Daily Loss

Hi Steve,

In your post, you mentioned: "...I have a couple of solid days and then just BAM I let it go. Any thoughts on how to kill this bad habit it is really haunting me." Can you share more specific details about your trading process (i.e. what you are doing to give back your profits, etc.), as well as what you think may be the cause of your self-sabotage?

Here are some thoughts from my experience...Generally speaking, our brains are not wired for uncertainty; probability-based thinking; and not being able to control the outcome: three implicit characteristics associated with trading. As a trader, we can't control the outcome of any trade. Are you aware of how your Limbic System & Amygdala operate? What most traders are completely unaware of and unprepared for, is the activation of their fight/flight/freeze arousal response associated with their Limbic System. When capital is at risk, logic & reason become compromised by the Limbic System's ancient and unconscious emotional response to uncertainty, which dominates the rational thinking mind. Examples of how the rational mind is compromised are: fear of entry, fear of loss, revenge trading, over-trading, FOMO, & failure to take losses (which ultimately turns into taking a large loss). If someone is accustomed to controlling the outcome in their normal day-to-day lifestyle/career, they're in for a wake-up call as a trader, particularly short-term day trading. The Limbic System operates from the subconscious level and is activated in milliseconds before one can 'think' logically with their Prefrontal Cortex. When triggered, it hijacks rational thinking. It operates under the premise that when one is threatened, there isn't time to "think," only fight, flee, or freeze. To a mentally unprepared trader, the cascading biological emotional stress response from the release of the neurotransmitters Adrenaline, Cortisol & Norepinephrine into the bloodstream simply makes matters extremely challenging to effectively manage trading performance. There is also the opposite arousal pole of the Limbic System associated with euphoria which produces the neurotransmitters Dopamine and Oxytocin. One of the main reasons why many traders give back their profits is that they are unaware they are making poor trading decisions while high on a Dopamine rush.

Your Limbic System/Amygdala would naturally prefer to master disappointment rather than risk the loss of control and uncertainty associated with the implied risk to realize the fulfillment of being a consistently profitable trader. Examples of trading behavioral response when an amygdala hijack occur are... a) fight response = aggressive revenge trading, or over-trading, improper risk management; or moving stops so as to not experience a loss; b) flight response = jumping in and out of trades; c) freeze response: not taking the signal, or chasing trades. All the Limbic System is concerned about is the present moment. It has no interest in long-term beneficial outcomes. For example, by not taking a trade when your system gives a signal, the survival brain wins, because it's prevented you from you experiencing a potential loss. Add to this paradigm one's internal self-critic (the inner voice); and the subconscious beliefs one has about him/herself: mattering; self-worth; deserving; and self-importance, and you can see how significant of a role psychology plays in trading decision-making and performance. Also, if a trader grew up in a dysfunctional family, particularly an alcoholic family system, that will add more layers of issues involving self-worth; a need to prove one's worthiness; mattering, etc.

Speaking of outfits like TopStep (who fund traders that pass a rigorous rule-based combine) ... ironically, their core revenue source that facilitates their business operating is contingent on traders succumbing to the failure mechanisms of their biology.

A critical stage in one's trading career (in my humble opinion) is when a trader learns to develop an acceptance of the psychological discomfort associated with the mental construct that s/he can not control the outcome of any given trade. The path to trading success, unfortunately, is a long and messy journey.

I look forward to hearing more about your circumstances.

Jim

Jim that is some heavy duty thoughts there but I understand what you are saying. So here is my example for how things went this week. Right now I am working on just a 300 - 400 a day and then close it down. Also my intentions are to also have a daily loss limit of around 350. So this week 3 days of 200 to 400 and once I reached that limit I shut down and if I took any trades it was only on SIM but today was a different story. I actually had my target met with my 1st trade and within 15 minutes of entering my trade. I took 1/2 out thinking that it was going to go lower which it didn't but still was up no loss at that point after I closed it. Then I got down a couple hundred but I thought because I have done it before I could bring it back which I almost did but then I was frustrated with myself for not having closed from the very beginning I let a trade go against me and gave my wins back. This is the only thing that keeps me from really moving forward. I tried so hard to keep telling myself all week 350 loss and out for the day for this very reason but when the time came I couldn't do it wanted to keep Fighting(lol) as you mention.

Steve

@Jim this was a very enlighting response that really made me realize some my own personal issues I've experienced, thank you for making it make sense in a very educated manner.

@sbrown, If it's any consolation, I to have experienced the exact same emotions and habits you are describing, I have tried the TopStep Combine like 5 times, each time getting extremely close to the goal of passing but my combination of old bad habits, prior bad trading education, and my own greed caused me to blow it when I've been with $200-$300 away from being funded. Also, TopStep is a bit tight in terms of truly letting the zones work out in my opinion. I've had to commit to trying to use the STF for scalping (which is awesome) but share the same experiences you described plus what I mentioned. Also, I was using max position size which was not very smart. I will keep trying and know eventually get funded as will you. Just regroup and follow Will's principals and we'll both get there.

@Luis Yes I have been funded once and blew it and have had way too many resets to count. I am using a different company but still have the haunting failure issue. I still have a ways to go with the Zones stuff and right now have to live with only the live trainings and reading through the forums and such to get my knowledge and I think I am slowly getting there. It is definitely hard to work the combines with TST because of time limits. Do you mind me asking what settings you use on the STF?

