CURRENTLY DONATING 20-60% OF MY DAILY TOTAL THROUGH LOSS AVERSION

[arbitrage16]

In-running trader, recently emerging from the break-even grind of death. The latest hurdle that I am smashing my head against is how I am reacting to a red.

The typical pattern is that the session beings with 3-4 good greens, then a red comes along - the source of which doesn’t seem to matter, whether it is horse mistake, my mistake, or just markets being markets - and from there I will go on a red run, where I’ll take 2-5 more reds in the markets that follow.

I have tried taking breaks, breathing exercises, working on the kinds of messages that are part of my internal dialogue, but this pattern is consistent.

I am calm about it, but would appreciate any thoughts from the wiser heads of the forum in how to overcome it. I have found that actually accepting that I am loss averse, rather than beating myself up about it, is helping me push through it and take greens in the latter part of the session, but the issue will occur in the following session; a good start, followed by a wobble, then some scratches and greens to finish...

[Kai]

I am calm about it, but would appreciate any thoughts from the wiser heads of the forum in how to overcome it.

They seem to be preoccupied with political markets at the moment.

Are you sure you're trading with an edge?

[wearthefoxhat]

The typical pattern is that the session beings with 3-4 good greens, then a red comes along - the source of which doesn’t seem to matter, whether it is horse mistake, my mistake, or just markets being markets - and from there I will go on a red run, where I’ll take 2-5 more reds in the markets that follow.

FWIW, the first thing that sprang to mind, and a rule I follow; (it may not be what you want to hear)

When the first red trade occurs that takes you into an overall loss, (be it the first race,or after several greens) stop for the day completely.

Before you begin a new trading session (the next day or after a nights sleep) review the last losing trade and compare to other previous losing trades and see if there's a pattern.

The pattern could be the racetype, position in the market, the price of the favourite in the market. It could be you were distracted during your trading, the dog/cat/kids/wife wanted your attention,(not necessarily in that order). Maybe you were pissed off about something, you were pissed, or not pissed enough. Only you know your set up/circumstances to make the judgement.

Be kind to yourself, celebrate the wins.

[Derek27]

The most likely reasons why you might start off well than then hit reds are getting slack, losing concentration, overconfidence, frustration, etc. I think you need to focus on how you're feeling, what did you do to get a big red that you didn't do in the previous markets? Or is it a risky strategy? Would you're greens be big reds if the market went the other way?

[spreadbetting]

When the first red trade occurs that takes you into an overall loss, (be it the first race,or after several greens) stop for the day completely.

Surely if you're a profitable trader you're just cutting off your nose to spite your face if you limit the amount of markets you trade and doesn't overcome the problem. From what arbitrage16 has stated those losing trades don't send him on the tilt so no need to stop for the day.

I'd guess it's just complacency and overconfidence causing you to lose focus if it's occuring after some decent greens and that's causing a mini tilt til you're back on track. Maybe you need to find something to help you maintain focus like writing down a summary of your trades after each race.

[arbitrage16]

Thanks guys.

It's as if there is a subconscious process operating that is triggered by a red that seeks to disregard my entry signals in favour of making an entry. Where usually I would take a no-trade, or wait patiently, instead I am entering the market on a more flimsy thesis.

Short priced maiden today, backed it and was happy with the entry, then the horse made a mistake, odds flew out, didn't panic and just exited for a controlled 18% red, but that was the trigger for two reds to follow that shouldn't have been entries in the first place.

Foxhat - thanks, I am thankfully past where these are taking me into overall reds for the day, and instead they are eating into my greens and slowing bank growth. Have considered just downing tools, but it feels like another solution is out there. But being kind to oneself is great advice

[spreadbetting]

Probably worth looking at your pnl over a few mnths to make sure you're not exaggerating the problem too as it's easy to focus on the bad trades but the situation may not occur as often as you think. May simply be the odd run of a few reds which are bound to occur at some time or other.

[jimibt]

Probably worth looking at your pnl over a few mnths to make sure you're not exaggerating the problem too as it's easy to focus on the bad trades but the situation may not occur as often as you think. May simply be the odd run of a few reds which are bound to occur at some time or other.

yeah, it might just be simply red - ok, i'll get me coat (again)!!

[arbitrage16]

Probably worth looking at your pnl over a few mnths to make sure you're not exaggerating the problem too as it's easy to focus on the bad trades but the situation may not occur as often as you think. May simply be the odd run of a few reds which are bound to occur at some time or other.

Understand what you're saying - I may have some form of confirmation bias that is exaggerating the pattern - but at the moment it's a daily thing.

And really it's not the reds, but the nature of them that mean it can't simply be a 'run of a few reds' - it's like a different person trading after the first red occurs. Too rushed, ignoring signals; I will enter, take a small red, then enter again to try to make that back. Decision making goes to shit!

[Kai]

Sounds like chasing losses tbh and wanting to get every market into green. While you're doing that you're clearly not trading with an edge.

All caps lock thread title can be viewed is a clear sign of exaggerating whatever issue is plaguing you, by overthinking different biases.

I think a lot of these things come just come down to a lack of confidence, in your ability and edge (if present). Confidence cannot be so fragile that it gets completely shattered soon as the first red appears, after which the recency bias coupled with low confidence levels can just snowball further.

