Thank you @rdaytrader for your response.

I have read through your journal and found many similarities between us two, but also some major differences: We both seem to use similar techniques as I also look at Support and Resist, Market profile, Volume profile and also some influences between bond markets, and equities. I trade only one market (Nasdaq) as you trade several. I trade full time, normally during the whole session since 3 Months app. Before my long break I also traded full time even though I am in demo. I treat the thing as my main business and am still in studying period. I try to follow a daily routine as close as possible. I do have a journal but not on NexusFi which I actualize daily. You are trading part time.
So I went today through all the days prior to my so far 2 catastrophic loss days and found very similar patterns between the 2 events:
Before my first big loss I had made a change in my setup which led to big improvements in my trading results and I had some good trading days (6 days) before the catastrophic loss day. Before my second big loss the market had significantly increased volatility from which I was able to profit big time during 4 days in a row. In both cases in the days prior before the event I experienced rapid improvement in my trading results because of some kind of change which was exciting for me. I can also see in the way I actualized my journal that discipline decreased clearly while success was increasing. I also lost discipline concerning my daily routine. It was this excitement about the good results while I was decreasing my discipline which put me into some ever lower alert state of mind. At the day of my second big loss in the first hour I was even making a skype call while trading (organizing for my life account). Before I would never have made such a thing. I was clearly overconfident in both cases and believed to have finally figured out how to be successful at this game. Furthermore as I am also somewhat impatient in getting superb trade results, I wanted to still increase my winning days even though I had made a stupid amount of points during the previous 4 days. (I measure all my progress in points, not in currency.)

When reading through your journal I found two parts which caught my attention:
1: on Sept. 7th:"FGBL was a disaster really. I kept buying, ignoring the downtrend and ultimately ate away a large amount of my profits. When I am winning and have a big green P&L, it seems I am ignoring rules and going for 'what I think will happen'. "
2: on Oct. 26th: "There's not really a reasoning when I got long the other day while the market was crashing, other than that I had a winning streak before that and it made me feel I would be right another time."
"I guess the desire to own much money gets in the way of everybody . In my case, when I am putting lot of effort in and at the end of the day profit is 100 bucks, I'm getting impatient. Especially when having experienced days with 10K profit or 100K profit in 2 months, it's easy to get impatient."

Summarizing: Both you and I before our big loss days are excited because of some previous abnormaly successful days, during those days we decreased discipline and lowered gradually the alert of our state of mind taking riskier trades, nevertheless we managed to reach one of our goals during those successful days. When losses start to become more frequently again (which is normal at some point) we try to compensate by overtrading trying to prolong our successful streak, losses increase further but we are still confident (because of the previous abnormaly succesful days) that now we are able to turn around the daily result, finally the day results in a disaster.

Does this describe your case? It certainly describes the two events I had so far.
It is a mix of being excited because we have reached a goal and we think that finally we are able to advance with a much faster pace, impatience, and overconfidence.

In the future I will be very allert after a big winning streak (we always reach goals in winning streaks). I now know that this can be followed easily by even bigger losses, no matter how big the winning streak was.

We have to be in high alert when entering the next winning streak. It seems to be the point where we enter into mindless trading. So after abnormal winning streak at first signs of loss of discipline, be it in preparation, trading, journaling or whatever related to this, we better take some days off and dedicate our time to something completely unrelated to trading.

Would be interested in your opinion.

@PetArn,

You really struck a cord. From your story I can see that you faced/are facing the same problems. In hindsight, it is easier to see what caused the problem. The big loss day is caused by the fact you're trying to turn a loss day into a winning day. Then, instead of trading opportunities that present themselves, you're trying to trade setups which aren't opportunities aka you're trying to force trades and also with bigger size. So you're trading both a suboptimal opportunity and with a bigger size. On top of that you want that trade to wipe out your previous loss, so your exits are also distorted. All in all, it's a recipe for disaster and that is also what happens.

Not everyone is susceptible to this behaviour though. I think it's really personal. It's a psychological problem of the limbic brain. In this case you want to fight back. Especially when you've had winning streak of e.g. 6 days, you feel you own the market, but nothing could be further from the truth. The truth is you're lucky to have had a winning streak. The truth is that every trade is more or less a 50/50 chance of outcome. So the key here is to manage the risk on every trade. Making sure you lose as little as possible on every trade and making sure you win at least as much as you lose and ofcourse ideally 100% more (aka R-multiples).

Hope this brings some insight to your trading. It is also useful for myself. I find it amazing though that you're trading sim. I am curious how you would do with real money, as most traders feel it's a different world.

