Staring at your P/L is like staring into the Sun.

Hi, my name is Eli and I am recovering P/L watcher. I would watch others trade and they would be explaining something and I would miss it because, let’s face it, money is more interesting than how to earn it.  Once I had my own account, I would be watching my P/L move and not watching what was happening on the chart. On the attractive scale P/L is a 10 and charts are maybe a 2. Staring at your P/L is like staring into the Sun, it makes you blind.

I am not saying you should ignore profits or loss at all. However, no performance activity allows you to look at the score and perform well. Imagine a baseball player checking his current batting average as the pitcher throws the ball. Or the running back looking at the jumbotron to see how many yards he has rushed for while trying to outrun a defense.

It is hard  to not stare at the P/L but it is necessary sacrifice.  Without fail, the students that come in for training almost always have their eyes in the wrong place.  No matter if it is a simulated account or not we catch them staring at the P/L, field of view is very important in trading. P/L should not take up valuable  space in your field of view.

P/L is an output not an input.

UPDATED

@IndependentTrdr made a good point with the sports analogy.  I always check the score at time outs and half-time.

Also note that this post was written in the context of trading one product in a short term.  For the most part, I am always know where I am within a hundred bucks if not less.   The main point I was trying to get across is that staring at money will pull your concentration away.  The point of trading, to me, is to make good trades.  The money follows.  Money is emotional, charts aren’t.

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  • Ken

    I purposely keep my profit and loss window hidden when I’m in a trade. I do look at it throughout the day as I believe it is important to know the score, to go with your sports analogy; however, this would be only in timeout/half-time situations.

    • Yes, I agree with the timeout and half-time situation.  I missed that.  Profit and loss is important, it means you can trade tomorrow.  I just do not think you can be focused on it while in the trade, money decisions do not work out over the long term.  Money is emotional, a chart isn’t. 

      • Ken

        There is a good line in one of Alerander Elder’s book that goes with this topic. He uses the analogy of a surgeon. If you needed an operation, would you want a surgeon who is thinking about how much money he is making per minute that goes by of the surgery, or one that is just focused on the task at hand.

        Trade well, and the money follows. T0 me that means concentrate on the charts, not the p/l.

  • Great line,” P/L is an output not an input.”

    However, I’m guilty. The way I used to handle this problem was to minimize the part of my P&L that gave me the number, and just focus on the color surrounding that number. If it was green, it meant I was up on the day. Red meant I was down. So I moved the P&L box enough that I could only see the sliver of red or green. Because I think it’s important to at least know if you’re up or down on the day as it could influence how much risk you’re willing to take.

    -DT

    • That is the great idea.  Thank you for the comment. 

5 Responses to Staring at your P/L is like staring into the Sun.

  1. Ken says:

    I purposely keep my profit and loss window hidden when I’m in a trade. I do look at it throughout the day as I believe it is important to know the score, to go with your sports analogy; however, this would be only in timeout/half-time situations.

    • Eradke says:

      Yes, I agree with the timeout and half-time situation.  I missed that.  Profit and loss is important, it means you can trade tomorrow.  I just do not think you can be focused on it while in the trade, money decisions do not work out over the long term.  Money is emotional, a chart isn’t. 

      • Ken says:

        There is a good line in one of Alerander Elder’s book that goes with this topic. He uses the analogy of a surgeon. If you needed an operation, would you want a surgeon who is thinking about how much money he is making per minute that goes by of the surgery, or one that is just focused on the task at hand.

        Trade well, and the money follows. T0 me that means concentrate on the charts, not the p/l.

  2. Great line,” P/L is an output not an input.”

    However, I’m guilty. The way I used to handle this problem was to minimize the part of my P&L that gave me the number, and just focus on the color surrounding that number. If it was green, it meant I was up on the day. Red meant I was down. So I moved the P&L box enough that I could only see the sliver of red or green. Because I think it’s important to at least know if you’re up or down on the day as it could influence how much risk you’re willing to take.

    -DT

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