ForexSpirit

It’s been two days since the fateful day when I blew up my account.

I’ve spent that time trying to ween myself off the markets. I don’t have charts up permanently and I don’t have to keep monitoring Bloomberg constantly. I still pop up the charts occasionally, out of morbid curiosity more than anything else, to see if the markets kept going against me or if they finally turned around. AUD-USD seems to have made a stab moving back up, most likely linked to the slight rise in gold, while the euro is still languishing away.

It’s amazing how powerful the urge to just get back in there and try to fix things is. I know that doing any such thing would be absolutely wrong, but it doesn’t prevent my mind trying to fix whatever is broken in my trading methodology as quickly as possible.

It was especially curious on Wednesday and Thursday when I found myself mentally reviewing technical indicators that I have favourable tendencies towards (i.e. ones that I consider to have at least some worth). The technical indicators in question generally come from work done by Joe DiNapoli or Joe Ross.

I would throw up a 3×3 Displaced Moving Average on the chart or try to visualise how well a Ross Hook would have worked. I’d be looking at the charts from the past two months trying to see whether these indicators would have been any help in averting where I have ended up.

I don’t think there’s anything wrong or bad in doing this.

What does strike me is that in doing this I am probably looking for certainty. I’m feeling lost at sea Every part of my trading methodology is now in question and will have to be closely examined to determine if it is still fit to stick around.

Technical indicators are visual and ever present right there on the chart. You can build hard and fast rules up around them.

Except that deep down I really do know that the certainty that they supposedly represent is just an illusion. I’ve gone through this flailing around and fight with uncertainty before. I’m sure I’ll have further relapses in the future. For now I just have to let them wash over me until their eerie, seductive pull abates.

Trading is uncertainty. It is risk and randomness and chaos.

What can be tamed and controlled is me. I am the key to unlocking consistent money from the markets.

I am the one who is responsible for blowing up my account. The market didn’t take my money. My broker didn’t cheat me out of it. I’m the one who pulled the trigger on the trades. I’m the one who decided what and when to buy. I’m the one who didn’t have a disaster money management plan in place. I’m the one who ended up trading over leveraged positions. I’m the one who let things build up to breaking point. I’m the one who didn’t step back and take a break when I started to make poor trading decisions. I’m the one who didn’t want to cut his losses in the face of a correction that I knew was coming. The responsibility lies solely with me.

The power to fix things and turn them around also lies with me.

Going forward I need to be critical of my current trading plan but I don’t want to throw out the baby with the bath water.

There are many strengths to my current trading plan, aspects of viewing the markets and trading them that suit me well.

There are also now obvious weaknesses that I must remedy to eliminate or mitigate against. These mainly lie in the money management and psychological aspects of my trading. My thoughts on implementing a fixed 100 pip stop loss on every trade is obviously one of the main cures I’m looking at for my money management woes.

On the psychological side of things I’m thinking that I really need to enact a positive feedback cycle. When I do well in a given month I need to have more than just the satisfaction of my trading account being up going into the next month.

A potential course of action that I am seriously considering taking is to withdrawal somewhere around 25% of the profits during a month. When that 25% of profits comes out I’ll have to put aside the tax due on that amount, but I’ll also be able to do something with money that I’ve actually made trading. I’ll be able to take my wife out for dinner, or buy a video game. By turning my successful trading activities into something tangible and real I’ll be able to reinforce the positive aspects of what I’m doing. I’m hoping that it will help to keep me energised and positive going forward.

The only downside is that these monthly withdrawals will diminish the compounding growth of my trading account. Of course if it prevents the possibility of another blow up from ever occurring again then it will have been well worth it.

Looking to take monthly withdrawals from profits made also presents a major shift in my long-term trading objectives.

I am sure that I’m not the only aspiring trader who has the goal of becoming a full-time forex trader. Earlier this month I would have said that if I was able to keep to my consistent returns of the past year I might be able to reach that goal in two, maybe three years.

Funny how things can change so dramatically.

After what happened on Wednesday I now have to face the stark reality that while my goal is still achievable, it is rather further off then I had previously thought.

I need to have a change in perception. Instead of my trading activities being solely dedicated to reaching the goal of being a full-time trader I want to switch and view trading as an active part of my life right now. Shooting for only the full-time trading goal is an all or nothing prospect. I either am or am not a full-time trader. The longer I solely focus on just that the longer the negativity of what I am not weighs on me.

A change in perspective is sorely needed. If I can withdraw profits every month consistently then I become a consistent, profitable trader now. I will get to benefit from any success I have now. The long-term goal of becoming a full-time trader can remain in place but I able to enjoy the fruits of my labours along the way.

I think this change is going to be a crucial underpinning of my trading going forward.

I certainly don’t hate my current full-time job. It has its highs and lows just like most jobs I guess. It even has its fun and sense of accomplishment when something turns out well. By only focusing on the trading as a full-time gig as-soon-as-possible scenario I have not paid as much attention to what my goals were with the regular job. If I was going to be doing nothing but trading soon then there wasn’t much need, or so I thought.

Now I see that there is a need to keep things in balance. It is foolhardy to ignore trying to advance my non-trading career.

I am also going to get back to some other hobbies that I used to love. I often spend so much time trading that I neglect other activities that I really enjoy doing.

I need to focus more on living and enjoying the here and now. If I can purge the weaknesses from my trading plan and play to my strengths then my goals will become reality in time.

I need to enjoy the journey and not focus so much on the destination.

Happy holidays. I hope everyone is able to have a joyous time with family and friends as we count down to the end of 2007.