C) The Sense of Having a Quota
This is most definitely one of the biggest factors in what causes me to switch from being precise and patient to being a loose cannon. I feel as though I have to pull some pips, often lowering standards for trading habits in hope of getting lucky and getting a few pips. This is by far most noticeable after losses. After I have lost, I feel as though I need to “get my pips back,” which most of the time leads to losing more pips. This is a variation of that sense that there is a quota to be met, or a target that I need to reach.
This “quota mentality” ties in to the “target mentality” that I have been working on lately. It seems that in the same way I can set a pip target while in a trade, and often ride it negative while waiting for price to reach my target, I can also have a pip target for the day, or some idea that there is a number of pips that I should end up with. Such targets or quotas can be dangerous if we treat them as a minimum that we must reach. One thing that helps me be consistently profitable in trades is the idea that the target should be treated more like a maximum. I think this mindset can be applied to the issue of having a daily or momentary quota also, so that I look at my quota for the day as a maximum, with the minimum being dependent on opportunity.
Regarding this issue as it relates to losses, I believe that I need to just learn to be okay with losses. Most of the time this is not an issue, but when I am not closely monitoring my emotions, that sense that I need to get my pips back can creep in, and lead to all sorts of ugly trades. I haven’t thought of a name for this yet, but it is the close relative of the Big Bad FOMO Monster. I need to keep in mind that having some pips and losing them does not mean that I have to get them back, most of the time this ends badly, and leads to out of control desperation trading.
I have noticed these problems at high news events, which often times seem harder to trade, perhaps due to the fact that emotion can quickly take over. I’ve had a couple of bad high news days that have gone something like this: I get in based on FOMO, I get stopped out once or twice, then I get back in because I am frustrated by the fact that I am losing money instead of getting paid like we are all “supposed to” on high news days. Then I make another trade or two, all within a few minutes, trading both ways, with no clear directional bias, or complete disregard for bias if I had actually established one. Then I leave even more frustrated than I already was, with the question, “What just happened?” resounding in my mind. These are the kinds of days that I want to avoid.
Some good habits to avoid the quota or target mentality:
Most everything in trading ties together, and the product of all of these aspects of my personality, style, and habits defines who I am as a trader. All of these rules or habits to help me stay on course do not work by themselves, so focusing too much on one rule may lead to oversight in other aspects of trading. These good habits have a synergistic effect, producing exponentially better results when combined. I must learn to ingrain all of these habits into my identity as a trader in order to succeed and become a consistent, disciplined and profitable trader. I am confident that with time, and constant introspection I will be able to do this.