Off the reservation and self preservation

Right up-front, before anyone else makes this comment I’m going to make it for them.

I am currently failing to learn this skill

Now this isn’t in some sort of ‘oh, woe is me’ post because I’m just not like that – oh no.

This is a statement of fact based on a recent trade where I went completely off the reservation.ย Friday I got involved in a trade with the following characteristics: –

  • It wasn’t my idea
  • It was in a pair I’ve not previously looked at
  • It was against the prevailing market mood
  • My entry point didn’t follow any setup at all
  • It was on a timeframe I’ve not traded in before

While this experience wasn’t particularly damaging financially it did lead me to question whether (after all this time) I have any business putting real money into trades when I am still pulling this sort of suicidal crap.

After much soul searching (well 20 minutes) I’ve pulled my live account and will be trading on demo till Feb. So that’s four months to get my proverbial s**t ย together and prove to myself I can build a rising equity curve over time.

BEFORE anyone chimes in with the ‘demo account is not like real trading’ bleh, bleh, merh meh me noises… I know this. However I’d suggest that if you (or one if you’re pretending to be HRH) can’t do this off a demo system then there is literally no way on earth you can trade successfully with real cash.

I appreciate this isn’t exciting or interesting for people reading (sorry) but as I pointed out this trade was a universe away from everything I know that works…

Reading books, knowing setups and all that is valuable but they’re nothing without proper execution… and my execution really, really does suck.

So back to the drawing board, back to school, back to backtesting and back to demo.ย The upshot of this may be that my posting rate drops off a cliff but it was already pretty minimal. However, in this context going backwards may actually mean going forwards in the long run.

Let’s make it so ’cause now I’m just plain pissed off.

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32 thoughts on “Off the reservation and self preservation

  1. Jessica Peletier (@RogueTraderette)

    You will make it, Rob. You’re doing everything right, except following your rules of course ๐Ÿ˜‰ Punishing yourself by sending yourself to the naughty corner is the perfect thing to do. Not many people can self-punish, and if you have the discipline to do that, you have the discipline to follow your rules.

    It takes time – I still feel like throwing on a rogue trade now and then…it’s only one step to go from ‘placing them’, to ‘not placing them’. ๐Ÿ™‚

    Reply
  2. simon olley (@olleybiz)

    You’ve tried a silly and potentially dangerous trick and paid the price by falling off your bike and giving yourself a nasty shock. Now, your reaction is to put the stabilisers back on ’til February?

    Man up!

    You’ve learned a valuable lesson. Now choose one market that you have some basic understanding of, study it, learn how it ticks, concentrate only on proper set-ups, trade strictly minimum sizes.

    Reply
  3. The1LotTrader (@The1LotTrader)

    Hi Rob,

    From an outside perspective it is clear you have a discipline problem. This trade and the “coffee shop” trade are testament to that. At times you seem to take punts, I would not call them trades since a trade is a preplanned, risk managed, prepracticed play that is shown to have a statistical edge. The other is a punt or a gamble or whatever you want to call it.

    I suspect you are experiencing an enjoyable/painful rush from putting on a live trade that your body is seeking again. So you override your own logical thought processes and before you know it you are in the market and you can’t remember how you got there.

    My inclination would be to ask what is your Grand Plan for trading? where do you see yourself in 5 to 10 years? Have you defined it? That type of context I believe is entirely relevant because if you haven’t set out clearly defined goals and definitions it could be quite easy to just play in the now and look for those quick hits. Your subconscious will think that you are going to become a trader “one day” and so you are not at odds with a quick flurry here and there.

    You need to train your mind into a new you where you are working towards or becoming the vision in that grand plan. At some point the idea of having a quick flash in the pan trade will become so alien to you, you will have no urge to do it but you have to create that context to begin with.

    Personally I think the fact you use spread betting as a vehicle is already problematic. Secondly how do you intend on building up the capital necessary to move into a real market? Is it in spread betting? Are you hoping for 1000% returns or do you have a larger term outside of spread betting plan in place for the time when you make the jump.

