Thoughts on Frustration in Achieving Trading Success

Jan 18, 2008: 10:16 AM CST

I wanted to provide some additional personal insights to a blog post by Toni Hansen recently entitled “Frustration in Achieving Trading Success,” which included personal statements of similar difficulties her journey to trading success.
I do recommend the entire post, but I wanted to highlight a few quotes for you:

“I think that nearly every single one of us has had to deal with that point in time where we have asked ourselves if it was worth it…. I know very few traders that are “a natural.”

Spot on. I think I’ve asked myself that question five times now. You get really down after a particularly horrid trade, or a series of smaller trades and you wonder why you’ve chosen this type of endeavor. It is SO much more difficult than the books and advertisements would have us believe. The ones who succeed are actually the ones who keep persisting despite doubts.

“With time though, as long as you [are] not flipping back and forth between strategies, then that comfort level will develop and you’ll find yourself not hesitating or making as many incorrect decisions.”

Early on, following my major trading loss, I jumped from strategy to strategy, book to book, seminar to seminar, and found that the more information I learned, the more hesitant/doubtful/scared I became.

I think at one point I had about 5 indicators on the screen and refused to enter a trade until all of them lined up. And when they all lined up, I’d look at the higher (or lower) time frame and decide that the other time frame had some sort of contradictory signal and I would sit aside.

I discovered the basics – trends, Dow Theory, price patterns, momentum etc – and committed to a specific strategy at the exclusion of all others. That helped build a solid, less volatile track record which also increased confidence in taking trades, and I stopped blaming myself (which was very difficult) when trades didn’t work. I realized truly that losses were necessary, did not mean I was less of a person, and that sometimes losses can provide information that the market is undergoing a change I need to be aware of.

“I remember that the one thing that always drove me insane was that I would find 6 or 7 great setups in a day and take 2 which underperformed and for whatever reason I simply could not pull the trigger on the others, even though I saw them develop and was convinced they would work. It was almost as if I could not take something that looked perfect and was settling for mediocre.”

I think Toni summarizes the entire “intermediate beginner’s” syndrome in that sentiment there. It’s not like I didn’t recognize set-ups when they occurred, but I would second-guess and decide to “let this be a time for me to see what happens” rather than participate and try to profit from the opportunity.

When one or two opportunities would have resulted in profit, I would force the next two or so trades and – you guessed it – end up with losses. That further complicated the process, in that I was seeing clear and profitable opportunities but every time I joined the market, I would lose or receive sub-par results. Even on the trades I won, I would take less profit than the signal (or target) afforded, afraid that the trade would reverse at any moment and my profit would be gone.

It took a while, but what really helped was learning from errors and studying why I did what I did and focusing on personality/psychology/risk etc. Also, it helped immensely to categorize and annotate each trading day for a variety of stocks to see intraday patterns (or daily chart patterns) in a series of files I called “Ideal Trades of the Day” based on my perception of opportunity and understanding of market/price principles.

By physically seeing trades from start to finish, complete with stops and targets, and seeing how many worked out had the “thrill of the order entry screen and rapid price movement” been removed, I began to rise above the fog of war to see the charts and the patterns more clearly.

It still took time, and I’m still improving each day and each week, and I know that 100% consistency is an unrealistic goal, but I try to take perhaps 75% of the ideal set-ups I see and reward myself when I do so. I’ve stopped berating myself when I miss out or hesitate and have learned to trade more relaxed and removed from the money.

That’s also what struck me is seeing actual money vanish before my eyes. Sometimes turning off the “actual dollar gain/loss” window of your account can help, provided you focus on the charts and perceived price opportunities.

Realize you’re committed for a lengthy but rewarding endeavor and don’t give up when doubts creep in. Take some time off if need be and re-focus, but always come back.

And do try to have fun along the way!

15 Comments

15 Responses to “Thoughts on Frustration in Achieving Trading Success”

  1. Stock Market » Thoughts on Frustration in Achieving Trading Success Says:

    […] Here’s another interesting post I read today by Afraid to Trade.com Blog – Overcoming Stock Market Fears […]

  2. Tyro Says:

    Thanks for that. It’s hard to deal with the down sometimes, but it’s good to know you aren’t alone.

    I just wanted to add that jumping from strategy to strategy just because you hit a drawdown is certainly a mistake, but I think most people seem too dogmatic about sticking with strategies. Sometimes you just aren’t suited for the strategy you’re trying which can lead to lapses in “discipline” or fighting the signals or general dissatisfaction. At some point, it’s okay to say “enough’s enough” and move on to a new strategy. Figuring out the point at which you move on is very hard though. I wonder if you’ve any thoughts on what you should look at to make this decision?

