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I'm going back to do something I did a few years back which proved very useful in terms of getting the right attitude for discretionary trading. I'm in cash as far as my stock trading goes, and my system holds no positions at the moment. I'm practising my "trading" using my Betfair account. There's lots of advantages for this:
-- I can reduce my position sizing right down to a very small size. I can't do that with stocks because the brokerage gets too high as a percentage.
-- Betfair has heaps of games playing all day/night.
-- I don't need to resort to paper trading stocks. I always found paper trading useless because you have no consequences of your choices. No skin in the game.
I choose a market that I know nothing about, say NHL.
I decide that this whole exercise is going to cost me $x. The amount chosen has to be within my psychological tolerance for loss - let's say it's $300. In other words, the amount lost has to cause no reaction when I think about it. My last discretionary trade cost me ten times that, and this is for education purposes. Then I commit completely to the loss. It's gone, the whole $300, and I'll never, ever see it again. The pay off (hopefully) will be that I get to see the stock market more accurately when I go back to it. (It worked last time).
I divide the $300 up into say 10x$30 bets. I commit totally to losing not just the $30 but every single bet I make. I also commit to being wrong, messing it up entirely. If the thought of getting it all wrong and losing $300 makes me feel bad, then I'm not ready to bet. I either need to reduce the bet size or the total gamble size, or I need to understand what it is I'm afraid of, then work on accepting that. When I feel ok about the loss and about being wrong, I'm ready to bet.
Next I very briefly read a few game previews from some NHL forums. I get a feel for the markets, but I don't apply any logic, because I can't since I know nothing about NHL. This is essential - no logic. But forums will give you a feel for markets, and it's that feel that I want to pick up on, and bet on. I read between the lines for tone and sentiment, not predicted result.
Then I place my bets and wave bye-bye to my money. I don't watch the live scores because ...why would I? The money is gone and I've lost. I check in the next day.
If you're after a cheap way of improving your discretionary trading, I recommend this. The whole idea behind it is this: you can't see markets as they are when you're trying to protect yourself from loss.
-- I can reduce my position sizing right down to a very small size. I can't do that with stocks because the brokerage gets too high as a percentage.
-- Betfair has heaps of games playing all day/night.
-- I don't need to resort to paper trading stocks. I always found paper trading useless because you have no consequences of your choices. No skin in the game.
I choose a market that I know nothing about, say NHL.
I decide that this whole exercise is going to cost me $x. The amount chosen has to be within my psychological tolerance for loss - let's say it's $300. In other words, the amount lost has to cause no reaction when I think about it. My last discretionary trade cost me ten times that, and this is for education purposes. Then I commit completely to the loss. It's gone, the whole $300, and I'll never, ever see it again. The pay off (hopefully) will be that I get to see the stock market more accurately when I go back to it. (It worked last time).
I divide the $300 up into say 10x$30 bets. I commit totally to losing not just the $30 but every single bet I make. I also commit to being wrong, messing it up entirely. If the thought of getting it all wrong and losing $300 makes me feel bad, then I'm not ready to bet. I either need to reduce the bet size or the total gamble size, or I need to understand what it is I'm afraid of, then work on accepting that. When I feel ok about the loss and about being wrong, I'm ready to bet.
Next I very briefly read a few game previews from some NHL forums. I get a feel for the markets, but I don't apply any logic, because I can't since I know nothing about NHL. This is essential - no logic. But forums will give you a feel for markets, and it's that feel that I want to pick up on, and bet on. I read between the lines for tone and sentiment, not predicted result.
Then I place my bets and wave bye-bye to my money. I don't watch the live scores because ...why would I? The money is gone and I've lost. I check in the next day.
If you're after a cheap way of improving your discretionary trading, I recommend this. The whole idea behind it is this: you can't see markets as they are when you're trying to protect yourself from loss.