Monday, October 31, 2011

A solid month that ends on a whimper

Just a little over 3 weeks ago on October 6th was when I first started trading the Diamond Setups system via my SIM account.  And as October comes to an end today, Renato closed out the month in spectacular fashion, gaining over 20 points in the ES.  Very well, then what about my performance? 

Monday, October 31
Total gross profits:  $25.00
Total trades:  15
Accuracy:  60%
Contracts per trade: 2

NOTES: I ended the month of October on a whimper.  After a gap down open, the ES had a relatively flat morning, with some minor sign of life early afternoon. Then the final jungle hour punished the bulls with a 20 point decline.  I'm usually capitalizing on those final hour moves. 

But this turned out to be a day when I was "right" often, but either lost money or the train left without me, usually due to careless errors.  Today was also the day that I stopped scaling out as a test, and exited my entire position at the first target, usually +2.00 or +1.50. 

Playing catch up
I missed some of the morning session when there were some good setups, and some people in the room had booked 6-8+ points before lunch.  Unfortunately, I was playing catch up in the morning after my late start, and that lead to some sloppy trades, which then lead to more, which then lead to more...  Feeling a bit under the weather should also be a sign that I need to take extreme caution.  The markets have no mercy for the weak minded!

Due to my schedule, there will be more days in the future when I will be starting an hour after the market opens.  So I'll need to be better prepared for playing catch-up and not let it impact my performance.  Once I was out of sync with Renato's call, it was a mental challenge trying to restore balance.  I thought I was going to be back on track since I nearly caught the sharp move down in the final hour based on Renato's call, but a careless error on my part botched those plans.

Totals: October 2011
Total gross profits:  $3512.50
Total trades:  142
Accuracy:  67%
Contracts per trade: 2

What happened over the past week?
After evaluating my equity curve for the entire month, it's clear that my P&L has flatted out over the past week, while the system continued to generate steady profits. 

In hindsight, I believe it's relatively clear what has happened.  After having a great start over the first few weeks, I thought I knew how to trade this system and began trying to "make it my own."  The alerts that Renato provides, which I initially traded with discipline, became less important. 

Other examples include:  I wanted to become a rapid fire scalper, but also hold a runner for a those big wins.  I wanted to trade aggressively, but yet in a conservative way.  I wanted to incorporate some of my biases and methods from the past, but yet still trade the new system as is.  I wanted to tighten the stops even more, but that's not a part of the rules of the system.  And so on.

Lack of discipline, chasing success, overconfidence, lack of a focused strategy, you name it.  And all long, the system continues to chug along, banking $'s.

So what do I do now?
I signed up with Diamond Setups to learn the system, but I recently strayed off the optimal path.  I'm very fortunate that the system has enough margin for error so that the damage to me was basically lost opportunities -- I essentially had a breakeven week.  It's now time to get back on track and continue to pay attention to Renato's calls, and continue to test and analyze the best trade management strategy for 2 contracts.

We're now down to the final 2 months of the year.  It's time to raise the bar and start November on a great note!


Tomross58 said...

Hey Grove,,

In every post you write there has been one point that really stands out to me. "And all along , the system continues to chug along banking $'s".
It sounds like it works in most if not all market conditions,,,Range days , Trend days, gap up/down days, Choppy days, Slow days, and maybe even a few I cant think of. Sounds like there is opportunity every day, at least a few trades a day.
I also have on my wall in front of me "If it aint broke dont fix it" thats after many years in construction. Now if I can apply that to my trading. Keep up the good work.


Grove Under said...

Hi Tom:
Yes, I am totally guilty of trying to fix things that aren't broken. I think I need to make a big printout of that sign and hang it on the wall! Thanks much for the great reminder.