Wednesday, December 21, 2011

Being mentally ready to trade...and when NOT to trade

As the holiday season approaches, stress levels can increase significantly, which can then easily spill over into your trading.  It's so important to be in the right frame of mind to trade, and I've had first hand experience with NOT following this basic and common sense rule.  Combine elevated stress with additional external factors, and your flash point can be easily reached -- just like what recently happened to me. 

Tuesday 12/20: -13.00 (OUCH!)
On Tuesday, 12/20, my toddler daughter was sick and wasn't allowed to go back to daycare for 24 hours.  So I thought I would be SUPER DAD and occasionally peek at the market to put in one successful trade after another while keeping my daughter entertained and comforted, resulting in a win-win for everyone!  WRONG!

Tuesday turned into a very bad day and I lost -13 ES points after being down as much as -19.  As my mental frame of mind became more and more agitated and irate with both being wrong with my trades, along with trying to deal with a daughter that wasn't really that sick and wanted all of my attention, it was a bad lose-lose combination for everyone. 

You name the rule, and I broke it.  And it was all my fault for thinking I could pull this off.  What was I thinking?  I essentially lost all of my profits from the past 2 weeks, all in a single day.

Wednesday 12/21: +8 (morning session only)
Whereas today, I started the day with a +3.25 profit from the overnight session, which gave me a nice little cushion (especially mentally) to start the day.  After my first trade of the day was a loser, my next trade went as much as +8 in profits, but closed it out with only +2.50.  A bit deflating.

So what did my mind tell me to do after a negative experience?  I took a revenge trade only minutes after that prior trade, ended up being a full stop, and decided to settle down and regroup.  I kept looking for good setups and ended up being up +8 in the morning. 

I left and went out to lunch, and decided not to trade again so that I can be guaranteed of a +8 day as well as prepare for my in-laws arriving tonight.  And as expected, I had at least +6 or more in missed trade opportunities.

The in-laws effect
Since my in-laws are coming into town tonight, I don't have time to do my usual trade review to calculate my execution score and opportunity costs, so that will have to wait. 

I will not likely be trading tomorrow, especially since I'm sure my stress levels will be way too high with the in-laws roaming around.  Just imagine the effect that the spillover from the additional in-law related stress would cause on my trading performance! 

Maybe I'm finally learning to be a little smarter about when NOT to trade.


Anonymous said...

Hi Grove and Tom,

Well, Merry Christmas,


Grove Under said...

Hi Hector:
Thank you, and best wishes for a Merry Christmas to you, too!

Tomross58 said...

Hi Guys

Merry Christmas to you also,,


Rocky Marciano said...

Hi Grove...

Been a silent reader of your blog for a few weeks. Your trading journey has inspired me to start my own blog as I go along.

You are doing a great job with your trading and blogging. I do look forward to your thoughts end of day, and quite often, the ideas and the thoughts you bounce off, reflect mine, and the way I trade of have traded in the past.

Wish you all the very best!

Grove Under said...

Thanks for the comment, much appreciated! Also wish you the very best in 2012!