This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
This morning, Ragin Cajun called out First Solar, Inc. (NASDAQ: FSLR), which he held through earnings and banked much of the rise from 165 to 225+. He’s on fire lately!
Anyway, RC called FSLR as a long. I looked at the 15 min, and thought it was a bear flag forming for another leg down:
Turns out I was wrong, and as I saw that, I reversed my opinion (Fade RC and lose your house) and went long. I set up the trade on the 1 min timeframe:
You can see that I sold half when we had a retrace after a very quick pop! I was up +2R overall when I took the partial, so I had met my goal of +1R per day I trade pretty much immediately. I moved the stop up to breakeven on the rest, and I was going to let the rest play out as fate dictated. Windfall or scratch, all the same to me because I entered well and made my goal. I missed a move up to 220 later in the day, but so be it:
I’ve had a great week trading in this laid-back manner. I’ve taken 6 trades this week, 2 breakeven and 4 wins, for a roughly +4R / +4% gain on my equity. I’m slaying my greed demon by being satisfied with my +1R per day. Anything else is gravy. Instead of straining and reaching for infinity R on each trade, and being pissed when the move was so far and I only got 80% of it, I’ve been happy and satisfied with how I’ve done. Instead of feeling like I had to trade all day, once I banked my +1R, I just watched, and didn’t feel compelled to trade. I have so much more control of myself this way.
If it so happens that I get up and running trading actively again, and +1R is leaving way too much on the table, and I’m more consistent and capable of more, I’ll raise the bar. But for now, I’m one awesome, amazing +1R trader. At least this week. That’s my mindset, and that’s my reality this week. :) Maybe it will turn out that I’ll be like Richard, hitting consistent singles with big enough size to make bank. In the past, I’ve always taken more ego gratification for riding a huge swing in price all the way, even if it’s with a smaller share size. But it’s the same $$ either way in the end. Expectancy has both win rate and size of win in the calculation. Whether I win 10% of the time with huge R profits, or win 90% of the time with 1R profits, the expectancy is the same. The consistency is not, though, and neither is the emotional aspect! If I risk a bigger amount on more consistent trading, I can compound just as easily if not more so than swinging for the fences. I’ve been more relaxed trading this week than I ever have been, I think, and that’s a good thing to me.
I still have yet to experience a trade that is a loser under this new mindset, so I’m watching for that to happen, because it will, even if I play every trade correctly. It’s the nature of the business. I’ll have more of an inner battle when that happens, I’m sure. By slaying the greed demon on the profit side, I hope I’m weakening the loss demon as well. For now, I will stop for the day if I ever get down by -2R. Two strikes in a row, without any wins, and I’ll bail. That will be my rule that will protect me from blowing up.
I remember a while back when Zoomie talked about trading a friend’s money, and he was up 20% for the year. I was so jealous!! But he did it by consistently hitting singles and doubles. I was trying to homer my way around the park, and falling on my face. I used to think that 4% per week was way too little. But if I had been compounding 4% per week from the time I started daytrading (7/25/07) until today, I’d be up 80% instead of down 40%!! This is a big revelation to me. My eyes are opened, and I have found religion in going for singles instead of infinityR.
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| FSLR |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