    The problem you are talking about is a deep problem with far reaching consequences that I think another 3months on the Sim may not necessarily cure. You may want to forget about trailing stops and markets and this and that for a bit and examine the bigger picture. That context is seriously important base from which everything else should build off of, not the other way around.

    Not expecting answers, I know they are entirely personal, just trying to help with a line of thought that may spark a flame somewhere.

    Hopefully helpful.

    Cheers
    1Lot

    Reply
    1. robertsweetman Post author

      Hi 1Lot

      There’s a lot in there to digest and as you surmise it’s linked into some very personal topics indeed.

      I’m not at liberty to address them here but wanted to say thanks for the comment/input

      Cheers

      Rob

      Reply
  4. Greyzy

    Hi Rob,

    I’ve been reading your blog for a while and would like to add my 2 cents on this matter:

    What you showed us was basically the description of an effect (your behaviour) and the corrective measure (as you see fit). But what about the underlying cause??? Would you be happy about a doctor that gives you a pain killer without finding out the deeper reason for the symptoms?

    So the first point I’d like to make is that you should dig up the real cause for your behaviour before you subscribe any “fixes”.

    This brings me to my second point: your “cure”.
    Right now you are probably as highly aware of your faulty behaviour as you can get. But instead of using this state of awareness to enforce “good” trading habits when it matters most (when money is on the line) you give yourself a break from “live” trading. By the time you return to trading real money most of that awareness will probably be gone, right?
    In essence you might lose money twice:
    1. by not making any money now, while your self-control is highest.
    2. by going back into the “real-world” with fresh experiences from the “demo world” in which you most likely act differently (and learn differently) and a faded awareness of what to carefully avoid.

    I am not saying that staying away from trading live is a bad thing in general, but in your case it’s about controlling certain behaviour patterns. You may be able to keep them in check through awareness while you will hopefully find and eliminate the root cause(s). The latter is essential, because otherwise you probably shouldn’t trade real money at all (and “demo trading” is pointless then).

    Well, just my thoughts…

    I really wish you the best of luck!
    Greyzy

    Reply
    1. robertsweetman Post author

      Hi Greyzy

      Thanks for the comment and good wishes.

      I’m impressed by your observational skills ๐Ÿ˜‰

      You’re right – I’ve not gone into the reason for my behaviour. I’ve also not given much detail about what I intend to do to fix it. Your observation warrants an explanation so I’ll try to give one…

      1) I am likely still looking for short-cuts, rather than putting the real effort in to learn a craft
      2) I’ve a ‘vision’ of what consistent trading should look/feel like which relies on a much deeper understanding of the price action/behaviour of various instruments. Have I put the time in to turn this into a system that suits my psychology? I haven’t. As 1Lot pointed out I’m still a punter.
      3) There’s a stack of money related topics in here that I’m not going to go into (see answer to 1Lot’s comment)
      4) I reckon that the work required to address point (2) will take several months (to do properly) given my other commitments.

      I agree on your point about self-awareness/self-control being somewhat different in a demo situation but I also don’t have the freedom of action currently to ‘try’ to be profitable so again, back to demo-land.

      Setbacks are temporary, quitting lasts forever.

      Robert

      Reply
  5. The HOVIS Trader

    Use the demo account to test strategies, set-ups, theories etc but nothing can replace the emotional feeling once you have a trade placed. When you have a position on the trade can only go 2 ways: success or failure, if you know the win: loss ratio of your set-up, the risk:reward of the trade and the expectancy then all you have to do is place enough trades for it to work.

    I would not worry about using a spread betting account either, there’s very little difference from being in the real market and it’s more tax-efficent, spread betting is my main form of trading the markets.

    I have a “Trade Card” that I fill-out, log and record every trade I make – it records everything to do with the trade and takes 2 mins to complete, part of it grades my entries and exits – I can then analyse the entire trade from consideration to exit and any mistakes I’ve made, to be honest I very rarely deviate from the plan and if when recording details on the trade card something does not add up I’ll skip the trade, but the trade card always gets completed even if I take 5 trades off a 5 min chart. The point being if something does not fit the rules the trade is not taken.

