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Oct 24

Hanging Tough. Just Like in the 80′s.

Categories:

Personal Growth, Trading Psychology

by Rogue Traderette

I’m going through a ‘patch’. A great bit soggy quagmire might be a little more accurate, actually.

I don’t really like writing that.  I’m normally a very capable, unemotional, get-the-job-done kind of girl, (and fun – don’t forget fun, because all that sounds horribly boring and secretary-like) and I’m really not really one to sook and sob and weep for any length of time so it’s all very out of character and really kind of wimpy.

Please don’t pat my back and tell me it will be okay, because I might accidentally punch you.

Normally, I’d most likely ignore the ‘patch’ and carry on, and I’ve probably been doing that a teensy bit too long – hence the putrid swamp I now need to haul myself through, rather than an easily navigable puddle.

Trading is Not a “Section” of Your Life.

It seems I made the mistake of thinking that my outside-of-trading-life could carry on happily without affecting too much in Trading-World.  I was wrong.

Really, I knew this – it shouldn’t have been a surprise. But when things are coasting along as they should, it’s easy to get used to those calm waters and ignore the little ripples – right until all those little ripples gang up on you and tip you right out of the boat.

At the risk of boring you with the finer details of my life, I’m going to bore you with the finer details of my life.

Ripple Number 1

You probably know I live remotely.  To give a little perspective, I live 1000km from the nearest Starbucks, and in saying that I can see that my sanity must a be little questionable to begin with.

Living that far away from the real world can, at times, make things a little tricky – dealing with a property subdivision, for instance, organising a bathroom reno, and figuring out a new and exciting location for a wayward leach drain probably all fall into the “don’t try this from a-far because it will drive you mental” category.

In retrospect, my “I Can Do Anything” motto didn’t serve me especially well in the leach drain scenario; but on the upside now I know first hand where the saying “It’s like pushing sh*t up a hill” comes from.

Ripple Number 2

This ripple is a bit new and unusual for me.  Somewhat related to Ripple 1, we’re also building a house and as you can imagine the costs associated with the whole subdivision and new build project are rather ginormous.

Normally when I’m trading, I’m absolutely comfortable with the risks that I’m taking.  I know what I can lose, and I can sleep well with that knowledge.  But when you are writing cheques for tens of thousands of dollars at a time, suddenly the risk doesn’t sit so well.

All of a sudden, I’ve got a sense of foreboding about a crash-type scenario where all my risk is wiped out at once, and it makes me really quite uncomfortable – even though my portfolio heat level is set so that only a small chunk of my capital is at risk at any time.  So even if  October 1987 did decide once wasn’t enough, I’d actually be okay.  Relatively.

Regardless of this, and even though my trading account is my trading account, and not at all ear-marked for the building process, the tight budget involved in the property project is making itself felt.

Weird.  But its a real obstacle, and one that I haven’t as yet quite decided how I’m going to manage.  Cutting risk seems obvious, but there comes a point where risk becomes so small that you may as well not bother.

Ripple Number 3

This year is my last year as a stay-at-home Mum.  My littlest guy is off to full-time school next year, and it’s time for me to stop being a princess and actually pull an income.  And that’s what this year has been devoted to – working out a way to trade for income, rather than longer-term profits.  All of a sudden, I’ve noticed I’ve only got a few short weeks to get ready  – and I’m not there yet.

Forex is proving tricky for me; I haven’t nutted it out and my time is ticking away.  It’s secretly freaking me out – I’m the anti-Cinderella, where once the clock strikes New Year I lose my shorts and thongs (shoes, you understand) and magically transform into a boots and Hi-Vis wearing Salt-Miner.

I totally under-estimated how long the process of finding a reliable income producing trading method would take.  Either that, or it’s possible I’m retarded.

Regardless, I’m spending every spare moment testing new ideas, figuring out what works and what doesn’t, and putting the puzzle together in a way that is robust and will stand the test of time.  It’s not quick work, but it will be undeniably worth it in the end.

How to Keep Trading Separate From Real-Life Problems Struggles Learning Opportunities

You can’t.  Trading is not a separate thing because trading is you.  It is you and your reactions to the information the markets present that determine your trading actions, so if you find yourself in a situation where you’re starting to come unstuck, it’s time to regroup.

When so much is demanding your attention outside of trading, it’s extraordinarily difficult to fully focus on the job at hand, and it’s pretty much guaranteed that you won’t be a particularly effective trader when you’re preoccupied with stuff that needs your immediate attention.  So when things are overwhelming, take some time off, and step back.

To be clear though, I don’t mean step back and cry.  This is not the time for sobbing as you cram 3 packets of chocolate biscuits into your mouth, and it’s also not the time to wash them all down with whisky straight from the bottle – because as comforting as that sounds, it actually won’t help.

If you want to drown your sorrows, at least get a glass.  And a pen and paper.

And get to work on those ripples.

***

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  • Andrew R

    Since R Brett has been mentioned, for those who haven’t seen it here is link to a talk he gave some years ago. http://www.youtube.com/watch?v=jKF3G3RYxXE

    • http://www.roguetraderette.com Rogue Traderette

      Fantastic! Thanks for that!

