Hello SMB,
Thank you for what you do for the trading community. I appreciate the blog as well as Bella’s book. A problem that I have is undertrading or failure to pull the trigger. It doesn’t happen all of the time but it happens too often.
An example:
Yesterday (9/21/11) SINA had a refreshing seller at 97 between from about 9:45-10. SINA had showed relative weakness the previous day and the SPY’s had pushed back from resistance the previous afternoon. I thought this offered a good R:R. I had my shares queued up to offer .99 with a stop behind it at .06. However, I could just not hit enter. SINA then dropped 5 bucks, pretty much straight down.
I have been trading full time for about 12 months now and feel that this is one of the last hurdles to becoming a CPT. I spent the 3 previous years working 2 jobs to save ample trading capital to withstand the learning curve….I can afford to take these small losses but can’t afford to waste time hesitating. Have you seen this amongst the many traders you have trained? What advice would you offer to push through this resistance?
Bella
First this is excellent work recognizing your problem. Second this is a nice job reaching out for a solution.
A few suggestions:
1) Build a Playbook. After the close you should be recording the trades that make sense to you for your playbook. map out exactly what you loved about this set up. Give it a name. Internalize that these are the trades worth risk.
2) Visualization. Visualize in detail this scenario. See yourself getting into the position. Repeat this exercise. You will prepare your mind to take this trade.
3) Have a conversation with yourself. Why do you think you are not making this trade? Often it is helpful to understand why you are failing to pull the trigger. When you recognize the root of this issue you can work to solve it.
4) Develop a list of A+ trades. 30 percent of your intraday loss is a good guide for the intraday trader. Perhaps 2 percent of your portfolio for the swing trader. Set a predetermined amount you must risk on these trades. And record whether you are in fact risking that amount on these trades in real-time.
Hope that helps.
Bella
One Good Trade
3 Comments on “Traders Ask: I am an undertrading undertrader”
I had this issue at one point, and I did everything Bella suggested in this blog…I also started keeping a daily trading journal that also included my emotions before/during/after trades that I did not pull the trigger on.
If you have developed your playbook, and know what your A+ trades are, the large volume of journal entries that go like this:
“XYZ held the level, my risk is 2c, target is 50c”
“Didn’t pull the trigger, XYZ held the level”
“XYZ now trading 50c higher”
Will greatly boost your confidence in your ability to get in the trade when you see your A+ setups.
You’re not pulling the trigger because you either lack confidence in the set ups or you haven’t accepted the risk of the trade because you’re trading to be right. Think about it. Let’s assume you are confident about your trading plan and have a thorough risk management plan. The only reason why you are hesitating is because you are getting caught up wondering if the trade is going to work. You’re trading to be right and any doubt prevents you from putting the trade on. Trade probabilities. You know the set up. You know the risk. UNDERSTAND THAT IT’S NOT ALWAYS GOING TO WORK. Pull the trigger. And remember, you don’t have to go all in at once.
Essentially you think about your thinking. What were your emotions before the trade? At the time of entry? Tradezone is exactly right. When u build a trading system you have to trust it, you have to have complete confidence in it, and you have to pull the trigger without hesitation. If you’re not satisfied with your trading system results then you change/upgrade your system, and try extremely hard not to let your emotions dictate your decisions. I’m pretty certain every trader has struggled with this and it always lingers ready to pounce when we let down our discipline guard.