PRESSURE: The Number One Killer of Trading Psyche
After I closed the $5,000 small account project down to the public...I was staring at the account up just $1500 after a month of trading it. The goal was to double the account, which was not lofty in my expectations using margin the way I do, and being that the account was only $5,000. So after one month of trying this, I just thought to myself..what went wrong? Why wasn't I able to do this? I make money pretty consistently in my main account, my green to red days ratio is around 80/20 typically - I have a small room of 10 buddies who watch me do it regularly - and yet here on this small account, my green/red day ratio was closer to 50/50. Why? What went wrong?
I tried to justify it..saying "oh I didn't have buying power" or "I couldn't trade multiple names at once like I usually do" or this or that or the other thing, when in reality...it was NONE of that. It was one simple answer...pressure.
On 10/20/2016, I closed this project down to the public after a month of unsuccessfully trying to double it live on screen for everyone. I then proceeded to trade the account privately after that, and the before & after is pretty staggering - I went right back to my more typical 80/20 green/red days ratio, and I essentially doubled the account in 10 days. Why? No more pressure. I made a proactive decision to change my situation to improve my environment and decrease the amount of pressure involved. This is something I want all of you to try and do & assess in your own trading situation currently, which you'll read more about in a moment below.
Zoomed in view if that first one is too small. Above the red line is where I was trading for an audience trying to double this account, and below the red line is where I stopped that and traded pressure-free.
Unnecessary. Pressure. Something we ALL put on ourselves in one way or another in trading. And it's likely the very demon responsible for a large, large majority of your issues, I can almost guarantee it.
There are so many different forms of pressure in this game. They don't have to be money related, either. For me in this particular scenario, it had nothing to do with the money, there was no fiscal pressure here. This is a 5K account, if I blew it up obviously I would not have been happy, but it also would have zero impact on my trading moving forward, you know? It wasn't life or death.
The pressure in this case, was to perform. I had performance anxiety!!! [insert corny sexual joke here. I know some of you are thinking it LOL] I couldn't get it up!!! My account, that is ;)
In all seriousness though...I really wanted to give guys who are struggling with their account some inspiration to keep hope & keep fighting, and show that it's possible to grow a small account. Therefore I felt pressured to perform on command. And that's not the way this game works. Just like when you're pissed off about a loss, and you go hunting around for another trade demanding to make back the loss you just took....not. the way. it works. And the sooner you can come to terms with that, the sooner you will significantly decrease the amount of account bleeding and issues you run into.
Chances are you probably have unrealistic expectations for the start of your trading career, as you've been starstruck by the guys you idolize, and get frustrated early on saying "well why am I not doing better by now? Whats the hold up? What are they doing that I'm not?" That's one form of pressure. The other BIG one is trading with a tiny amount of capital where if you lose it...you're done. Such a killer. You will never have the ability to hold out on trades, you'll constantly take tiny green profits the second you see them because your psyche is so warped from the PRESSURE you've put on yourself to succeed, and succeed immediately. It just doesn't work. You're so worried about losing money that it completely consumes you and overrides your entire thought process & decision making ability. If you're trading under this kind of financial pressure, you've lost before you even wake up in the morning.
If this describes you, and you're trading a tiny account you can't afford to lose and you trade scared and micro-scalp everything out of "fear of giving back gains"...then stop trading. I mean it - just stop. That's a completely unhealthy place to be, and you need to find a way out of that situation ASAP.
Save up money, and trade with disposable income, not "all you have". The day you do that, there's so much less pressure on yourself, and you can just trade. Learn, and trade. Not be obsessive compulsive staring at your PnL tick by tick with your sweaty nervous hands constantly on your mouse ready to bail on the trade at all times - that's insanity. Pure and utter insanity. You'll be totally miserable, and it'll get you nowhere.
So take a moment today to think about the situation you are in. Think about your financial situation. Think about your expectations you have for your trading career. Are they realistic? Are they healthy? Or is there some form of PRESSURE that you've laid over your shoulders like a ton of bricks?
