Thursday, September 8, 2011

Ooops, I overtraded again

After doing so well being focused averaging a handful or less trades per day for the month of September, I got on the overtrading bandwagon again yesterday (Sept 7).  No, it wasn't like the day when I deliberately scalped TNA with 103 trades

But I know I lost some trading discipline yesterday and there were a few items that were particularly disconcerting:
  • Since I over traded (at least according to my definition of it) that means that I didn't follow my plan.  Upon reflection, one factor that may have contributed yesterday was because I missed out on my pre-market preparation and visualization.  I need to make sure that my mind is properly focused prior to trading.
  • In the big scheme of things, over trading is not bad if all I'm doing is taking "A" grade trades one after another.  But this was not the case.  Many trades I took were "D" grade that had small losses, and as you can see below, all those small losses add up quickly.
    • Sept 7 trades by grade (gross figures):
      A & B grade:  +7.3R
      C grade:      +4.2R
      D grade:      -9.9R
  • Once commissions were applied, my gross profits ended up being net negative.  Yes, more than all of my gross profits were eaten up by commissions.
  • I ended up just below my limit down figure on my account (1% per day), but what is a big concern is that I let it get to be nearly 3% down before recovering nearly 2/3rds of my loss. Although my risk management plan for each individual trade is very solid, my account risk management plan was not followed.  This is a critical breach of my trading plan.
In a day not to be very proud of, there were a few positives:
  • I was able to regain my focus after lunch, and was able to increase my accuracy and recover nearly 2/3rds of my losses.  This demonstrated my resilience and ability to fight my way back without being careless.  There were some cases when I could have exited my positions when my account was at break even, but I was trading for bigger moves according to my trading plan.
  • There was a time when I would over trade and my gross loss would be very negative in addition to my net loss.  But now when I over trade, it seems as though I have a gross profit, but net loss is negative due to commissions.  At least it's trending in the right direction.
So what next from here?  I need to revisit my pre-market preparation and take an even closer look into my trading diary.  One of the worst ways for me to start the trading day is to take the first 2 trades as losses.  This usually evokes a "I'm not going to lose to you" attitude against the market, which then begets more rogue and revenge trading activities. 

It's time to take back control of my discipline.  I can already see in my mind that September will be one of my best months to date, and my primary focus for the rest of this month will be to take only excellent quality setups.  Easier said than done, but I'm up for the challenge.

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