Wednesday, January 4, 2012

Still rusty, but new plan for trading 2 contracts

Wednesday, January 4

Total gross profits-($225.00)  -4.50 ES points
Total trades:  6  [1 scratch]
Accuracy:  20.0%
Execution score: 50%
Opportunity cost: $200.00

Unfortunately, there is still some rust in my system and a day that could have been breakeven or slightly profitable, just wasn't meant to be.

A combination of a setup that I will always take that just didn't work, in addition to some trades that weren't managed well after the entry, sprinkled by relatively well contained rogue trades, resulted in a day that was relaxed but not great.

The execution score of 50% leaves a lot to be desired and my opportunity cost shows that I should have had a breakeven day.

Next area of focus - scaling out
I noted several areas of focus in my prior post, but one item I didn't note was moving up to trade multiple contracts.  Based on the what I have seen, the whole concept of scaling out will generally reduce risk (assuming they aren't rogue trades), while still keeping open the option of having a big trade based on letting your remaining unit of contract(s) run. 

Changing the plan mid-stream
Since I'm only trading 1 contract right now, a typical mental challenge I run into is whether I should get out at my +2.00 profit target, or whether I should let the trade run a bit longer.  Making these calls mid-trade isn't the smartest way of managing for a trade, at least based on my current experience and skill level.

I'm quick to enter / slow to exit
I've discovered that one of my strengths is to be very patient and letting a profitable trade ride, perhaps even too long.  What's interesting is that this strength of holding on and being patient with a profitable trade is directly inverse to my ability to patiently wait for the right setups to enter.  In other words, I am impatient and trigger happy to get into a trade, but very patient and slow to get out of a trade, especially if the open trade is profitable.

Next step - trade 2 contracts
So it's time to adjust my trading plan and incorporate 2 contracts into my trading so that I can play to my strengths. .
  • I'll exit the first contract most likely at +1.50, and then raise my stop up to -1.50
  • Let the 2nd contract ride to either the next target level, or let it ride and let the markets tell me when to exit
The overall volume in the ES still seems to be light, so I might consider moving to 2 contracts next week, when the markets will hopefully be getting back to "normal."  In the meantime, I have a lot of work to do so that I can improve my mental game.


jacksoo said...

Just found your site. Like the style and will follow closely. Can hopefully share lessons. Good luck.

Tomross58 said...

Hey Grove,,

Good to see you back and in Renas room. He continues to amaze as he is just so spot on that it gives me hope. Its so hard to watch when he makes a call and I miss the entry by 1 tick and the trade works perfect. That desire to jump into another trade isnt a problem for me but seems to take the wind out of my sail.
We shall try again today


Grove Under said...

Thanks, hope to hear about your lessons and experiences!

Thank you, good to be able to focus more on trading again. And yes, those missed entries by 1 tick are really tough, and something I also need to find a way to get over. You're right, we gotta keep trying every day!