    It sounds what you’re failing to do is stick to rules and have the discipline to stick to them regardless – easily fixed.
    You might benefit from reading books regarding discipline rather than set-ups.

    good luck

    Reply
    1. robertsweetman Post author

      Thanks Hovis

      You’ve hit the nail on the head really

      1) What I’m doing completely lacks structure
      2) I don’t know the stats (win/loss, risk/reward, expectancy) for setups I’m aware of – I KNOW what I want to know about a setup before I get into a trade. Have I done the work to really understand what this looks like? Nope… Which means I shouldn’t just throw money out of the window trading a live account to find out.
      3) I will be using the time to figure out what these look like for my perception of the market
      4) I’ve started building this structure in Filemaker which would look very much like your trade card
      5) Agree on spread betting – I know plenty of guys trading well size wise to make this irrelevant

      So discipline test number 1 goes like this – I will not get back into the live market till I’ve got a much clearer FRAMEWORK for taking trades in.

      I can only take so much tough love from you lot out there so I may well pull this together in weeks rather than months ๐Ÿ˜‰

      Would be nice to write a post along the lines of ‘I had a good week – here are the results’ right?! LOL

      Thanks for the comments and support

      Robert

      Reply
  6. umm_wasnt_i_supposed_to_get_72_virgins_?

    i’ve been following your blog and i really like your discipline and determination. that being said, we really are just human and we do make mistakes. i commend you for having the discipline to formulate a plan of attack – including just doing demo. i agree with you 100%, while demo isn’t “real”, if you screw up there, you’re better off blowing your money on strippers.

    whatever plan you have to better yourself – do it and do it with a full mind. trading your own money is about as intricate as landing on the moon. i look forward to reading future posts when you’re giving guidance younger traders on how to make it!

    cheers!

    Reply
    1. robertsweetman Post author

      Thanks mate – really appreciate the encouragement – and yes the definitive ‘how to learn how to trade like a complete BOSS’ online course will be out soon ๐Ÿ˜‰

      Kowabunga!! ๐Ÿ˜€

      Reply
  7. The1LotTrader (@The1LotTrader)

    Guys, can I ask you one question? Have any of you actually met, in person, a highly successful spread better, making lots of money and turning a living?

    The idea in itself is absurd because anybody that draws that level of competency would know what it is they are in fact dealing with, a spread betting dealer is not a real market, when you place a trade you are in fact placing “a bet”, I’m going to say betting because it is in fact not a a trade. You are betting against a house. If you knew this and managed to beat the house over time. Why would you continue to play against the house? when you are well capitalised enough to move into a real regulated market that offers a level playing field, you would move.

    The idea that you make a large sum of money over time in a world that is designed to work against you and then continue to do so is illogical. If you have managed it and continue in this vein without understanding how you got there, then it is likely you are a statistical anomaly with a target painted on your head.

    When you spread bet you are taking a price offered to you by the dealer, pure and simple. They are bucket shops, more often than not, the price offered to you is to there advantage. Read the small print…

    The same get up has existed for years, read reminiscence of a stock operator, go to my Charlie D Video and look through to the bit where he talks about the Met-RX pit, I think he says Met-RX, audio is bad.. he will tell you, “you are playing against guys that have a very hard time losing”.

    The tax efficiency argument is not not an argument, gambling in a casino is also tax efficient..

    This is not to say that I do not believe you can’t learn how to trade with spread betting but at least see it for what it is, otherwise you’re just another sucker waiting to be rolled over.

    Go and read Sith Traders blog, look how he uses his knowledge of these guys models and uses it against them, to exploit their weaknesses. He doesn’t go into detail but that is what he is doing. Personally I am surprised they don’t cancel his trades more often but he has to move dealers regularly enough. Ask yourself why he needs to do that?

    1Lot

    Reply
    1. robertsweetman Post author

      I know of at least half a dozen guys doing very well through spread betting – whether it’s ‘real’ or not they still have an edge that works for them which they’ve developed over time. I’ve had a conversation with one where he said he preferred spread-betting over DMA and CFD’s due to fewer re-quotes.

      I don’t buy the ‘crooked broker’ argument because this sounds very much like a cop-out/victimology to me. To each his own I guess.

