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I struggle with loss limits (TST combine), advice/thoughts?
To put it simply, I struggle a lot with loss limits. I want to fix this problem. I want to be able to stop when I'm down a certain amount per day rather than taking it all the way to edge. Yes, there is a lot on the line for me, which is why I know fear of missing out shows its face rather easily for me. A part of me knows that once I am actually pulling in checks from TST that I would likely back down, but last week I really disappointed myself.
I passed the $50k combine and was put on LTP. My first day of LTP I made a solid profit of over $1300, which is $200 shy of the project objective for LTP. The next day I was down, and very very irresponsibly I did not have my trade activity log open and was relying just on the profit loss that my chart shows (which does not include commissions) and I ended up hitting the loss limit. I don't know why I did that. I knew there was a possibility I could be close to the loss limit, but I was too busy trading to look. I am a bit embarrassed about it, but it is the truth. From my combine results you can see I'm a very active trader. Most of those days I was trading 1 contract.
I welcome any thoughts, be as forth right as you please. I prefer practical tips to manage my psychology. Motivational thoughts are always welcome. Anyone who has struggled with this before and managed to overcome it, I would very much like to hear what you have to say.
I have long history of circumstances that can no doubt be connected to FOMO, amongst other things. I'm already well aware of the answer, "you should find a job if you're really needing to make money" -- but I'm still okay for now not having a job. And more than that, I think my trading performance shows a clear edge, so to me it is truly an opportunity cost that comes into play finding a job at this point in my development as a trader. I am too close to doing well to go part-time. My combine results are shown below.
The middle picture shows my trading in between my successful combine and the start of LTP. I treated those days as though it was the LTP.
You know where is the answer. You said it.
Its simple, just stop trading when you are
close to daily loss limit.
What I did ?
I calculated how many stop outs are needed to go past the daily loss limit.
With 3 stop outs in row I will be safely below daily loss limit.
With 4 stop outs in row I will go past daily loss limit.
I implemented rule to my self " stop trading after 3 losers in row "
It is this simple, yet it is hard to do. Believe it, and just do it!
Only you can help yourself in this situation since you know yourself the best. Its behavior modification and it has to do with your subconscious, the part that gets you to act without thinking. It is similar to quitting smoking or drinking after being addicted - very few find help externally. Its like learning to ride a bike or to drive a car. Instructions, advice, comments dont really help and most of the time tell you what you already know. The older you are, the harder it is.
OK, some helpful stuff now. Automation has helped me a lot. It is easier to program the mind to follow simple instructions. It is easier to get your mind to do things without thinking when an event or a series of events occur, like a go, no-go situation to put it simply, and it helped me to program these events and make the instructions simpler for my mind to follow. It is easier to anticipate in advance these go, no-go situations and prepare yourself for both scenarios by visualizing your actions in advance. This is a conscious effort in the beginning and eventually needs to be internalized and it takes time.
Trading wise, you might want to consider taking fewer trades a day. Taking trades that make you stay in longer, for larger profits. Basically, anything that helps you rest your back and relax when you are in a trade, anything that makes it less stressful - remember, this is something you are choosing to do 52 weeks a year.
What has helped me is to be sure I am never close to the TsT limit, by having my own personal loss limit that is about half of theirs. So with your TsT loss limit of 1,000, my personal limit might be 500 or 600.
Perhaps that would not work for you, but if you don't have something that stops you when your trading is not working, you are going to keep having this problem.
I have also used the "3 losses in a row" rule that @lemons mentioned.
Here's what I think the real issue is. Sometimes our trading just isn't working. Maybe you are trading your method correctly, but the market is not cooperating -- that will happen; not every method will match every market situation, and you can't expect it to. Sometimes you are trading your method incorrectly -- that will happen; traders have a tendency to get a little off (or very off) in their personal psychology when things are not going well, and you have to expect that to happen.
So you need some external rule(s) that you are not willing to break, that will just put a stop to it until tomorrow.
It is not necessarily easy. The other day I was over my personal limit (I only watch it on a closed trade basis, because it gets too complicated to track it in an open trade), which means I have to stop, but I wanted to "get it back" so hard that I deliberately took another trade anyway. It started to have a loss and, fortunately, I had enough sanity left to close it and walk away from the keyboard. Since my own loss limit (300) is way below the TsT limit for my Combine (500), I still had enough leeway that I did not blow it up. Part of the point of having a limit that is much lower than theirs is to allow for personal weakness and still survive.
The thing that will bite you with a lower personal loss limit is the feeling that you can just trade your way out of a loss, or that you are making the limit too tight for your trading style. So make it not too restrictive, but still recognize that if you have a significant loss for the day, something has gone wrong and you really need to pull the plug.