  • Koyasan

    Hi Jess
    Hmm…..beats me how I can trade when I can’t manage to post a comment…here goes second attempt….

    First, have to give you credit for being so candid, most of us lose money while in a state of denial. Sounds to me that you have a pretty good grasp of your situation even if it all seems a mess, literally and otherwise. I’m curious what has happened your trading because on the face of it your trading should be taking the pressure off your finances, not adding to them. Reading through your posts I realise that you are switching to Forex to achieve income as opposed to making investments.

    I know you are no novice so I won’t insult you with repeating the usual technical stuff. However it goes without saying that unless you have confidence in your system you will not be able to trade with the courage and decisiveness required and therfore you are right to step back….to trade in these circumstances is only gambling….and I know that you know that.

    I’m not into rescuing and I can gather that is not what you want so I’ll share my situation which I hope will help you put things in context. I trade Forex Futures full time for an income, Aud/Usd only,30 min time frame. I reckoned if I could not be successful trading one pair why bother with the rest. I trade 30min time frame because it generates enough setups with not too much noise. I trade futures rather than spot because I feel more secure seeing volume and I find the process more transparent. For the past four years I have spent 10′s of thousands of hours developing my strategy and still spend hours every day refining and testing. My strategy is not perfect, will never be perfect and neither does it have to be. I have a cheat sheet defining 12 steps from setup to exit leaving little to discretion.

    I gave myself a time limit as well for developing my system which I overshot by almost a year, and I was working at it fulltime! The key to me was the absolute attention to detail……testing in real time and discarding anything which would take too long to implement or failed to be robust (I define robustness in terms of the shape of the equity curve). Another key was defining my style…..I am a trend trader so I enter on pullbacks. My task is therfore to bascially define what is a trend and what constitues a pullback (simple questions which are not easy to answer)…….all other types of trading styles were of no practical use to me and only serve as a distraction..and distractions eat up time and only feed into procrastination.

    My journey is different from yours but I hope it contains something which will get you a bit further. In the meantime 3 ripples can make a wave so probably a good idea to head for higher ground (or at least the rooftop)…….always a chance of higher ground offering a different perspective.

    • http://www.roguetraderette.com/ Jessica Peletier

      A lot of what you’ve said here has resonated with me, thanks so much for posting such a comprehensive response! Like you, I am now focussing on just one pair, the EURUSD. It seems wiser to become used to one pair rather than spreading myself too thin looking at 5 pairs. I’ve also cemented my objective and idea, so that’s postive too. So all in all it’s coming together and things seem a lot clearer now than they did, so I’m looking forward to forward testing this for the rest of the year and seeing it all come together.

  • http://twitter.com/PitVillTrader Pit Village Trader

    Forcing timeframes sounds the most difficult of your ripples if you want to break them down. The problem i guess is like you say, that everything you do forms your personality and behaviour and that means everything around you will do too.

    Speaking from experience, a building project is so chaotic and makes holding down a normal job with any degree of competency extremely difficult so i can only imagine that that feeling of chaos and strewn objectives will make trading effectively almost impossible.

    You need to have a certain degree of calm about you when you trade and building projects just dont give you that.

    Realistically, and im sure you know this, unless you have some longterm trades already in play, you should try and stay out of the markets until your other projects are complete.

    If it were me, i know what id do, id listen to all this good advice, sort of agree with it and bank it away as something i should do but in actuality id ignore it and keep trading.

    And i think id lose money doing it.

    I think you know what you should do, but you probably wont do it, so i just wish you good luck for your tras over the next couple of months and hope you hit a lucky streak – and i mean luck, because i think you’ll need it to juggle all of these balls.

    All the best

    • http://www.roguetraderette.com/ Jessica Peletier

      Good comment!
      And so true. I’m only trading my longer-term stuff during this building phase, as like you say it’s just too stressful. Once the subdivision is complete – early next year – I’ll start trading my short term method. Right now, I’m ‘acting’ as though i’m trading my income producing Forex, just without any money in it. Paper trading, I suppose, to make sure I’m ready to go next year and can actually pull a wage with reasonable consistancy. I know I can make money trading FX, as I certainly have – I just had trouble keeping it, so that’s the challenge for the next few weeks.

      I’ve actually delegated a lot of the building stuff to other people now – more expensive that way, but better for life. And trading.

  • Andrew R

    I think almost everyone underestimates the time it takes to become a CPT. Especially those of us who work without a professional mentor, such as would have been the norm back in the day of the trading floor or, more likely nowadays, with a prop firm. Mike Bellafiore at SMB said the learning curve goes from lose a lot to lose less to lose a little to staying flat to making a little, to making more, and some. I still find it amusing looking at the income “plan” I made 3+ years ago! Ignorance was bliss. The reality we all know is that it is possible to make huge sums of money in this business, and to make it sometimes very quickly. but, if it were easy then 90% or whatever of entrants would not fail. It’s the most a; trading is so simple, but so not easy. I often compare the financial potential with the learning curve of other professions. It takes years and years to become a high earning doctor, lawyer or engineer.

