Wednesday, January 11, 2012

1 tick makes difference - trade dumb!

Total gross profits:  $62.50  +1.25 ES points
Total trades:  9  [3 scratches]
Accuracy:  50.0%  [excluding scratches]
Execution score: 94.4%
Opportunity cost: $100  +2.00 ES points

Yet another choppy narrow range day, but that doesn't mean there weren't any opportunities.  If I had not made one error, I could have had a +3.25 day, which isn't too bad for a relatively narrow range day. 

With others that I communicated with today, it seems like it was one of those days where a 1 tick difference in your order entry or exit price made all the difference.  

For example, for many of my trades, if I had entered the order right on the sup/res level, instead in fronting it by a tick, I would have tightened my stop and exited many of my trades for at least +2 ticks (+0.50) instead of breakeven, per my trade management rules.  That would have added +1.50 to my bottom line, which would have resulted in a potential day of +4.75.

Or, on some other trades, my stop would have been just 1 tick farther away so instead of getting taken out and then watching the trade go +2.00 without me, I would have remained on the ride to the profit-land.

I tried to determine whether getting out with +1.50 target would have worked on a day like today, and yes, it might have helped a bit. Assuming I didn't make any errors or get any slippage, when comparing profit targets at +1.50 vs. +2.00, I would have left with potentials of +6.00 vs. +3.50, respectively. 

In the big scheme of things, the profit potential of all my hypothetical "what if's" (blah blah blah!) is just not much of a difference to warrant a change or complication to my trading plan. No need to overthink this.  But it's good to know that as long as I stick with the plan, on a good (and lucky) day with more volatility, this could have easily been a +10.00 day.

Luck always has some element in trading, and today was not necessarily a lucky day (nor was it unlucky, thank goodness). But with an execution score of 94% (on one trade, I moved my stop order to b/e 1 tick too early on one trade, and missed a +2), and ending the day knowing that I followed my plan pretty darn well.  I am very satisfied with my performance.

However, we start over again tomorrow, with a clean slate. What I did today and how well I followed the plan today will no longer matter, and frankly, no one cares. All that counts will be how well I am mentally prepared and how well I execute my trades according to the plan. 

I'll continue to research and analyze smart after the market closes.  But I will continue to "trade dumb" in accordance of my trading plan -- as if I don't know any other way.


Anonymous said...

hi grove,

the important thing is you trade the system right, no rogue trades. I think you did very well. Patience and disappointed. Take care before

ps sorry about punctuation, using tablet

Anonymous said...

ooh hell, meant patience and discipline, hector