That "wanting to make it back" or "I can trade my way out of it" type of idea is incredibly dangerous, because it involves denying the present reality that your trading is out of step with the market, and that you can't rely on it any more, at least today.
It doesn't matter that you are "usually" profitable, or that you style of trading "usually" works, or even that you can "usually" trade your way back. At some point it is important to recognize that today has not worked out the way it "usually" does, and take that as your wake-up message to pack it in and trade another day.
In my experience, the rule or rules have to be mechanical, not subject to judgment. The problem is that your judgment is likely to be off at that point, and you need something to just override it. So make a rule or rules that you are not willing to break, and stick to them even though you might not want to.
I have the same issue. I came $2 shy of passing a $50K combine and hit the loss limit. I was stunned. The next combine, I passed. I was assigned to LTP and I came within $20 of meeting the objective and hit another loss limit instead. It is very easy for crude to tear up and down and leave me looking like a screaming banchee. That is me in the picture after I did that again! I don't want to hear anyone say that it would not happen to them. It can, it does, it will.
I am a great analyst. I know where price is going. For me, trading is not getting market direction down. It is learning how to "land mine trade" within the day's algorithmic trading and all the market maker stop hunts. Once I get on the right side of market action, it is nothing for me to make several thousand dollars each day. I know I can make the money. I am working on the other part, staying alive. It is all about the risk management. 100%. I recommend getting back on the horse, and just working it out. It's what I'm doing. You can do it too. Let's get funded together.
I am developing trading strategies for crude. I have several momentum strategies and am now working with UniRenko bar ranges. I am not an advocate for indicators other than pure momentum and price action. And momentum = open/close bar printing. All my time is spent trying to find the right pattern of how to manage the little risk they give you $1k to work in. It's not much. Like I said, making money is easy. To get funded with TST, you have a very tight leash. Too tight imo.
I am practice trading forex and early last week found myself moving away from my rules and over trading. On Wednesday, I put the market down, did not take one glance at it, and replayed in my head what I had done that was different from weeks before. I got away from using longer time frames and found myself in low time frames. This simple, unconscious move had me taking low probability setups and set up a string of losers. Got back to the long time frame and managed to recoup with a dash of profit. One thing I did do was close many of those trades early as I could see they were duds. There is always another setup approaching and I don't HAVE to win this one.
I am working 1st shift and will continue to do so as my live trading commences. I strongly feel this will help eliminate the "scared money" factor. I can keep track of the market on the mobile app.
For me it seems like the point of no return is 7 trades in a row. I haven't had a winning day where I've had greater than or equal to 7 losing trades in a row. Have had solid days with 6, but it seems 7 is the magical number. Thanks everyone for your responses, I will reply later on tonight with some thoughts.
The book, "the Power of Habit" references that rather than trying to change a habit instead insert a new routine into the existing habit that will then affect the overall outcome. Think of what routine you could insert into your existing habits that would change the outcome to what you want it to be.
For myself, I started writing down each trade... and then a checkmark if I had executed it correctly. Very simple
"Trade #1 - then a large checkmark.
"Trade #2 - then a large checkmark.
etc.
Sound crazy easy right... but it slows me down enough to consider if each trade I am executing the trade plan consistently and correctly.
Then I added an upgrade, which was simply ticks... + or - .... A fast way to quickly see how I am doing on the day without having P&L staring you in the face on each trade. Another good way to help keep you away from breaching your loss limit. Plus, you start to see a few of -10, -7, -13, -3 in a row... and you think, what is happening, maybe I need a break?
A simple routine inserted into my trading habit that can significantly alter the outcome of the day.
Now that helps you stay more aware of the loss limit... but now you have to love that loss limit. Don't hate it, or rebel against it, embrace it as the friend you want sitting beside you throughout the trading day. Call it a guru who is going to help you survive to trade tomorrow, and the next day, and the day after that.
I used to have a $1000 daily loss limit, but I found it much more beneficial to decrease that loss limit significantly, so now I have a $400 daily loss limit. This keeps me focused on A+ setups... and yea, if I get there to the loss limit it isn't that big of a deal... because I can easily make that back and more the next day. When I get there, I now celebrate that I can shut it down.
Great tips - I had a checklist before but stopped using it, I'm starting a new one now - a lot of the trades where I didn't follow the rules could've easily being avoided if I had a checklist that would have flat out said no. If there is no checklist, it's too easy to say "it's different this time" when it clearly should never be different.
I hope some of this helps you.