      Reply
      1. The1LotTrader (@The1LotTrader)

        Rob,

        They are not crooked broker’s, they are bookies.. there isn’t an argument, it is a fact.

        How do you think these guys make their money? Taking a 0.005 cent spread off of each betters deal?? Do you know how hard it is for brokers in the real markets to make money off of commissions alone on decent size deals? the business is so cut throat now the deep discounters are squeezed up against the wall. They need the interest on the float to survive which is another reason many are struggling these days in the current environment. When I moved my account about a year ago I spoke to a ton of different guys around the world. I cold called bank trading desks and got to speak to some guys that broker deals for the hedge funds. Some of them quoted me ridiculous rates per trade. I asked them why? I was told because this is what we really need to survive. The deep discounter model currently being employed in the states has been shown to fail time and again. So you take it or leave it he said.

        Contracts for difference is the same game in another guise, the firms supplying them are not brokers. Brokers are guys that sit in the marketplace and “broker” deals between traders and take there cut for arranging the transaction. The spread betters, CFD’s, retail forex dealers are in fact offering a price and hedging there books or taking the other side of the trade. This is in no way what a broker does. Like I already said, this game has been going on since the beginning of time. Every couple of decades it is given a new coat of paint. At least the spread betting firms call themselves for what they are. Have a look up why it is illegal in the States, Google is right at your finger tips.

        “I donโ€™t buy the โ€˜crooked brokerโ€™ argument because this sounds very much like a cop-out/victimology to me” – based on what mate? what some guy on the internet told you about his spread betting riches? I mean clearly Hovis makes an absolute fortune at it: says it right here on his site, http://thehovistrader.wordpress.com/tutorials/ , I wonder if Hovis stands for specialising in taking the bread out of would be traders mouths..

        And requotes. Do you know what a requote is? It is the dealer saying “hold up, the odds have changed, they are not in my favour anymore, hang on, about to give you a new set of odds, ah.. there we go” Read my post about the casino, the small variations in price, widening spreads, requotes, front running, price shading, having access to the book and knowing where all there clients are sitting, supplying the actual synthetic price feed. These are all small not so apparent things that lead up to a big fat green Zero on the roulette wheel. They are a house.

        Yes it can be beaten – over the long term, most probably not.

        Given our long and entertaining chats so far I am surprised by the dismissive response.

        but as you say, each to his own.

        1Lot

      2. robertsweetman Post author

        Hey 1Lot,

        Look, you’ve done way more research on this than me so I’m going to concede.

        I re-read my reply and don’t feel it was particularly dismissive. However it could have been coloured (by me) from the fact that I’m so very far away from having the resources to be worrying about this particular problem that it’s currently irrelevant.

        1) I don’t have the funds to trade in the real market
        2) I’m not consistent
        3) It’ll be >2 years at least before I’ve got even close to enough cash to attempt to trade full time

        My experience with spread-betting has been uniformly positive – I’m the guy who can’t trade for shite regardless of the platform ๐Ÿ˜‰

        Cheers

        Rob

  8. The HOVIS Trader

    I don’t really want to deal the public, I find charging puts off 99% of people and you’ll also notice I insist on pre-course reading/learning – this puts off another 0.5% before they’ve paid me a penny. If someones genuine I’m happy to spend my time teaching them, if their not I can do without interacting with them. and if they don’t show the right attitude I’ll refuse to teach them so the vast majority of would-be’s won’t be wasting their money via me.

    1lots right you have to be careful with SB firms and they are a secondary market, but, most of the top SB firms virtually match the market that the difference is not an issue, if the spreads too wide miss the tradeand if you have live charting (not via the SB firm) you can quickly check cash prices v the ones the SB firm are offering. Obviously they can if they wanted too [manipulate price], but I’ve never seen happen [manipulate the price] – the negative publicity would not be worth it for them imo, but they could should they wish do it.

    and yes I do make a very good living from the markets [mostly spread betting] and have done for the past 4 years, the reason I trade is for the freedom, If I want 4 months off to follow sport or take a break I have that choice – I do not sit placing trades every 2 mins, 5 days of the week – I traded the Euro yesterday and if I want I can now take the rest of the month off.
    I don’t know many other’s that make money Spread betting as I keep away from BB’s and forums and the like as I prefer to find my own way with things without others influence, but I’m sure there are some bearing in mind that 95% of people either fail at this or just break-even

    Reply
    1. The1LotTrader (@The1LotTrader)

      ok Rob, no worries I took your reply as in you were dismissing it but I see it is perhaps something you just don’t think is important which is probably my fault for being overly subtle.