Figure out a way to trade in as pressure-free of an environment as possible. It will do wonders for your progress as a trader. If that's not a possibility for you at this current time - then show some maturity and patience, and stop trading for the time being. Do what you have to do elsewhere in your life until you can improve your financial situation and you are able to trade again in a low-stress, pressure free environment. As soon as you can accomplish that you will thrive, just as my small account thrived as soon as I made a change and improved my situation in include less pressure.
If you choose to ignore me and continue to try and force the issue and pray for a miracle...well...I think you know how that story will end. Make the right decision, don't force the issue. Mother market does not care about how bad you want this or how hard you work, all of that is just completely and entirely irrelevant when it comes to your chances of success in this game.
Get yourself in a healthy situation, or you'll never get anywhere. That's harsh, but it's also reality. Really think about your situation and do some soul searching here, if you are in one of these pressure-riddled situations, please take my advice and temporarily cease operations. I know it's not fun in the short term, but in the long run, it will be the best decision you've ever made.
Have a great weekend, and good luck.
- D
I tried to justify it..saying "oh I didn't have buying power" or "I couldn't trade multiple names at once like I usually do" or this or that or the other thing, when in reality...it was NONE of that. It was one simple answer...pressure.
On 10/20/2016, I closed this project down to the public after a month of unsuccessfully trying to double it live on screen for everyone. I then proceeded to trade the account privately after that, and the before & after is pretty staggering - I went right back to my more typical 80/20 green/red days ratio, and I essentially doubled the account in 10 days. Why? No more pressure. I made a proactive decision to change my situation to improve my environment and decrease the amount of pressure involved. This is something I want all of you to try and do & assess in your own trading situation currently, which you'll read more about in a moment below.
Zoomed in view if that first one is too small. Above the red line is where I was trading for an audience trying to double this account, and below the red line is where I stopped that and traded pressure-free.
Unnecessary. Pressure. Something we ALL put on ourselves in one way or another in trading. And it's likely the very demon responsible for a large, large majority of your issues, I can almost guarantee it.
There are so many different forms of pressure in this game. They don't have to be money related, either. For me in this particular scenario, it had nothing to do with the money, there was no fiscal pressure here. This is a 5K account, if I blew it up obviously I would not have been happy, but it also would have zero impact on my trading moving forward, you know? It wasn't life or death.
The pressure in this case, was to perform. I had performance anxiety!!! [insert corny sexual joke here. I know some of you are thinking it LOL] I couldn't get it up!!! My account, that is ;)
In all seriousness though...I really wanted to give guys who are struggling with their account some inspiration to keep hope & keep fighting, and show that it's possible to grow a small account. Therefore I felt pressured to perform on command. And that's not the way this game works. Just like when you're pissed off about a loss, and you go hunting around for another trade demanding to make back the loss you just took....not. the way. it works. And the sooner you can come to terms with that, the sooner you will significantly decrease the amount of account bleeding and issues you run into.
Chances are you probably have unrealistic expectations for the start of your trading career, as you've been starstruck by the guys you idolize, and get frustrated early on saying "well why am I not doing better by now? Whats the hold up? What are they doing that I'm not?" That's one form of pressure. The other BIG one is trading with a tiny amount of capital where if you lose it...you're done. Such a killer. You will never have the ability to hold out on trades, you'll constantly take tiny green profits the second you see them because your psyche is so warped from the PRESSURE you've put on yourself to succeed, and succeed immediately. It just doesn't work. You're so worried about losing money that it completely consumes you and overrides your entire thought process & decision making ability. If you're trading under this kind of financial pressure, you've lost before you even wake up in the morning.
If this describes you, and you're trading a tiny account you can't afford to lose and you trade scared and micro-scalp everything out of "fear of giving back gains"...then stop trading. I mean it - just stop. That's a completely unhealthy place to be, and you need to find a way out of that situation ASAP.