    As others mentioned, time and money pressures invariably entice bad, even terrible, trading behaviour. I reckon from my own near misses that this might be the main cause of a traders spiral towards an empty and closed trading account.
    Apparently the best predictor of success in the business is how long someone keeps on working at it, and to do that, in the face of inevitable recurring spankings from the market for bad trading, is not easy! Good books, websites can be a great support.
    As for Starbucks. How about making yourself a good coffee and taking it in a thermal cup out into the bush; there must be some fine timeless places nearby to sit, away from trading plans and building plans. If you were 1000kms closer to a Starbucks there would be 1 million other things you were closer to as well, and not all would be welcome neighbours I dare say?

    • http://www.roguetraderette.com/ Jessica Peletier

      We actually have a coffee machine, and we love it. It’s our one must-have little luxury – we even bought a little one to keep in the van when we’re camping on a pristine, private beach just 15 minutes away. And for back-up when our main one breaks.

      It’s not really such a sacrifice living out here ;)

  • Murphy

    Ripple #3 is the most dangerous IMHO. The other ripples have clear steps you can take to solve it. Once you get over your ‘moment’ on those ripples, you can step back and plan it the solution and know that there is an answer.

    Ripple #3 though will mess with your head (and I’m sure you know it!). Nothing makes success harder than feeling that you “must” succeed by a certain time frame. As you know even a successful system has down times, so even if you have a successful system, you will be doubting yourself, and then messing with the system to force it to work within your time frame.

    I recently went through a ‘patch’ (relationship breakdown), and I (foolishly) kept trading. The trades, individually, were managed fine, but I didn’t have (or make) time to enter the trade into my trade management software, instead just using my trading platform to track risk. I was doing really well, up over 100% in two weeks.

    Except, I’d lost track of overall portfolio heat. Last 72 hours saw me loose a considerable amount. Still up a nice 25% for the month, but….good lesson, if I don’t have time to follow all elements of my system, I don’t have time to trade. I consider that draw down the price of that lesson.

    As one of my favourite mentors says ‘Cash is also a position.’

  • Emini All The Time

    You need to read some Dr. Bret Steenbarger Books “Enhancing Trader Performance” and “The Daily Trading Coach” he goes into detail on these issues. He used to have a blog but got hired by the biggest futures trader in the world and is now is hidden from the world. Success in Forex has so much to do with your broker. Oanda is one of the few that does not have a trading desk that fades clients. Most retail forex have methods to fool retail so beware they do not have an exchange to keep the honest, it is all about the bank. Anyone who trades knows that life issues can screw up your trading….Most are too proud to admit it. Excellent Post.

    • http://www.roguetraderette.com/ Jessica Peletier

      Thankyou :) I’ve had Dr Bretts books on my things to read list for ages, but for some reason haven’t got to them yet. Better make it a priority!

  • Hez

    Jess, the whole US market system is acting and feeling just like you right now. And so, despite my needing to make $$ consistently, I have left off with the SPX and Euro, gone flat, and am waiting for a couple weeks til somebody gets elected and we get a market direction for a little bit. There’s certainly money in gobs out there right now if you trade with the newsfeed but I only got issued 1 nervous system and would like to keep it.

    • http://www.roguetraderette.com/ Jessica Peletier

      LOL, me too :)

  • steve0617

    Help me out here in the States:

    1. organising a bathroom reno,

    A bathroom remodeling?

    2. Figuring out a new and exciting location for a wayward leach drain

    What’s a leach drain? The shower drain? The toilet location?

    • Hez

      Heather from NE USA here. 1. Bathroom renovation 2. When you have a septic system with what we call a leachfield, as opposed to being hooking up to a municipal sewer system, sometime they plug up. Then you have to call a contractor to come out and dig you a new one for a few thou.

      • http://www.roguetraderette.com/ Jessica Peletier

        Heather is right, except our leach drain is unforunately in the newly subdivided block, and has to be contained in the same block as the house, while complying to lots of health regs and setbacks from boundaries….it’s pretty tight, that’s for sure.

  • Kapil

    Hi Jess, Your blog is a breath of frest air. I really appreciate you candor about both the good and the challenging. For the record, I don’t think you are retarded. ;-) Keep up the good work and best of luck tackling the ripples!

    • http://www.roguetraderette.com/ Jessica Peletier

      Thanks Kapil :)

  • http://twitter.com/forexpipx JML

    Nice post, you are a great writer. The love for me in trading isnt looking at the charts but the physchology and the mental struggle I have at times. It gives me a better understanding of the person I am and also allows me to recognise that my personal development is always a work in progress. Cheaper than a phychologist

    • http://www.roguetraderette.com/ Jessica Peletier

      The psychological stuff is fascinating, isn’t it? I love it too – it’s interesting to see how you react under different circumstances – but this moment i’m in now clearly shows that I took my eye off the ball. Traders need constant self-surveilance.