Tag Archive for: Emotions and trading

The huge mistake for a discretionary trader is to get lured into trading simply out of the anxiety of missing moves that are taking place.

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Trader's Discipline factor Peter brandt

Patience and Discipline – A Trader’s Friend

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Patience … Discipline … Discipline … Discipline … Patience

 

I know my sweet spot. Every trader should strive to know his or her sweet spot.  We should strive to only take a trade when the market set up is in our sweet spot.  We should strive to avoid trades out of our sweet spot.

If you, as a trader, do not know your trade set up with great intimacy, then how in the world will you know if you are exercising patience and discipline?

Once you know exactly what your sweet spot is and is not, then the real challenges begin.
 

The real challenges for me (and it could be different for you) are different
nuances of patience and discipline.

• Patience to wait for just the right set up
• Discipline to sit on the sidelines and not getting pulled into a trade that does not fully satisfy my requirements
• Discipline to pull the trigger when the right trade comes along
• Discipline to remain detached from open positions and properly manage each trade according to trade management guidelines developed over decades of market speculation
• Patience to allow a position with a substantial profit potential the room and time to bear full fruit

 

The above challenges are very, very real. The markets can force a trader to let his or her guard down. The markets are all about forcing traders to make mistakes. Markets are constantly luring traders with such deceptive messages as:

“Trade now and trade often”
“You’re missing out on some good moves”
“The only way to make money is to trade”

 

In fact, there are times when NOT trading can be the action with the best outcome. Trading just to trade often leads to drawdowns. Then comes the urge to find trades in order to recover the drawdown. Often this leads to a worse drawdown. Before a trader knows it he or she can be in a 20% to 30% or greater drawdown resulting from trades that never really qualified as trades in the first place. This is when the the capital drawdown becomes a significant emotional drawdown. Vicious cycles can easily come upon us as traders.

 

 

Factor Membership

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Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:

checkTrading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print book
checkWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentary
checkAlerts: Detailed information on specific charts as unique opportunities present themselves
checkMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodically
checkWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questions
checkKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of content
checkAutomatic notifications: Email and social media notifications are sent out when new content is published

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View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

Factor Trading - An Introduction

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Tweet Storm

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While on Twitter last night, I engaged followers in an unscripted Q&A session.  The exercise was quite enjoyable in fact and we thought we would share the experience on the website today.    Here is a transcript of that Tweet Storm for you.

 

 

Factor Membership

.
Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:

checkTrading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print book
checkWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentary
checkAlerts: Detailed information on specific charts as unique opportunities present themselves
checkMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodically
checkWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questions
checkKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of content
checkAutomatic notifications: Email and social media notifications are sent out when new content is published

.

View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

Factor Trading - An Introduction

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Trading Performance - Factor Trading - Peter Brandt

The 3 Most Important Ways to Track Trading Performance

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Trading Performance

Human beings exist day-to-day in a world preoccupied by statistical measures, ranging from numerous personal health metrics (blood pressure, PSA counts, temperature, oxygen levels, heart rate, etc.) to standard weights & measures (gallons, pounds, meters, temperature, etc.) to determinants of economic well-being (GDP, unemployment rates, inflation rates, interest rates, balance-of-payments, etc.) to statistical definitions of every area of our lives. Modern society could not exist without measuring nearly every conceivable thing. Yet, many traders make no attempt to convert their Trading Performance into meaningful metrics. This is unfortunate because meaningful metrics are not simply interesting statistics – rather they can serve important functions:
  • Dictate and guide the development of trading strategy
  • Monitor trading outcomes against intended benchmarks
  • Diagnose potential problems
Read More

Factor Member Questions

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  Below are a few Factor Member questions from this past weekend's report I thought you might enjoy.   Question: Peter, how do you protect against large open trade profits from disappearing?    - Factor Member Answer: Read More
losing Trades - Peter Brandt Factor

How much patience should a trader have with a losing trade?

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How much patience should a trader have with a losing trade?

  The question on losing trades, all traders must answer for themselves, and there really is no right answer. The answer for any given trader must depend upon his or her trading approach, markets traded, risk tolerance and other factors. For me, the answer to this question is quite simple and multi-layered.
  • My initial risk per trade seldom exceeds 70 basis points and is limited to 100 basis
  • I aggressively advance protective stops within days (sometimes hours) after entering a trade.
  • My goal is to bring a trade to as close to breakeven as possible, as quickly as possible!
Read More

Taking Profit – A Trader’s Challenge

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Taking Profit

The following is a discussion on Taking Profit from our member Q&A feature at Factor Trading.

