My trading is improving, although not as quickly as I would like. I still am getting caught by the market swinging against me quickly, but at least now I am getting out. I think I have learnt that lesson now. Although it is hard to take a definite loss rather than hang on to hope that the price is turning around, it is safer over all. I need to assume that if the price turns against me then it is going to keep on moving against me and so getting out is the only option. It is better to take a scratch trade (back and lay at the same price) than to take a loss. As long as I am not moving backwards, in the long run, I am heading towards my goal. At least now my bank should grow rather than get a hammering!
"How to Stop Losing and Start Profiting"
10 comments:
richard, just read your post, freeing my mind, which i found very interesting.can you expand on this subject esp. NLP and what are the techniques you are refering to ? i keep going through the same circle--save £200 for my betting bank, work out a new set of rules, start off well then usually by chasing a small loss, end up losing my whole bank by just gambling whats left with a big bet !! all rationale thinking goes out of the window and i guess my unconscious mind takes over. can you help !! thanks stan.
Hi, thanks for your question. I'll see if I can expand a bit here, otherwise I can do a fuller post.
Basically, the drive to chase losses is an in-built unconscious thing. This has been researched quite heavily by Amos Tversky and Daniel Kahneman, two israeli researchers, who started the area known as behavioural finance. I have mentioned them and their work in some of my earlier posts. Basically, whilst you are chasing a loss, it is not yet seen as an actual loss. You think, "it might still turn around". Chances are it doesn't. Now, by taking a loss, that is definite, no chance of it turning into a profit or break even. We are wired to respond stronger to aversion to loss than to making a gain.
The NLP technique I initially used is called a "parts integration". When done properly it has a mildly hypnotic effect, i.e. it causes light trance. It is a visualisation type exercise, best done when lead through by a trained practitioner. Another option would be to use hypnosis. I might put an MP3 together with the process in for people to try, if there is enough interest.
Techniques aside, another option is to change the beliefs you are using when trading. One belief to start using would be that whenever the market turns against you, as you don't know what will happen in the future, you must assume that the market has swung the other way and will continue to do so. Therefore the only option is to get out quick. This way, even if the market moves back to where you started, you will be out. It may mean having a lot more scratch trades, but you will prevent losses and keep your bank safe. I hope that helps. Let me know if you want me to expand further or write a separate post.
One more thing, you could also start using a software package that provides stop loss (especially a trailing stop loss) feature. On my previous post about trading software I have listed 2 commercial packages that offer this. I believe they both do a trial period, which may be worth checking out. This way, getting out of a trade that has turned is taken out of your hands and handled mechanically. Becareful you know how the feature works properly though, I have got caught out by the software I was using, when it triggered a trade which I didn't want or need! (really annoying!)
thanks for your advice, richard, i have been trading for a while, i use Bet Angel Pro which is excellent. i think i can understand the horse racing markets to a degree[ impossible to get it right all the time ] but i always fail in the long run because i cant control my behavioural problems when i get it wrong . i would be very interested in this technique you call parts integration . cheers stan.
Parts integration isn't the best or most powerful technique to use, I used it because it was one that I have done on myself before, whereas most of them work better with someone leading you through it (in fact, parts integration does too). I'll see if I can put some instructions for it together, if that would help. Probably here isnt the best place to post it, so I could knock up a PDF with it and some other ones that could be useful. What do you reckon?
dont know if you got my last email, richard ? i am interested in the techniques you mention and also i have just ordered the market wizards book . cheers for your help .stan.
I didn't post up your last comment as it had your email address in it and I didnt want your email address being picked up by a spambot and you getting loads of spam email.
I have started writing a special report, to expand on the post. In it I will be able to discuss some techniques that should help etc. I'll post a link to download it when I've finished it.
I hope you enjoy the market wizards book, I found quite a lot of value in there. In the last section of the book, there is an interview with an NLP guy who works with traders and also another interview with a hypnotist who does too. This explains the kind of stuff you can do with NLP and hypnosis, so would probably be better than me trying to explain in a couple of posts.
I'm also working on a DVD with an associate that would give you the (as near as possible) equivalent of being led through some of the techniques rather than you having to read and remember them and then try to run through them yourself. This is only at the beginning stages but hopefully something will come out of it.
cheers for that richard, i will look forward to that. the discipline side of trading is very important to being successful i believe , but is just as difficult to master !! can you recommend any articles or books on the subject of your conscious and unconcsious mind sets that you mentioned in your article. thanks stan.
Hi,
I was going to put up a short post about conscious mind/unconscious mind influences today. Great minds think alike, eh? I'll put some book reccomendations there too. Hope that helps. Any comments welcome
many thanks richard. stan.
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