Weekly Trading Review – Acceptance

Weekly Trading Review – 6th to 10th March

Summary of Performance

Overall an okay to good week.

Overall trades where Grade A average. I took the average amount of trades when compared to the typical average amount of opportunities that my system normally finds.

What did I do best this week and how I did I do it?

I was focused and followed routine / process, took nearly all the trades that fitted my process, stayed out of the trades that where borderline fit to my process.

What did I do badly this week and what lead me to do it?

I did not have anything that went bad during the week.

I found myself getting gun shy at the end of the week, and did not want to trade the NFP.

This was due to fear of giving profits back.

I did trade the NFP, and took the majority of trades that my system indicated. Only 1 trade that stuck out, where I know I hesitated due to FOL. I did place the order but the hesitation cost me the fill.

Why was I hesitating?

Due to fear of giving hard earned profits back. Which is understandable but not acceptable.

Why do I fear giving hard earned profits back.

I should trade my system, regardless of my state of the profit and loss. This should not have any bearing on the decision process of whether the trade fits my criteria.

But in real life after a good week, it is there in the back ground, trying to muscle in to the decision making process.

A little while I go I did this experiment. Where you are given $25 (pretend money) and over a period of 30mins, place bets on a coin tossing exercise. The coin is programmed to come up 60% heads and 40% tails.

I managed to turn the $35 into $5343 over the required period.

Interesting, I noticed that I had familiar behaviour patterns. As I went through a string of losses, I became more risk seeking. This was demonstrated by the speed I was willing to place the bet.

And as I went through a string of winners, I become more risk adverse, I was a lot slower to place bets.

This become a lot more pronounced once I had got the total balance over $2000.

I was displaying the same emotions on a fake money exercise, as I do with real money.

Which has got me thinking that maybe the problem is less to do with money and more to do with the law of large numbers.

And that whilst I understand the law of large numbers, I am not truly accepting this in my trading. Otherwise, I would not be letting these emotions effect my decision making process.

A string of losses or a string of wins should not have any bearing on the decision of whether I take the next trade.

My trading system decides whether the trade is valid or not, and this decision is independent of previous results.

Why am I struggling with accepting that variance of results is part of all trading systems?

Whilst I am improving with this aspect, it is constantly there and is a battle at the end of good weeks to stay focused and keep taking the trades.

I think that it is a lack of self confidence in myself and a lack of self-belief in my system.

Why this lack of confidence in myself and my system?

The system itself, has been worked on and improved, and I have removed many of the discretionary elements.

And I know from all the testing and the past results that it has an edge. The past results have only been marred by human operating error.

The lack of confidence in my trading system, comes from the lack of confidence in myself. This comes from past experiences and that my stats constantly show that I am the problem when it comes to execution.

I cannot change what has happened in the past, but I can change what I do in the future.

Of course, I do not expect to get rid of these emotions, but I need to be able to get myself into a position where they do not influence my decisions.

What am I currently doing to help this?

Mediating twice a day.

Trading more mindfully, taking notice of my emotions and accepting them but not focusing on them during the trade.

Using positive self-talk to replace the negative self-talk.

This has all helped me from making poor decisions that are not in my best interest but has had limited effect on this sort of decision making at the other end.

I have been recommended to read Trading to Win by Ari Kiev.

I will read this and think of some possible solutions to improve this situation.

Notes

Below is the link to the coin flip experiment.

http://coinflipbet.herokuapp.com/

Also check out the article called Lessons from betting on a biased coin, afterwards to find out what they learned and how your results fit in with this.

Thanks to Auh for sharing this article and experiment with me, it has been very helpful.

5 thoughts on “Weekly Trading Review – Acceptance

  • 11/03/2017 at 21:03
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    Hi Adey! As always, very nice review. I did the same coinflip exercise a while ago. A very good tool to get a better grasp of your tendencies. I used a bet size based on Kelly criterion (adjusted to be slightly more conservative) and reached the threshold of 2.5k quite quickly. When the game informed me about the max. payout, I got very conservative with bet size, reached the payout threshold and stopped the game with 10min to spare. I do the exact same thing in trading. When I reach level of profit that I consider decent, I get passive (also had this issue on NFP friday).

    Dr. Steenbarger had a great post recently about methods of accepting emotion in trading and better practical preparation: http://traderfeed.blogspot.com/2017/02/a-powerful-technique-for-changing-your.html . It has been working ok for me this week. I’m hoping it continues.

    Reply
    • 12/03/2017 at 13:14
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      Hi Maro,

      I also used kelly for position sizing, but rounding down, to make the calculations quicker. As I intend to place the largest number of bets as possible. Nearly went bust twice and took 10 minutes to get to 2.5k, and then that was when I really started seeing the risk seeking and avoidance. Numerous times I wanted to stop but did not, I managed to keep going till a few minutes from the end and then I had a look at the results. And the interesting thing was if I had stopped when I really wanted to stop which similar was around the 20min mark, which was around the 3k mark, then that is around 60% of the total balance I had by continuing to the end.

      Lesson there for both of us. I think.

      Thanks for the link. I have read it though, though I have not much success in visualisation in trading, I will add it to my morning mediation practice to see if it helps.

      I hope you having a good weekend.

      Adey

      Reply
    • 12/03/2017 at 14:50
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      Thanks for sharing the Steenbarger link – I have been been looking for something “simple” to work with in this area.

      Reply
    • 12/03/2017 at 13:04
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      Thanks mate. I appreciate it.

      Reply

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