 

Question:

Your reports on markets and discussions surrounding the more thorny issues of portfolio/trade management and emotions are without parallel. I am writing you in hopes of some advice. I am having problems with my trading in the sense that I often take my profits on a trade before it reaches my target, sometimes well before the target is reached. In other words, I am not being disciplined enough with trades that are going in my favor. Is there anything you can suggest (a book, a trade process, etc.) which can help me improve and work on my trade discipline? Thanks very much.

–Factor member, London

 

Response:

You describe a challenge that faces all discretionary position traders at some point in their careers. The temptation to take profits in a trade are overwhelming, especially during difficult trading periods and drawdowns. After watching the initial early profits on a few trades turn into losses creates a great emotional urge to grab a quick profit the next time one becomes available.

Ultimately this is a challenge every trader must work out for him or herself. There is no easy answer — what you describe is basically an inner battle that must take place with each trader. I engaged this inner demon early in my trading career — and I must admit that the “take profits before they disappear” inner voice makes itself heard even today. The upstream swim against human nature never ends — although it does get easier. Base emotions are never really defeated for a discretionary trader — the best we can do is to manage counter- productive urges.

I must start off by emphasizing that being a “target trader” is not for everyone. I know very successful traders who seek a three or four-day price surge (or break) and then step aside and look for other similar opportunities. I also know successful traders who would not think about “target trading” — they want to ride out a trend for as long as it continues (using various trend-following techniques).

If it is your strong desire is to be a “target” trader, let me suggest simple moving averages may be a way to get there — but you must look at this challenge as a marathon (requiring several years of development) and not a quick-fix.

If your account allows for a multiple-contract position futures, you might allocate at least one contract initially to a simple moving average system of your design. Perhaps you stay with the position as long as the 8-day or 14-day or 21-day or whatever moving average confirms the trend — of course then taking profits at the target if that is your goal. It is quite easy to split an equity or spot forex position into tiers for the purpose of delegating a partial position to a trend following model.

 

Hope this helps.

plb

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Factor Membership

.
Peter Brandt is a 40+ year veteran of trading.  Through his Factor Service, members receive:

checkTrading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print book
checkWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentary
checkAlerts: Detailed information on specific charts as unique opportunities present themselves
checkMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodically
checkWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questions
checkKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of content
checkAutomatic notifications: Email and social media notifications are sent out when new content is published

.

View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work.   Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about.  For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

Factor Trading - An Introduction

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Announcing Factor – Tech Charts Association

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Announcing Factor – Tech Charts Association

 

Today I am extremely proud to announce the association of Factor Trading with Aksel Kibar’s – Tech Charts service.  We recorded the below video yesterday to discuss the association and what members could expect from Aksel and the Tech Charts service.  Below the video are details on how to follow Aksel and his service until the new service goes live.  I encourage all to check out his global equity market reports.

 

 

plb

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More About Tech Charts and Aksel Kibar

 

Aksel Kibar is a Chartered Market Technician (CMT) with more than 15 years of experience as a classical chart trader and global equity market analyst. He has worked for various companies throughout the GCC and MENA regions during much of that time.
For more information, see his blog at :  https://blog.techcharts.net

 

Join his free mailing list and be alerted on when he publishes his free (until launch) Global Equities Market Report and all classical chart break out alerts.  Sign up here: >>  Link

 

On Twitter, follow:  https://twitter.com/TechCharts

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Risk Per Trade

Why do you cap your risk to 100bps per trade?

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Risk Per Trade

A question from a past member only webinar.  “Why do you cap your risk to about 100bps per trade?”    I thought you might find this interesting.

 

 

Consider joining the Factor community where we run a monthly one hour member only Q&A session.  All past webinars are archived on the site to be viewed at any time.

 

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Factor Membership

.
Peter Brandt is a 40+ year veteran of trading.  Through his Factor Service, members receive:

checkTrading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print book
checkWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentary
checkAlerts: Detailed information on specific charts as unique opportunities present themselves
checkMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodically
checkWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questions
checkKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of content
checkAutomatic notifications: Email and social media notifications are sent out when new content is published

.

View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work.   Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about.  For more information watch my 30 minute webinar where we cover the Factor service in depth.

I hope you will consider joining the Factor community.

Factor Trading - An Introduction

.

sig

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