Thank you for your reply.
In my case I noticed that I am falling from a greedy state of mind into a loss situation where I am still convinced to be able to reverse that loss. However everything starts with greed.
As of course in my past trading experience I have experienced first losses and only recently started to experience also big winners I am not yet mindfull or aware of the euphoric state of mind which leads to more and more greed.
I hope that by repeating winning streaks in the future that I will be able to detect when euphoric feelings or overconfidence start to kick in. Its all a matter of awareness.
As for trading in the demo account: I am aware that it will be an adventure to change to a live account. However from day 1 I was sure that trading would be a complex thing to learn. So I decided to split the complexity into different phases. Control of emotions is one huge topic. Finding ones trading style and trading methods with positive expectancy is another thing. By not trading live accounts I hoped to separate the problem into two different steps. I am also surprised that feelings already present themselfes while trading demo. However this might happen because I am investing a lot of time into trading and I would like to progress faster. Time has a big value for myself. I just read Rande Howells book Mindfull trading, mastering your emotions and the inner game. There was one sentence which gives hope:

"The trader who could perform
well in simulation is freed from the fear that stopped him
from trading as well when risk entered the game."

I know this is complete theory and in many cases wrong. However since I am working on stress management in the demo account the knowledge and skills I learn now for sure will be helpful when entering live.
I believe that a successful way of trading once felt and firmly memorized in demo account will be a huge advantage when starting live trading. Sound trading habits learned in demo account should be a good fallback when having stress in a live account. I will know when I start live trading but for now I will remain in demo...

Funny, I was just going to post seeing if anyone else was having similar issues, and then saw this thread.

I'd say I'm not so goal oriented, but find when I have reached a point that seems significant, like reaching a 50% account increase, or feeling like I've 'cracked it' and its plain sailing from here on, I end up crashing back to break even. It's so predictable I now know its coming, like a self fulfilling prophecy, and I'll break all money management rules, etc, to get there quickly!

So just wanted to say, reading this thread has helped a lot. Focusing on the process and trying to put pnl out of mind as much as possible is a good approach I feel. But really I want to know why this is happening, I'm certain it is a psychological issue. To that end I'm going to have a go at the worksheet linked to from this article (that I read about in another thread but can't recall where...)
https://www.jigsawtrading.com/2017/09/15/self-sabotage-trading-exactly-overcome/

Also, may or may not be relevant, but a fascinating talk on how financial rewards may lessen performance:
https://www.ted.com/talks/dan_pink_on_motivation

reposting this link as it doesnt work in the previous post and also quoting this wisdom here for reference (from @monpere)

Going Beyond Psychology to make Winning Trades and Nice Profits Why do you need to understand why you are taking the trade? You spent 1500 hours figuring out that, when the market is in this state, and this bar does this and that candle does that, or when this indicator does this, and that indicator does that, and …

Why do you need to understand why you are taking the trade? You spent 1500 hours figuring out that, when the market is in this state, and this bar does this and that candle does that, or when this indicator does this, and that indicator does that, and this other indicator does this, then this is a trade setup. And you spent another 1000 hours looking through historical charts to prove that those assumptions are correct most of the time. The reasoning for taking that trade is built in to the method you are trading. Understanding why you are taking the trade at this point should be irrelevant, you already know the reason, you spent 2500 hours figuring out the reason.

If you are not pulling that trigger every time your setup criteria is met, I will tell you the reason why. 2 reasons, greed and fear. Then, every trade you take or skip is rooted from a psychological cause. Every trade you skip is rooted from the fear of losing. Every trade you take is rooted from greed, because you think it has a better chance of making you money. That's why you feel invincible when you get 5 wining trades in a row, you get a compounding accumulation of greed. That's why you hesitate after the 3rd loss, you get a compounding accumulation of fear, because every trade starts from one of those emotions, whether you realize it or not.

The answer is, knowing the historical win percentage of your method, and trusting those stats. No need to predict the market, no need for transcendental meditation, or a mental state above and beyond the norm. The necessary criteria is built in the stats, the necessary analysis is built in the stats, the heard psychology is built in the stats, all you need is already built in the stats. Markets don't radically change overnight, the habits and psychology of market participants don't change overnight. The way they behaved during the 2500 hours of history you looked at, is the same they will behave again in general. Now, every win becomes part of the stats working themselves out, and every loss become part of the stats working themselves out. The result is the removal of the fear and greed, the removal of the bulk of the psychological entanglements with each and every single trade.

rdaytrader 

reposting this link as it doesnt work in the previous post and also quoting this wisdom here for reference (from @monpere) Going Beyond Psychology to make Winning Trades and Nice Profits Why do you need to understand why you are taking the trade? You spent 1500 hours figuring out that, when the market is in this state, and this bar does this and that candle does that, or when this indicator does this, and that indicator does that, and … Why do you need to understand why you are taking the trade? You spent 1500 hours figuring out that, when the market is in this state, and this bar does this and that candle does that, or when this indicator does this, and that indicator does that, and this other indicator does this, then this is a trade setup. And you spent another 1000 hours looking through historical charts to prove that those assumptions are correct most of the time. The reasoning for taking that trade is built in to the method you are trading. Understanding why you are taking the trade at this point should be irrelevant, you already know the reason, you spent 2500 hours figuring out the reason....

Glad you found this post. This is exactly on target.

Bob.

Glad to see I'm not the only one who digs through old threads here... or came across that one Great stuff man.

today had experienced this behaviour again and I have noted it down so posting it here for reference

My Trading Journal This morning did not have time to trade as I had family activities. In the afternoon I decided to look at the market if there were some opportunities during US session or not. I thought PL had the best chance to get nice profits in the shortest time, …