This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
So I did a really boneheaded thing today. After trading without any luck this morning, and losing -2.6R over 5 trades in CFC, I was mad. I was mad that I had smacked CFC around yesterday and it was “beating” me today, and I felt like I could scalp the money back. This was after 3:00 pm already, on an OPEX Friday. I traded, lost a lot and gained a little, and then doubled my size, and lost more. During all of this, I kept very tight stops, but when I came to my senses I had traded 8 more times and lost another -3.4R, making today’s loss -6R overall. Based on the $ sizing, today I gave back -6.5% on my equity because I chose not to leave it alone and stop trading. I am responsible for these trading results. Boneheaded choice, no? At least I still ended the week up 4.3%.
This wasn’t a “Keep Swinging” problem, because you don’t size bigger when you’re down. That’s backwards. So I’m going to learn from this lesson so that my tuition money isn’t wasted. I will not open positions after 3:00 ET, only manage open ones. I will also only “Keep Swinging” if I see a defined setup. I will not increase my size when I’m down. I will not scalp blindly, but only in combination with a good setup and tape reading. I knew the action was aimless and random, and I had no business gambling to make my money back.
My biggest problem is that I hate to lose, period. I’ve made peace with the fact that every trade can’t be a winner, even though it took me a while. Now I’m battling with myself that every day can’t be a winner! I need to accept that I will have some losing days–I can’t be green every day! My goal should be to end every week in the green; I believe that is achievable. There’s nothing wrong with losing, just losing big. There’s nothing wrong with being wrong, just being wrong big! I should have walked away, and next time I will. I can’t imagine how much harder this must be for someone who trades for a living and has pressure to take money out of the market to pay the bills. There is no urgency in my trading, other than the urgency of wanting to get enough capital to trade full time.
I share all of this for juxtaposition next to my results from yesterday. It shows how much I’m still a novice trader, and that my personal discipline and psychology need work, even if some of my techniques are starting to improve. See what I mean when I say that ol’ Jesse Livermore and I have something in common? With me, you’ll get the good and the bad–it’s “reality internet”. I’m really mad at myself, but that won’t do any good, so I’ll refocus my anger into discipline, and come back ready to look for quality setups on Monday.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
August 17th, 2007 at 4:43 pm
You seem to have a good handle on what you need to do to avoid repeating days like today. I especially think “I will not scalp blindly, but only in combination with a good setup and tape reading.” hits the point very well. I don’t know the details of your particular trading style, but saying you won’t open new positions after 3pm might be unnecessarily limiting. Sometimes there are very good trading opportunities in the last hour of trading. The only other thing I would toss in there is to try to have an awareness of your emotional state because oftentimes elevated emotions are the reasons we overtrade, don’t wait for the good set-ups, etc. If you are aware of yourself getting more emotional than usual, you can compensate.
August 17th, 2007 at 5:40 pm
Looks like your day was a lot like mine! I don’t know why it is, but sometimes nothing seems to work. It’s ok! We will kill ‘em monday. (or tuesday at the latest) (i hope)
August 17th, 2007 at 6:05 pm
Yeah, but my trades sucked and I gave up a lot of R’s. I’m sure you did better than that!
Hopefully we’ll kill ‘em on Monday, but if not, I’m gonna be the smallest loser on the Street. :)
August 17th, 2007 at 7:43 pm
Prospectus,
This may not make you feel a whole lot better, but it’s really common to have a breakout day followed by a total crap day. I can’t tell you how many times that shit has happened to me.
You and Richard have it exactly right… it’s all about losing small, because like everyone else in the game, there will be many times that you lose. I also agree with the above poster that strictly not trading after 3 may be over-limiting yourself. But different things work for different people. Try your own things and figure out what works.
Have a good weekend,
-DT
August 18th, 2007 at 11:28 am
Prospectus,
You’re doing great. You’ve really turned it around quickly and your progress has been outstanding. Don’t get overly harsh on yourself because of one bad day. Yesterday was a difficult day because of the Fed intervention. I agree with the others re: not limiting yourself in the last hour. I notice that the market often pauses around 3:00 and picks up between 3:15-3:25, so you might not want to miss out on that action because of one bad day, but also agree with DT re: figuring out what works best for you.
August 18th, 2007 at 5:35 pm
Thanks for the kind words, everybody. After thinking about it, I agree that the 3:00 limit is heavy handed. I appreciated John Forman’s comment, since he highlighted the biggest problem among the big list that I was lamenting about, which was the aimless scalping without a setup. Also, letting my emotions get the best of me and overtrading.
Do any of you still make dumb choices in your trading like this, or have you overcome that temptation completely?
August 19th, 2007 at 3:50 pm
prospectus: u already know the answer to that question…have u overcome every temptation in other areas of your life? i’m sure they are better than they were in the beginning stages, but i doubt any of them are perfect…likewise, you are well on your way to becoming a good trader…they may just be further down the path
gl next week
August 21st, 2007 at 3:16 pm
[...] +26R. My PnL chart is now not as impressive next to Trader Mike’s. At least I didn’t do what I did last Friday, by trading out of control. I took setups that looked reasonable as I saw them, but they turned out [...]