold at 53.49 and given that I was tired and wanted to go back to bed I covered at 53.37. Later I found out it dropped to below 51.50 before stabilizing. Finding good entry points is much easier than managing the psychological capital. Aside, because the European traders can move crude so much I’m thinking of sleeping 8pm to 3am so I can get up when they do. THIS WILL TAKE DISCIPLINE.

    Trader Mark

  3. Spent the weekend reviewing strategy as in “planning”. Then went through more of Denise’s teaching. Including some videos archived… Now I am trying my best to consciously WRITE DOWN my emotions during trading.

    Happy to say, it is working. My emotions were a little nervous, and had I not been aware, I would have impulsively closed a trade at breakeven.(seems like that is more my problem, impulsively adjusting a trade) I got up, walked around, asked myself what was happening… then wrote it down. I am still in that trade, but now with 36 pts locked in. A significant difference compared to impulsively closing a trade 30 mins ago…

    Actually, the more I think about it, that is a major difference for me. And all I did different was to ask myself what I was feeling and write down my emotions on cheap lined paper….

  4. Spent the weekend reviewing strategy as in “planning”. Then went through more of Denise’s teaching. Including some videos archived… Now I am trying my best to consciously WRITE DOWN my emotions during trading.

    Happy to say, it is working. My emotions were a little nervous, and had I not been aware, I would have impulsively closed a trade at breakeven.(seems like that is more my problem, impulsively adjusting a trade) I got up, walked around, asked myself what was happening… then wrote it down. I am still in that trade, but now with 36 pts locked in. A significant difference compared to impulsively closing a trade 30 mins ago…

    Actually, the more I think about it, that is a major difference for me. And all I did different was to ask myself what I was feeling and write down my emotions on cheap lined paper….

  5. Dear Trader W: Poor hands! Hope you didn’t break anything (bones or steering wheel).

    I think that expressing your emotions can be a great way to acknowledge what you’re feeling… and hopefully let you make use of the information. But it might be good to find an alternative to hitting… or at least hit something softer like a pillow.

    Just a side note (and not about you, Trader W). The anger literature tells us that the extreme expression of rage takes on a life of its own. Really angry people get even angrier when they act it out.

    1. Josie, one comment I would have is regarding the acting out – I would expect if someone is consciously punching their steering wheel knowing they are trying to siphon off their emotional energy then the anger decreases. In Modern Psychoanalysis, the conscious expression and working through (verbalizing) of anger has cured schizophrenia.

      Glad to “see” u here!

      DKS

  6. Dear Trader W: Poor hands! Hope you didn’t break anything (bones or steering wheel).

    I think that expressing your emotions can be a great way to acknowledge what you’re feeling… and hopefully let you make use of the information. But it might be good to find an alternative to hitting… or at least hit something softer like a pillow.

    Just a side note (and not about you, Trader W). The anger literature tells us that the extreme expression of rage takes on a life of its own. Really angry people get even angrier when they act it out.

    1. Josie, one comment I would have is regarding the acting out – I would expect if someone is consciously punching their steering wheel knowing they are trying to siphon off their emotional energy then the anger decreases. In Modern Psychoanalysis, the conscious expression and working through (verbalizing) of anger has cured schizophrenia.

      Glad to “see” u here!

      DKS

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