      The majority of folk that spread bet tend to do so because of small cap., there is no other reason to choose it over a professional regulated market. It is always cap. This is what I was getting at with your larger term plan. Whether you truly see yourself as moving towards a direction that will allow you to attain the cap. that will allow you need to make a decent go of it and what that plan is.. 10000% returns in SB is not a plan.

      The ramifications of not having that plan leads to the type of manifestations you describe.. Feelings of hopelessness being one.. or the feeling of needing to hit one particular trade out of the park.. the feeling of impatience or the feeling of “it is so far away in the future”, which in many ways is a sub concious excuse for current behaviour. Nothing has to be in the future if you are planning and working towards it now.

      Hopefully a bit of help maybe, I may be completely barking up the wrong tree I admit. I can only tell you I have never suffered this problem from day one. So trying to relay what my own process and mindset is like, we are all different though. I thought might be of some help. Apologies if I’m totally off the mark.

      1Lot

      Reply
      1. robertsweetman Post author

        No worries – it’s all good feedback and certainly helps me think. I guess as far as planning and timescales go the only parallel I have personally is going through the sort of stuff I have done to get fit/change my physique. Numbers in years… i.e. year 1, year 2 etc.

        0) 82Kg but fat/no muscle tone/unfit/overweight & running = puking
        1) Started running
        2) Ran a lot
        3) Ran an ultra-marathon (then stopped running! lol)
        4) Joined a gym
        5) Bulked up to 102Kg
        6) Realised quite a lot of it was fat – started experimenting with stuff
        7) Back to 91Kg getting lean, better diet etc. Target is 82 but ripped – haha

        Six years from starting this process I now go to the gym 3 days a week, eat well (ish) and have figured out enough levers and info to know how I need to exercise to lose fat, build muscle etc. – it’s simply a matter of doing the right things day in, day out and I’ll get to where I want to physically.

        The parallel with this to trading/goals is clear but more opaque since you’re dealing with intangibles and emotion. Also the timeline isn’t advertised as six years, more like 6 days (lol) so there’s a certain amount of expectation management issue there.

        So going to leave work now and crack on with the plan/structure I want to build. Let us all continue in moving forwards! Banzai! ๐Ÿ˜‰

  9. Diane

    Hi, Rob

    There is a need here to reassess everything you are doing. I am coaching a few traders with issues at the moment and firstly their trading systems don’t stand up. If a trader doesn’t have a good system which is grounded, got an edge, been backtested/forward tested and is monitored, then no trader stands a chance of making anything except losses.

    The challenge is how does a new trader know their system stands up when they haven’t got the experience to analyse it! They don’t and that is the issue – they are going in blind into market. Unfortunately, there is very little concrete advice and structure available in books, courses and other resources.

    Forget about psychology for now, work on having a good trading system. If you not sure what to do or want someone to check testing results, get some help. You have some experienced traders on this blog and I am happy to help out as I am sure others are.

    About spreadbetting – I have been using SB accounts for the last 4 years and have not had a problem. They aggregate their clients positions and then trade the other side if required. This information has come from an accurate source. I don’t have any requotes or issues on platforms I am using and never have had and I daytrade forex. oil and gold.

    Hovis trader is correct in the monitoring he mentioned, it is critical to success. I do similar things to to monitor my performance and my systems performance and feel it is critical to it’s success.

    Rob, I won’t wish you luck, trading is not about that. It just needs a fresh approach.