Thanks,
Steve

I think everybody has to read more than once what Jim shared above. It contains so much information that you might not be able to understand completely how deep it is. Seriously, wow.
I read a very good book, recommended here in different post, called “trading in the zone”. Very good reading about our own beliefs. But even though that book doesn’t touch so many topics as Jim.

I also experienced the same problems, probably as everyone else. I’m getting much better but takes time. You have to create new habits and beliefs.
The market never do anything wrong, it’s us who receive that information emotionally.

Steve, I really recommend you to keep practicing before you try to get funded. This type of accounts need a lot of self control if you want to succeed. You are not going to be consistent only because you say you have to. If you're not consistent now, you're probably won't be it under pressure.
The problem if you are not ready, you’re not only going to loose money, you’re also going to get frustrated, get mad with yourself, question everything you know and probably create bad habits. It may help you but generally I would say it could do more hurt than good.

One way to go through this is practicing until you don’t have any doubts about how to do it. The day you’re ready is the day you’re not trying to figure out nothing. You know what time frames you like, you know exactly what is your strategy, your risk, everything.
If there is any part you’re trying to figure out, the day you have a loss you’re going to question it, try to adapt and change, but on the move. Maybe that was not the problem and you fix what was not broken. It’s like trying to build the plane while you’re flying it. Again, probably you’re going to question everything you do.

For example, Steve, I think you’re probably over trading, revenge trading and all the symptoms Jim mentioned. The trade you mentioned clearly was for the wrong reasons. I don’t know if you’re aware of how you described it (because I have done it before I could bring it back) but it says a lot. You didn’t enter because price was in demand for example, or because any Fibonacci ratio, you enter because you wanted more profit. If you’re looking at your account balance, you’re more worry about that than what the market is telling you.
How do I know that? Because we all make the same mistakes. If you loose a trade, you probably want to make another one to recover that loss, right? At least, if you still didn't hit your daily loss, right? And if you get profits, probably you don't let your winners run, you take profit as soon as you get "enough", right? But right away you feel you could get more... Wrong reasons... Trade the chart, not your account balance.

I think that once the markets start to make sense, once you accept the losses, once you figure out your whole strategy, then you don’t need to think that much.
I don’t think how to press the brake of my car, I just do it. At the beginning, I had to think about not pressing it to hard, too soft, too soon or too late. Now, I just do it.

Keep practicing and be aware of your thoughts. If you open your computer thinking "am I'm going to loose today?" you're probably will.
If you know you're edge, you know when you have a loss that you were playing odds. This time was not in your favor but in the long run it will.

Good luck and good trades!

Sebastian

Sure thing Steve,

I like using a few combinations depending on which instrument and the current market conditions.

60m15m
30m10m
15m5m

But keep in mind I am starting to move over more to the LTF like Will uses and drilling it down to the STF

Daily/60m
240m/60m

Hope that helps.

~Luis

@Sebastion I appreciate your comments and I don't think I ever thought about it that way when you mention what I said and what it really meant, that I took the trade not because of the setup but because "I have done it before". So this is definitely I need to take a hard look at and get my act together on it.

@Luis I have been using 60/15 and looking at daily so close to what you have been using. Trying to look at longer but when doing the combine stuff you can only stay in till end of day so doing longer trades is difficult.

@Brad Thank you for the input and everything you mention are good steps to get the process going and I know I should do some of them and have done well documenting in the past and then quit doing it. "Stop Thinking" , I THINK i will put that on a post it right next to me when trading. Thanks again for the input I will definitely soak all of this good advice in and hopefully be able to come back in the near future with victory under my belt. I will also agree after seeing what Will has I will not be doing anything but this because I know it to be true just need to get better at trusting zones and accepting the loss END OF STORY!

Thanks,
Steve

@Sebastion Don't worry I don't think you misunderstood me and hope anything I said didn't come across wrong. I was saying I think you are right on in the fact how you pointed out what I said when describing what I was doing and it made sense to me.

Steve...some thoughts on your reply... I realize it's easy for me to armchair quarterback, but apart from having a hard daily loss limit (in which you stop trading), you are potentially setting yourself up for daily disappointment and lackluster overall system performance with setting daily profit goals. First off, you should have a rule-based system with a proven expectancy, and have it written down in detail (if this...then that). I'd recommend that you consider discontinuing your focus on meeting a daily profit objective (and then you stop trading once it is met) and replace it with the objective of executing your system with an exceptional daily "performance" objective. Why? Because with any successful system, not only do you have to take the high probability signals that arise when they do, but some trades that you exit early after pocketing $400 will turn into large winners that net 3-6x that amount. It's important for any successful system to log those large winning trades. Adopting a trailing technique will aid you in that process. Trading successfully ultimately boils down to performance. If you are trading a system with a proven edge & reliable expectancy, the profits will take care of themselves by executing your system with exceptional performance. Consider replacing the daily profit objective strategy with that objective, and learn to stay in trades that are working in your favor. I also pick up on your internal critic beating up on you ..."I was frustrated with myself for not having closed from the very beginning I let a trade go against me and gave my wins back ... This is the only thing that keeps me from really moving forward." I'd argue there's a high probability that's not what's keeping you from moving forward. There's an unconscious agenda that's keeping you from moving forward. Good luck.

@TraderJim
I appreciate you in depth analysis of what is going on here. I will say it is very hard to not look at daily targets etc...for when when trying to break through the combine to become a funded there are a lot of rules to follow and time limits on everything so not easy to do but will definitely look on how I might be able to change the approach to everything. When you mention replacing the targets with daily "performance" objectives can you give an example of that? Thanks in advance for any further advice.

Steve