Wednesday, 5 October 2011

I Remember September...

Last year, I had a tricky month and couldn’t gather any momentum after taking some bigger than normal losses. It was a similar story during October and although I was making a profit overall, the path was bumpy and stressful, it forced me to really work on my overall game and iron out some bad habits that had crept into my trading. 
From a psychological perspective one of the things I looked at was how a losing trade could affect my performance moving forward. It was incredible to see how often I would have a losing race after a losing race and this same trend was becoming evident in my daily P&L. I used to be good at taking losses and I would naturally set out to take each race as it came but for some reason my mentality had changed. It’s difficult to pin point exactly where and why this happened but the underlying reason would probably be that I was getting frustrated with the markets and couldn’t meet my own high expectations, I knew something had to change.

I came across a blog called Traderfeed and could relate to many of the topics I was reading. One of these topics was performance anxiety. I purchased The Daily Trading Coach by Brett Steenbarger who is also the author of the blog and In parts it was almost as if the book was written for me. I felt I was stuck and this rough patch was kick I needed to wake up and change my ways.

From “The Daily Trading Coach:” Lesson 1: Draw on Emotion to Become a Change Agent
“We desire changes in our lives. We adapt—we grow—by making the right kinds of changes. All too often, however, we feel stuck. We’re doing the same things, making the same mistakes again and again. Do we wait for life to change us, or do we become agents of our own life changes?
The easy part is initiating a change process. The real challenge is sustaining change. How many times does an alcoholic take the initial steps toward sobriety, only to relapse? How often do we start diets and exercise programs, only to return to our slothful ways? If we focus on starting a change process, we leave ourselves unprepared for the next crucial steps: keeping the flame of change burning bright.”

I made big changes to my daily routine and how I approached each day with regards to goal setting and targets. I started writing in a diary after each day’s trading and quickly began to spot patterns in why I was making mistakes or getting frustrated. Here is a sample from my own diary last October where I talk about how watching videos of my own trading is helping to identify my triggers.

My Diary Oct16th 2010
"Watched a video of a losing race before trading today. It is crazy to see the hesitation and lack of control when these types of trades go against me. It has really helped to watch this one back and it reminded me how it feels when I get caught like this and how this can lead to a stressful day. l should do this more often before racing as Steenbarger suggests for a visualisation technique."

Today went well and I felt in the zone from an early stage. I started to fade as did the markets (hopefully linked) as the last hour came in and there were a few niggly losses at the end of the day which I should of limited or turned green if I was more focused and not being greedy."

I am much more aware now of my risk in the market and what I can handle without becoming emotionally blinded. I never thought that the toughest challenge of my trading career would be 4 years in. I had always assumed that the hardest hurdles were at the beginning but I can tell you for a fact that’s not always the case.

This graph below shows my P&L comparison of Sept 2010 & Sept 2011. I only had one losing day this September compared to seven in Sept2010. The momentum gained from setting out not to lose really is worth it not only from a financial sense but also mentally I feel much stronger. I’m much more confident compared to this time last year and believe I can keep this momentum going through the winter months.