  3. Psychology » Blog Archive » Thoughts on Frustration in Achieving Trading Success Says:

    […] Afraid to Trade.com Blog – Overcoming Stock Market Fears wrote an interesting post today on Thoughts on Frustration in Achieving Trading SuccessHere’s a quick excerpt I wanted to provide some additional personal insights to a blog post by Toni Hansen recently entitled “Frustration in Achieving Trading Success,” which included personal statements of similar difficulties her journey to trading success. I do recommend the entire post, but I wanted to highlight a few quotes for you: “I think that nearly every single one of us has had to deal with that point in time where we have asked ourselves if it was worth it…. I know very few traders that are “a natural.” […]

  4. Corey Rosenbloom Says:

    Tyro,

    Thank you for the comment and for reading.

    I tried to work in some sort of sentiment into the post regarding the thought that you really need to try a variety of strategies – or at least learn about them – before you become successful but the post already was getting too long. I think – for me – the very act of studying so many strategies so deeply made me not only who I am today, but a better trader as well because I know what works for me and what doesn’t. I’m not a long-term investor. I’m not a scalper. I don’t believe much in Fibonacci (or at least it doesn’t speak to me), I’m not an Elliot Wave Theorist, I’m not a high-flying techno-momentum trader, I’m not a bond trader, not really an options trader, I’m not a long-term trend follower, on and on. But I’ve tried those strategies and more.

    Through process of elimination, we can whittle away what doesn’t speak to our core being or core philosophy, and gravitate towards that which does.

    For me, I am a risk-averse, conservative trader. I knew that and learned to incorporate strategies accordingly.

    I’m not entirely sure at what point you say “The trend-style approach isn’t working for me” or “the fast scalping NASDAQ Level II screen isn’t working for me” or “I just don’t understand moving averages”. I think it’s extremely personal for each trader, and that’s why it’s difficult or impossible to go out and buy a trading system and follow it. It’s such an intensely personal and private journey through various educational resources combined with actual trading experience (holding those positions and seeing how you react emotionally or if your account can handle the volatility) etc.

    I’d love to hear more of what you think or what others think from their experience. Trading is such a personal thing but we can learn from others and get support & encouragement from others to shorten our learning curve as we progress.

  5. Tyro Says:

    Corey – I started as a fast scalper and have slowly been backing up to the point I’m at now: a struggling novice swing trader. Each step back has made me happier so I think I’m onto something, but each time I try a new thing I struggle with feelings of guilt, failure, regret and some sense that I ought to stick with something else how can I ever succeed? Since I’m still in the process of trying swing after many months trying day trading, cognitive dissonance is probably fogging my brain so thoroughly that I don’t know what is real.

    The only thing I can say right now is to echo a point that Steenbarger made, that “lack of discipline” is often a symptom that we are trading an unsuitable strategy or unsuitable time frame. I’d add that some strategies made me feel happy and excited as if I were leading a better life, and others drained my energy and made me feel stressed, tired, frustrated and angry. I’m trying to listen to this and move on, even if it means moving away from trading entirely – who wants a life like that?

    I just wish that it hadn’t taken me so long to understand these things!

    Thanks for a great blog.

  6. Ana Says:

    Corey

    May I comment on some of the systems you mentioned which you do not apply in your trading?
    For instance, Elliot Wave Theory by itself has some flaws when counting the waves which will have an impact on the outcome. However, if one were to combine EW with fine tuning systems like Ray Wave Theory, therein lies the power of better interpretation, I find.

    Fibonacci levels similarly need fine tuning and one book :Trading with DiNapoli Levels by Joe DiNapoli is a practical application of Fib analysis to investment markets.
    Hence, the necessity to delve deeper into any system to find its benefits.

  7. Corey Rosenbloom Says:

    Tyro,

    I’m also looking to expand my time frame to that of longer term swing and position trader. I do like the control and leverage of the 5-minute chart, however. I’m doing more with Sector Rotation, which necessitates ideas play out on longer time frames.

    I’ve tried a lot as well and each step hasn’t always led to better results, but it’s made me a better trader along the way, definitely.

    True, it’s important to know if our strength is not in trading, if indeed that is what must be done. There’s so many styles of trading, but the constant assumption of risk may be more than some people can tolerate, financially or emotionally. The ’emotion’ past has been the hardest for me, that’s for sure. I’m too conservative financially.

    Thank you for reading and for commenting!

  8. Corey Rosenbloom Says:

    Ana,

    Absolutely! I study with a group of traders who love Elliot Wave, but I don’t think it works for me, or at least I don’t understand it like they do. I do believe there has to be ways to tweak it or interpret it differently that adds edge, but I haven’t found those ways yet.