Can obviously overcome this by increasing confidence levels which can happen naturally over time if you're producing good results. With enough confidence you take your red and keep trading in the same manner, knowing that at the end of the session you should overall be in the positive (IF trading with an edge). With no confidence whatsoever you can fall apart and start doubting everything after the first red appears.

Coming off after a long run of breakeven results would explain the low confidence levels overall, if that's one of the problems.

[wearthefoxhat]

Probably worth looking at your pnl over a few mnths to make sure you're not exaggerating the problem too as it's easy to focus on the bad trades but the situation may not occur as often as you think. May simply be the odd run of a few reds which are bound to occur at some time or other.

yeah, it might just be simply red - ok, i'll get me coat (again)!!

If you don't know me by now...

[arbitrage16]

Sounds like chasing losses tbh and wanting to get every market into green. While you're doing that you're clearly not trading with an edge.

All caps lock thread title can be viewed is a clear sign of exaggerating whatever issue is plaguing you, by overthinking different biases.

I think a lot of these things come just come down to a lack of confidence, in your ability and edge (if present). Confidence cannot be so fragile that it gets completely shattered soon as the first red appears, after which the recency bias coupled with low confidence levels can just snowball further.

Can obviously overcome this by increasing confidence levels which can happen naturally over time if you're producing good results. With enough confidence you take your red and keep trading in the same manner, knowing that at the end of the session you should overall be in the positive (IF trading with an edge). With no confidence whatsoever you can fall apart and start doubting everything after the first red appears.

Coming off after a long run of breakeven results would explain the low confidence levels overall, if that's one of the problems.

Something tells me that you don't think I have an edge Kai

[Kai]

Sounds like chasing losses tbh and wanting to get every market into green. While you're doing that you're clearly not trading with an edge.

All caps lock thread title can be viewed is a clear sign of exaggerating whatever issue is plaguing you, by overthinking different biases.

I think a lot of these things come just come down to a lack of confidence, in your ability and edge (if present). Confidence cannot be so fragile that it gets completely shattered soon as the first red appears, after which the recency bias coupled with low confidence levels can just snowball further.

Can obviously overcome this by increasing confidence levels which can happen naturally over time if you're producing good results. With enough confidence you take your red and keep trading in the same manner, knowing that at the end of the session you should overall be in the positive (IF trading with an edge). With no confidence whatsoever you can fall apart and start doubting everything after the first red appears.

Coming off after a long run of breakeven results would explain the low confidence levels overall, if that's one of the problems.

Something tells me that you don't think I have an edge Kai

Why would I be talking about confidence then? I think you do, but when you lose confidence then you may as well be trading without an edge, is what I'm saying, because then you can't really use the edge effectively.

It's not important what I or others think, can't even form an opinion since I know nothing about your trading, the only thing that matters is what you think. And the vibe that I'm getting based on what you've said is that you sometimes feel like you don't have an edge, (maybe not think that way but feel that way after a loss), because it sounds to me like a textbook confidence issue. If you're getting niggling doubts after a bad result that's normal, you have to shake it off and keep focus on your execution.

I'm sure you've doublechecked your results to confirm the edge, because you've probably dismissed my initial question as a stupid one ( ), fair enough but I feel that's the first question that should often be asked since it's easily overlooked and imho is the #1 problem that people have.

So, if you've got some good results behind you then that's all you really need and should tap into that source for confidence, give yourself some credit and keep calm and carry on. Even if you've been profitable for a very long time, sometimes you have to accept bad periods or bad days as part of the job, when markets aren't trading like you expect them to etc. Don't see a need to immediately jump to any conclusions that something is wrong with you mentally and that you're donating everything back to the market.

[arbitrage16]

Ok, thanks Kai, perhaps my diagnosis of loss aversion is an incorrect one and has led me down the wrong path for a solution. After a red comes, it's almost as if I'm a striker who starts snatching at opportunities, trying to force it - and that is often a confidence issue.

I put a lot of pressure on myself to perform, and when this issue occurs I can feel myself tensing up which presumably only exacerbates the issue.

So, what does one do to maintain a steady balance of confidence?

[Kai]

So, what does one do to maintain a steady balance of confidence?

A steady stream of good results I'd say, I think that's an easy enough question.

Even the best of traders get all sorts of knocks to their (temporary) confidence levels, but ideally it should somewhat reset for the next markets and especially for the the next trading session.

Ok, thanks Kai, perhaps my diagnosis of loss aversion is an incorrect one and has led me down the wrong path for a solution. After a red comes, it's almost as if I'm a striker who starts snatching at opportunities, trying to force it - and that is often a confidence issue.

I put a lot of pressure on myself to perform, and when this issue occurs I can feel myself tensing up which presumably only exacerbates the issue.

That's a great analogy actually, we've all seen what happens to world-class strikers when they lose all confidence but still have to try and perform.

Could easily be wrong, like I said I don't really know anything about your trading, but if it's a simple matter of confidence then it probably doesn't help much if everyone else automatically assumes that something is indeed wrong with you and offers their own theory on what bias may be the issue etc. All I know is that a bit of confidence can do wonders for your trading execution, and that's something you build naturally through results.