    Di

    Reply
    1. robertsweetman Post author

      Hi Diane

      Yes, that’s bang on what I’d recognised myself. So that’s the plan – to bridge the gap between what I have been doing and what I know I should be doing rather ๐Ÿ˜‰ I have actually spent the time/money getting hold of an education so I know what I should be doing however I’ve essentially continued to be a lazy ass looking for a shortcut. I get the process of testing, trading forward and monitoring. I know what should work.

      So there – I’ll admit to being foolish, lazy and culpable.

      Reset, start again and do it right.

      Cheers for the comment – much appreciated

      Robert

      Reply
  10. Steven

    Robert – thanks for the blog. It’s “warts n’ all” – quite brutal and honest.

    I read your stuff last year and hoped you’d turn it around, and was a bit disappointed to catch up on your blog today and see all of this business is still causing you considerable pain.

    I will say to you that you are making it WAY harder than it actually is!

    I’d advise that you get a simple, mechanical system to trade.

    Simple so that the exits & entries are unequivocal.
    Mechanical – so that emotion can be removed from your trading.

    I was going to say I wish you luck, Robert. But I don’t – I wish you thousands of emotionless trades with positive expectancy.

    Please view the following presentation on what makes a successful trader: http://www.youtube.com/watch?v=ew1L6SLpHgM

    Remember – one trade matters not in the grand scheme of things.

    All the best.

    Reply
    1. robertsweetman Post author

      Hi Steven

      I reckon you’ve hit the nail on the head there as I’ve been thinking maybe I’ve been spending a lot of time getting caught up in one trade rather than 100’s or even 1000’s of trades ๐Ÿ˜‰ Way too much attachment to being right and not enough longevity… It appears I’m too precious by half

      If I simply wait and refuse to take shitty trades this will actually come good for me.

      Cheers for the link – I will go check it out later

      Thanks for the comment – it’s much appreciated

      Robert

      Reply
      1. Simon M

        Robert, have you audio-booked ‘Trading in the Zone’ yet? I know you’ve probably over-saturated yourself on trading media but give that a read / listen. It was a game-changer for me.

        Also, if you have a minute have a look at my short video http://www.ftseday.co.uk/simons-blog/

        I feel like publically blogging some of my stuff after being a long-term reader of your site! Although it may not be to such a depth!

      2. robertsweetman Post author

        Hi Simon

        Watched the video – very nice and some extremely good points. I like the ‘feedback loop’ slide showing how you improve as a trader. I’ve listened to ‘Trading in the Zone’ and I’m going to be honest and say that I have trouble connecting to the info/content. I’m struggling to explain why that is but it sadly doesn’t strike a chord with me. However I am really impressed with Mark Whistler’s book ‘Trade with Passion and Purpose’ which is excellent.

        I will be trading a particular EURUSD behaviour forward (on demo) in the live market for the next couple of weeks and then will be back in the fray in November, earlier than previously anticipated.

        Much fun will ensue I’m sure ๐Ÿ˜‰

        Thanks for the comment

  11. Simon M

    Thanks, early days but I intend to develop the blog.
    Regarding Douglas, horses for course! I’ll have to take a look Whistler’s book.

    Reply
  12. Pit Village Trader (@PitVillTrader)

    Hi Rob,
    I’ve been fascinated by this particular post and a few of your recent ones. I’m not even going to try and offer any advice as I feel like I am where you were perhaps 12 months ago.

    What I would like to do though is wish you all the best in your break from trading and hope that the time off allows you to refresh your mind and body so that when you do return, you return with open eyes and a more clearly defined approach.

    I also think it’s important that you keep believing in yourself and if you really want this, back yourself 100% to overcome the obstacles that are in your way.

    One very important point to note is that to become successful at anything, it takes a lot of time and experience and you really must learn from every trade you make.

    Anyway, I wish you all the best, mate and look forward to your return.

    Cheers,
    Lee
    http://PitVillageTrader.co.uk

    Reply
    1. robertsweetman Post author

      Thanks for the comment and support Lee – all very much appreciated

      Beavering away in the background like a good’un to make my first post back a doozy

      Taking another flying leap at sorting out the bit between my ears and re-framing the whole thing

      Stay tuned ๐Ÿ™‚

      Cheers

      Rob

      Reply

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