    I’ve met Joe DiNapoli and attended a seminar by him, but still. I don’t like to draw that many lines on my chart and pick which one price is expected to inflect off of – it’s too much for me. I don’t understand which level or ratio to select, and when I pick one and trade it, it always seems to violate that level and hit my stop. It’s like price is out to get me 🙂

    I just try to stick to the founding principles of Dow, Shabacker, Rhea, Pring, Edwars/Magee, Raschke and others. I’m always open for new information, but I have to trade with what I’ve found works with me and my personality. Everything is so exciting!

    Corey

  9. Ryan Says:

    Corey,

    Great article, thanks for the post. I’ve seen myself there many times. Overcoming this dilemma takes patience and repetition of taking the right action. It takes some time to integrate our trading systems into our subconscious minds so our daily actions reflect or beloved systems. It’s all about doubts, fears, and anxiety. I used to always questions why at the end of a trading day I had 6-8 signals but only followed through on 3-4 of them. I’ve learned that may times we won’t enter a trade because we rationalize. If you break that work up it means, rational lies. Saying things like, “I still need one more indicator to line up”. Or “the markets to volatile right now”. This is where keeping yourself present comes into play. We don’t see what we want to see, we only see what where conditioned to see.

    I just came across your site which is fantastic by the way. Great bio. A can absolutely relate to your story! I added you to my blog roll 😉

    Ryan
    http://www.evolvedtrader.com

  10. Corey Rosenbloom Says:

    Ryan,

    Thank you for reading and for the comment and blogroll add. I’ll be happy to check out your site as well.

    You’re right about patience and repetition and experience. One of the first systems I developed was a behemoth that had about 10 indicators and required that 6 of them line up, but they were all given an index value of importance because they would never do that, and then finally it took a while to realize that trading was about more than indicators.

    It’s all about balance, but there’s big rewards for those who figure it out sufficiently.

  11. Erick Says:

    After I mentioned to a friend that I have problems taking positions, he recommended this site. So the first thing I read is this, and it’s like I was looking into a mirror. In a few paragraphs you painted my picture. I remember seeing 8 out of 10 trades work very nicely, and guess what, I took the two that were losers. Now, tell me that doesn’t do something to your confidence. I even wondered if I was not wired somehow to only pick the losing trades. So I watch every day seeing really great signals and letting them go by. So it’s a breath of fresh air to read how others have had the same or similar experiences. I will continue to read and learn, and hopefully, can report back on some positive progress. Thanks, Erick

  12. Corey Rosenbloom Says:

    Erick,

    Thank you for the comment! I’ve been there 100 times, and sometimes this still happens to me even as far as I’ve come as a developing trader. Sentiment like this is so common to newer traders, and there are so many reasons why it happens, but it’s still hard to overcome it. Trading is a complete different skill that seems to go against all that we’re hard-wired to do or think.

    Don’t get discouraged – it happens to us all. I’m glad to hear I’ve been a bit of help and would be happy to be of assistance any way I can.

  13. Jonathan White Says:

    OMG DUDE THIS IS SOOO ME THE INTERMEDIATE BEGINNER!!! I see setups all day long and will take the wrong ones, or will kill highly profitable setups and beat myself to a pulp mentally for not taking them!!! Thanks a trillion for this article I don’t feel alone and crazy anymore!!!

  14. Long AMGN @ $57.74 | Wall Street Stocks Says:

    […] of tradingJoe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled By The MachinesThoughts on Frustration in Achieving Trading Success var wpmlAjax = […]

  15. Nike Shox Pas Cher Says:

    Les femmes veulent bien paraître. Ils flattent la mode Que leur chiffre est élégant et Basket Nike Pas Cher
    à la Sametime. Aussi Big articles filles vêtements pour tous ce qui leur donne Chaussures Basket Nike
    la minceur. Toute femme peut être belle si elle sait quelques trucs pour aider de son mieux.Nike Shox Pas Cher
     1. Le noir n'est pas la meilleure couleur pour grande fille. Pantalon noir de couleur,basket pas cher
     robes, jupes et autres vêtements de taille plus n'est pas nécessairement chaussure nike pas cher
    la figure la plus flatteuse minceur ou sur le corps de la femme. Une tenue attrayante,Chaussure Nike Shox
     c'est autant Proportion, la couture et le style global, car elle est sur la couleur.Nike Air Shox
     Vous devriez essayer quelque chose dans la couleur que vous faire plus jeune et gai. Choisissez des couleurs flatteuses et les jumeler avec black.