or ‘ceasing to trade after a period of success’
The AtticFund has an ‘ok’ start. Up 7.7% after 6 weeks. It’s not bad and its not great.
But I find myself in a ‘mental place’ that is preventing me from getting invested. There are a number of reasons for this.
1) I’m protecting the profit
2) I’ve booked some profits on positions that have subsequently made huge advances in my favour – When this happens its really hard to remind ones self that the market doesn’t care one bit how I have traded in the past. It does not care that I’ve left money on the table. However getting into a stock that was 40% cheaper only a week ago (even when the system is still giving you a buy signal) is bl*ody hard!
3) My stock selection methodology needed revisiting (This is in hand and so I’m just left with the reality of dealing with my current mental state – God I sound like I need to be sectioned!!)
Here is what I plan to do in order to overcome Subconscious Profit Protection Syndrome;
1) Acknowledge that I have an issue with getting back into the market after a period of relative success – When I get this feeling remind myself that the market doesn’t give a sh*t about me and what I have/haven’t made in the last couple of weeks.
2) Forget any trades that I made (that subsequently moved big time in my favour, by removing them from my watchlist and ceasing to follow their activity – until such time as they reappear on the watchlist because they conform to my trading parameters)
3) Record my feelings in blog as this helps me to understand, clarify and move forward
Lovely Jubbly – Personnel therapy session complete….
Hi! Have you read Jason Zwieg’s Your Money And Your Brain? It’s a neuroscientist’s perspective of trading psychology, and it goes over the “anchoring” phenomena you are experiencing.
It’s only human to start feeling like things are going to go wrong after a period of success. Law of averages says you’re going to make a wrong call eventually.
The great thing about what you’ve said is that you’re already aware of it, and that goes a long way to addressing the problem.
Do you use any habit forming/breaking methods?
Hi itchymoku – Thx for the post. I’ve not read Jason Zwieg’s book, but I’ll certainly check it out. It does sound interesting.
As you pointed out, because I’m aware of it (and blogging about it made me much more aware than perhaps I would have been otherwise) I’m formulating a way of dealing with it. I’ll be dealing with it, simply by sticking to the trading plan and continuing to trade. I’ve blogged about the fact the strategy still requires work around identifying long term trends, shorting opportunities and exits.
Once these elements are in place my strategy will be more mechanical and then it should be easier to follow the plan regardless of the outcome of the last trade.
In an older strategy, I used to stop trading after hitting a certain percentage for the month. I no longer employ this strategy as no only was I missing out on opportunity, I also found myself ‘out of touch’ with the market on my return. I do however still have a rule to cease trading for the month after 3 consecutive losers.
Yo Attic Antics
Dont toss those painful tickers off the watchlist. I noticed my trading improved when I really limited the companies i was trading. Get to know five stocks very well in and out of years. Range and behavior becomes second nature and setups start to step off the page. I say this after 8 years of position trading stateside, ASX and NZX
Flitting from one exciting setup to the next ends in chasing prices and losses. This approach however does require patience and the ability not to take a trade.
Good Luck buddy…. PS My Dad had similiar living arrangements to you for four years however these arrangements always come to an end so get yourself a plan B you can fall back on if your arrangements come under pressure for one reason or another.
Thx for the post esoap. I hear what you are saying (on both points!). Understanding a handful of stocks is definitely a strategy to consider but for me it just didn't work. I found myself looking at the graphs after I'd bailed out and working out how much $$ I'd left on the table…It didn't put me in a good mind set. That said, I'm going to consider combining some of an old strategy I had, which just looked at a handful of commodities, indexes etc and see if I can start to get in tune with them.
Thx for the comment re your Dad. It's touching to hear someone else who has experienced 'strange living conditions'. Hear's to you and you old man.
Take Care.
BTW – check out @diamonddivefilm – another project I'm working on – Your day job skills in film could definitely be useful!!