Wednesday, September 28, 2011

Well, that didn't work...

As I wrote yesterday, one thought I had was to start the day with the mindset of being in full recovery mode. In other words, don't wait half a day until I had a loss to start scrambling, start immediately!  So I tried it today.

Well, it didn't work.

As luck would have it, after being up maybe 2R or so after a few trades, I decided to go right to TZA and take it up several notches.  But perhaps due to being out of sync, as well as having to deal with choppy markets, and of course having some bad luck (getting stopped out multiple times by just 1 tick, only to see the trade work well), my plan didn't work.  I dug myself into another deep hole.

After hitting the losing streak, there were instances when my open positions showed that I was breakeven or even positive for the day, but a buy program would trigger and knock me out of my short positions or else reduce profits significantly, or [insert another excuse here].

Elements of revenge trading kicked in, which then led me into other poor entries, which led to more small losses, which then let me into even more desperation entries.  In other words...I could see a death spiral forming.  Time to blow the whistle, call time out!

Now that my portfolio is back close to the "I've blown up my account" levels, it's time to step back, regroup, and reevaluate my overall strategy once again.  I can definitely see how this day could have been quite a profitable day, but there were many actions I took that didn't support that outcome.

My scheduled time off starting now is timely, so we'll see how my mind processes all of this over the next few days to figure out my next steps.


Anonymous said...

Do you track your trades in a way that allows you to filter by strategy? Then you can eliminate the strategies that don't work. Slow down and play the one trade that works the most. Then play the two best trades.... What tickers did you play today? It may not be your trade types but the stocks you are in.

Grove Under said...

Hi NereusProject:

Thanks for the feedback. I did do some analysis of all the trades I've taken since May of this year, and found setups that worked best for me.

I even setup a trading plan last month that only focused on those setups. Did OK for the week from the discipline perspective, but then tried to expand it, lost some focus, and things slowly started to unravel. Taking low quality setups resulting in overtrading is the biggest culprit.

I think there are many factors, but I'd say 90+% is mental. I know the trades that work for me, and all I have to do is to be patient, wait for them, and take them. So your advice to slow down and focus on a setup is spot on.

Today, I played way too many different stocks (I scan for gap open/in-play stocks), trying to find "the one" that would "fix everything." I even looked too hard for something that wasn't there, and took some setups in choppy stocks, which is a recipe for disaster. Also went into TZA for rogue strategy scalps. Hope and rogue trading are not good strategies to have when it comes ot trading.

Yet another day of lessons learned the hard way. But what will be most important is whether I truly learn and stop repeating these "simple" mistakes!