Friday, January 6
Total gross profits: ($75.00) -1.50 ES points
Total trades: 7 [2 scratch]
Accuracy: 40.0% [excluding scratches]
Execution score: 35.7% [yuck]
Opportunity cost: $275 +5.50 ES points
Here we go again, another day where at one point, I was over -6 ES
points in the hole. And once again, it was a battle for the rest of the
day to get back to break even.
Although I only had 7 trades today (at
least I didn't overtrade), the execution score of 35.7% indicates that I wasn't trading according to the plan. So in hindsight, I'm very
fortunate that this didn't turn out to be an exceptionally ugly day. Had I followed my plan to the T, I would have ended the day with a +$200 or +4.00 point day, according to my opportunity cost calculation.
What caused this lapse of discipline?
I had made a decision a few days earlier to begin trading 2 contracts
starting next week, since one of my issues has been whether to exit my
single contract at +2, or to let it ride for a bigger gain. Trading 2
contracts would make it much easier to scale out of 1, reduce your risk,
and let the 2nd one ride.
So Friday seemed like a "last hurrah" type
of day for my single contract days. And once I was negative from the
very first trade, I threw the discipline book partially out the window
and started to throw Hail Mary touchdown passes instead by trying to let profits run beyond my usual +2 point profit target.
Whoa, Nellie! Scratch the plans to move up to 2 contracts!
One of the points Renato has made many times is that he earned the
privilege to trade bigger as he reached his goals. I have made it a
goal that I have an execution score of at least 80% or higher, which
would then indicate that I am doing pretty well executing according to
my trading plan. After stepping back and realizing that
67% was my best execution score I had on a short week, I've made a decision to
cancel the decision to trade bigger, and continue trading with 1
The new plan
I'll need to prove to myself that I have the discipline to trade with 1
contract consistently before moving up to 2. Managing the risk of my
portfolio should be priority #1, so there's no reason to rush into
trading bigger. Therefore, starting next week, I will exit my positions with a
profit target of +2 points on a single contract, and imagine (i.e. track
and manage) that I have a 2nd contract runner.
This week, it's not about my P&L. It's all about my ability to
follow the plan - how well can I focus on the process? The execution
score will be THE metric to track my success...just the way it should