Save up money, and trade with disposable income, not "all you have". The day you do that, there's so much less pressure on yourself, and you can just trade. Learn, and trade. Not be obsessive compulsive staring at your PnL tick by tick with your sweaty nervous hands constantly on your mouse ready to bail on the trade at all times - that's insanity. Pure and utter insanity. You'll be totally miserable, and it'll get you nowhere.
So take a moment today to think about the situation you are in. Think about your financial situation. Think about your expectations you have for your trading career. Are they realistic? Are they healthy? Or is there some form of PRESSURE that you've laid over your shoulders like a ton of bricks?
Figure out a way to trade in as pressure-free of an environment as possible. It will do wonders for your progress as a trader. If that's not a possibility for you at this current time - then show some maturity and patience, and stop trading for the time being. Do what you have to do elsewhere in your life until you can improve your financial situation and you are able to trade again in a low-stress, pressure free environment. As soon as you can accomplish that you will thrive, just as my small account thrived as soon as I made a change and improved my situation in include less pressure.
If you choose to ignore me and continue to try and force the issue and pray for a miracle...well...I think you know how that story will end. Make the right decision, don't force the issue. Mother market does not care about how bad you want this or how hard you work, all of that is just completely and entirely irrelevant when it comes to your chances of success in this game.
Get yourself in a healthy situation, or you'll never get anywhere. That's harsh, but it's also reality. Really think about your situation and do some soul searching here, if you are in one of these pressure-riddled situations, please take my advice and temporarily cease operations. I know it's not fun in the short term, but in the long run, it will be the best decision you've ever made.
Have a great weekend, and good luck.
- D
Hey Dante
ReplyDeleteI can so relate to this post of yours as it is one of the best post you have written!! I came across your blog and felt everything that you were talking about on your blogs in my trades. I tried working on it bit by bit. And boom you started a live screen share and I was lucky enough to watch you trade. Your blog made me think you’re a psychopath and that man how does this trader know exactly how and what a person goes through during their trades to the T!. The time I was in your pilot program, I learned a lot and it was my first month that I achieved a milestone. I was green on every trade I took in October. Here is the snapshot. https://postimg.org/image/63zartkt7/
You hit the nail on the head with this blog on pressure. I related to this on the last two trades I took. Its like a texbook example of everything you wrote about in this blog. Pressure of winning and fear of giving back gains. It just happened to me Thursday on my $AUPH trade. Though news was a little good on this stock as I had traded it coupla months ago and I was able to catch a morning spike on it. So I longed it and bam out the gate, support cracked, went to southpole and I reveresed my position on it. The short was working, never came close to my risk, and bam im in the money. The “pressure” from the earlier loss and fear of giving back my gains(even when the trade was working), I exited a winning position that coulda made back my loss plus more profit. I hated myself for exiting but didn’t know exactly why did I do this.
https://postimg.org/image/yer9mlue5/
I covered it at 2.71 and if I was not under pressure I would taken partial profits and let the remaining shares ride..it went down to 2.45! and yes I am gona save this post of yours as a lesson to be reminded everytime I sit at the desk.
Thank you for taking out time and writing these informational and the behind the mindset blog!
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DeleteThere are so many different forms of pressure in this game. They don't have to be money related, either. For me in this particular scenario, it had nothing to do with the money, there was no fiscal pressure here. This is a 5K account, if I blew it up obviously I would not have been happy, but it also would have zero impact on my trading moving forward, you know? It wasn't life or death.
The pressure in this case, was to perform. I had performance anxiety!!! [insert corny sexual joke here. I know some of you are thinking it LOL] I couldn't get it up!!! My account, that is ;)
In all seriousness though...I really wanted to give guys who are struggling with their account some inspiration to keep hope & keep fighting, and show that it's possible to grow a small account. Therefore I felt pressured to perform on command. And that's not the way this game works. Just like when you're pissed off about a loss, and you go hunting around for another trade demanding to make back the loss you just took....not. the way. it works. And the sooner you can come to terms with that, the sooner you will significantly decrease the amount of account bleeding and issues you run into.
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