Stall recovery

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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kingsmark
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As a novice trader, I am very aware of mindset disruption prompted by losses. The same behaviour will have broadly the same results every time, and it is madness to repeat this without correction.

In some areas of life we need to accept tuition and action that is contrary to our natural instincts. For trainee pilots there is an early and vital lesson to learn, which is a scary experience.

Insufficient air speed will result in a stall, with consequent loss of lift and control. Suddenly, the aircraft is in rapid uncontrolled descent. To recover from a stall, the pilot must push the nose down then increase the engine power. Power up flying nose down is counterintuitive, but soon becomes an automatic response.

My activity on the exchanges has recently improved, but yesterday felt like serious stall financially. I carried on with no deviation, and finished the day neither up nor down. Upon reflection I am very pleased with the outcome, for two reasons.

Firstly, the losses were due to normal market events and not mistakes or reaction. So no real cause for concern.

Secondly, brief analysis tells me that yesterday probably presented the most adverse conditions I am likely to encounter. If that is true, break even is a great result!

I gained a clear understanding of stall recovery many years ago. Hopefully, I can now apply the same discipline to trading.
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to75ne
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kingsmark wrote:
Sun Jun 09, 2019 10:36 am


Secondly, brief analysis tells me that yesterday probably presented the most adverse conditions I am likely to encounter. If that is true, break even is a great result!

yesterday was a very average saturday for this time of the year (horse racing), with no problems from betfairs end. Straight forward liquid and in the main low volatile markets (during the afternoon session).

not sure what flying planes have todo with trading horse races
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Derek27
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kingsmark wrote:
Sun Jun 09, 2019 10:36 am
As a novice trader, I am very aware of mindset disruption prompted by losses. The same behaviour will have broadly the same results every time, and it is madness to repeat this without correction.

In some areas of life we need to accept tuition and action that is contrary to our natural instincts. For trainee pilots there is an early and vital lesson to learn, which is a scary experience.

Insufficient air speed will result in a stall, with consequent loss of lift and control. Suddenly, the aircraft is in rapid uncontrolled descent. To recover from a stall, the pilot must push the nose down then increase the engine power. Power up flying nose down is counterintuitive, but soon becomes an automatic response.

My activity on the exchanges has recently improved, but yesterday felt like serious stall financially. I carried on with no deviation, and finished the day neither up nor down. Upon reflection I am very pleased with the outcome, for two reasons.

Firstly, the losses were due to normal market events and not mistakes or reaction. So no real cause for concern.

Secondly, brief analysis tells me that yesterday probably presented the most adverse conditions I am likely to encounter. If that is true, break even is a great result!

I gained a clear understanding of stall recovery many years ago. Hopefully, I can now apply the same discipline to trading.
I used to pilot a Boeing 737 ( ;) ). You can recover from a stall given enough altitude but take off too steeply with not enough airspeed and you're usually f**ked, as I've discovered many times.

It's much the same with trading. There are mistakes you can make and recover from quickly, for example, closing trade before it gets too bad. You can have disastrous losses, lick your wounds and get back to where you were in a week. But just like piloting an aircraft, there are mistakes that are irrecoverable that you have to avoid, such as risking near 100% of your bank.
kingsmark
Posts: 11
Joined: Tue Nov 22, 2016 6:26 pm

yesterday was a very average saturday for this time of the year (horse racing), with no problems from betfairs end. Straight forward liquid and in the main low volatile markets (during the afternoon session).

not sure what flying planes have todo with trading horse races
Yesterday may have been a typical Saturday for horse racing. Within my parameters and experience it was a challenging day.

My analogy compares stressful situations which trainee pilots and traders must learn to cope with. Pilots seem to adapt well, but I suspect a lot of would-be traders repeatedly fall at this hurdle.
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Derek27
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kingsmark wrote:
Sun Jun 09, 2019 10:03 pm
Pilots seem to adapt well, but I suspect a lot of would-be traders repeatedly fall at this hurdle.
You can't make a comparison between pilots and would-be traders.

As a would-be pilot I used to keep crashing my Boeing 737, but as a trader I adapt well.
eightbo
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Seems like you're developing the right approach; judging performance by what's in your control rather than raw P&L.

I'd imagine in the cockpit the pilot would be alerted to environmental changes, technical faults etc. which pose a safety threat.
Similarly, try writing up a list of potential emotional triggers (red flags) to be on the lookout for whilst trading to keep your P&L from flying all over the place leading to increased risk of crashing.
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to75ne
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Joined: Wed Apr 22, 2009 5:37 pm

kingsmark wrote:
Sun Jun 09, 2019 10:03 pm
Secondly,brief analysis tells me that yesterday probably presented the most adverse conditions I am likely to encounter . If that is true, break even is a great result!

Yesterday may have been a typical Saturday for horse racing. Within my parameters and experience it was a challenging day.
you state "brief analysis tells me that yesterday probably presented the most adverse conditions I am likely to encounter" my reply meant, No it is no where near comparable to the most adverse conditions you will meet, it was a very easy session (if your experienced at trading horse markets that is), you will encounter far more adverse sessions than yesterdays afternoon session.

its a good thing you found it to be a challenging day, you now know how hard trading horse markets are on a relatively easy day. Its not going to be a straight forward easy thing to learn to do successfully in a few weeks, it going to take you time.
stueytrader
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Joined: Tue Dec 15, 2015 6:47 pm

Interesting post OP.

The general concept is good - that fighting against natural responses is often key in trading psychology.

For certain correct.
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