Wednesday, December 14, 2011

Not so perfect execution day

Wednesday, December 14

Total gross profits:  $200.00  +4.00 ES points
Total trades:  19  [5 scratch]
Accuracy:  57.1%
Execution scoreFAIL 
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. 
I'm sounding like a broken record this week, but today should have been a 10+ ES points type of day.

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 what's right.  And soon, those 10+ ES point days will become a reality.  I really can sense it.


Tomross58 said...

Hey Grove,,

I was wondering how you are doing as far as getting filled?. I know you made adjustments on sim about 1 tick and now that you are live do you find that the market goes one tick past your order before you get filled? Are you missing many fills? And are you using limit orders? I am trying to make the adjustments on sim and its hard but I am trying to create as real time as possible. Just wondering.
It looks like you are really starting to hold your own here lately. You still had mistakes I guess but wound up the day positive and its really great to hear you talk about money left on the table and not money gone from your account. The discipline you are showing is working and with small size its very hard to let em run but once you figure out how you will handle that it will be another step for you. Great job.


Grove Under said...

Hi Tom,

Thanks for the feedback, really appreciate it. I've had a relatively good run over the past couple weeks, but the post I'll have tonight will show that my run is over. So it's time to start another good discipline streak!

With regards to fills, I'd say that maybe 10-25% of the time, I will get a fill on a limit order that doesn't go through the order price. And with regards to my stop loss orders, the slippage has been minimal. Maybe 10% of the time I'll get a one tick slippage, but it has been pretty rare.

So yes, there have been many instances where I didn't get a fill to enter a trade or to exit at my +2 profit target limit order.

Most of the time, that doesn't really bother me, since I just chalk it up to costs of doing business. But if I were to add them up as opportunity costs, I'm pretty sure it would be a lot more than I would have expected.