Wednesday, December 14, 2011
Not so perfect execution day
Total gross profits: $200.00 +4.00 ES points
Total trades: 19 [5 scratch]
Execution score: FAIL
Opportunity cost: $387.50 +7.75 ES points
Yesterday, the final sentence in my update was: "Now the tough part is to maintain focus and consistency to stick with the plan."
Well, that didn't last very long. Today, my execution score = FAIL.
After a morning with: (1) several trades that went +1.50 before getting stopped out at breakeven, or (2) not getting fills on trades (that ended up working), or (3) gritting my teeth while avoiding great non-strategy setups (that ended up working), I thought I was taking everything in stride.
Here's how it started
There was one trade I took after lunch that I knew immediately prior to pulling the trigger, was rogue. Terrible feeling. I exited a little early with a reduced loss, but the damage was done. A crack was formed in the foundation.
Later, after I entered a trade with a short position that should have been a long, I immediately exited with a -1 point loss, but the crack in the foundation grew bigger. The erroneous short would have worked just fine, had I not caught the error, but instead, I got a full stop loss with the "correct" long trade.
This flustered me, and my mind went into partial REVENGE mode to try and quickly correct what went wrong. I had to get it back, and more! From this point forward, my sense of control was partially gone. But upon review, the biggest loss of control was not in stock selection, but in my trade management. Upon entry of a trade, I threw my +2 target down the chasm which used to be just a crack, and started seeing every trade as a potential runner for +10 points. Shame on me.
Don't I get it? If trading just 1 contract, stick with a +2 target!
In my trading log, there were 3 trades during the forgettable afternoon that I entered properly per my trading plan, but I decided NOT to take the +2 profit target (instead, I moved my stop loss to breakeven and let it go for the big runner). The opportunity cost for those trades was +$300.00, or +6.00 ES points, out of a possible $387.50.
On the bright side
At the end of the day, it felt like I was just involved in a day where I had lost -20 points. But due to the combination of the Diamond Setups methodology along with the experience I've been gaining over the past 9 months, I feel as though I've hit a milestone of sorts - if I can continue to minimize my "bad" days to small losses or at breakeven, this will truly be a significant accomplishment.
I also felt that even with these tricky markets, I'm starting to gain a better feel for the constantly shifting conditions of the markets, as well as reading the quality of the setups as they take place. Although I believe I'll always continue to make adjustments to my trading plan, I feel as though I'm finally getting in the ballpark with a trading plan that works for me and my style.
And lastly, similar to how I ended my entry yesterday, I will need to prove to myself that I can maintain my focus and consistency so that I can earn the right to trade bigger and expand my trading plan. Focus on the present...do what's right. And soon, those 10+ ES point days will become a reality. I really can sense it.