The "Anxious Trader"

I was perusing the great trading blog of Dr Brett Steenbarger. He identifies 4 problem traders, and I definitely see much of myself in the one he identifies as problem trader #2, the anxious trader. I am going to cut and paste from his blog, because this is a private blog. If somehow this becomes more public I would provide a link to his blog rather than copy it. Just be aware that this is his work:

The anxious trader is consumed with fears of loss, missing out on objective opportunity either by not taking signals or by sizing positions too conservatively. In a sense, the anxious trader is more concerned about not losing than about winning. This risk aversion can lead to analysis paralysis, as the trader waits for the perfect setup that never quite materializes. Sometimes the anxious trader is one who has been traumatized by prior losses. It's too painful to relive memories of those losses, and so the anxious trader exits positions too quickly and is too reluctant to get into positions. A very common feature is cutting profits rapidly out of fear of losing those. Signs of the anxious trader include muscle tension, worry, relief over getting out of positions (or away from the screen), and inability to trade reasonable size. The key strength that combats anxiety is confidence and an ability to accept loss as a natural part of trading. The techniques most helpful in combating anxiety include cognitive methods for replacing worry talk with constructive problem solving; behavioral techniques to calm oneself and reprogram stress responses; setting process rather than outcome goals; and regaining confidence by trading successfully in simulation mode and gradually building one's size.

The good news for me is that I recognized a while ago that one of my problems was my fear of being wrong. It can't be fear of losing money, because I am risking at times as little as $10 !! and almost never more than $50. I do get overanxious when I am in a position, and recently have gotten out WAY too quickly for way too little profit. But worst of all, I do not pull the trigger. That is my biggest problem: I am not trading enough! Today I saw the double bottom forming, I called it a double bottom, and I even recognized that I could buy it and set a very tight stop, so risk was minimal. I did not take the trade and watched NQ rally 50 points! This is the type of thing that is killing me! But I am making progress which is encouraging.

Fed moves / market moves

Fed went 25 bp as expected, and also as expected indicated that they were shifting to a neutral bias which should limit the market's expectation of another cut at the next meeting. NQ formed a perfect double bottom and rallied bigtime, a cool 40 points off the DB. I was nervous pre number and bought 400 SDS to "hedge" my portfolio exposure. Fortunately I sold it out for a small profit after the Fed rate announcement. T notes sold off as once again the 6D system provided a valid sell signal with a maximum of 4.5 tics heat!

Waiting for the Fed

Quiet day today waiting for the Fed. NQ was up overnight and made a big new high, 2230.25, then went down and tested the daily pivot (2205.25) low was 2204.25 then meandered higher. Treasuries flattened. Apparently there were curve unwinds in front of the Fed and some month end maturity extensions. USZ closed up 5 while FV was down 2.5. I made just a little bit $$ scalping NQ. Sold a breakdown and made an instant 2 ticks. I need to trade more - even if I lose money I am not learning anything by making 2 trades all day.

My new blog

This should be a good place to write post-market impressions of my trading. Today was a wild day. NQ went down down down, formed a nice W bottom, then went right back up. I did not do a single trade today. Actually pulled the trigger on one trade but the system lagged slightly and I missed the entry so canceled the order. I went out to lunch and we had people over in the afternoon which distracted me from my trading, hence no trades. Read some interesting web material this evening. One site has a trading system that derives signals from the Nasdaq index, so I will chart the index for a while and see if it gives me different signals from the NQ chart. Another site gave some basic ideas for day trading with the trend. 1. Pivots (which I don't like for determining trend), 2. HH, HL, LH, LL, which is exactly what I do use (plus trendlines), and 3. Indicators, specifically 2 moving averages and a stoch cross.

Trading from home

This has been my dream for years, and now I have been living the dream for nearly seven months, and while not quite a nightmare, the dream is far better than the reality. I have studied and studied and logged screen time and narrowed my focus and I do have a trading plan and I do have a day trading methodology and now I just have to make it work. The major problem is still taking the trades.