Tuesday, February 28, 2012

Hello, Mr. Revenge

Total gross profits:  $-787.50  -15.75 ES points
Total trades:  8  [2 scratch]
Accuracy:  0.0%    [Yes, ZERO]
Execution score: 50.00%
Opportunity cost: $500.00  +10.00 points [Yes, 10 full points left on table!]

It seems like once I write that a certain mental challenge seems to have been overcome, I get jinxed, and it comes back, like a ton of bricks on my head.  

It was only a few days ago when I wrote the following:
I knew within the first hour that this was potentially a dangerous day where you could easily get chopped up to bits.  But you know what, I didn't get chopped up, and I truly believe that behavior is becoming something of the past.  I'm now less likely now to be tempted to enter the murky waters, especially if I sense danger, since I have a greater respect for the markets.  And I'm not as interested in pulling out the machine gun just for the sake of action caused by boredom.

I believe Rogue Grove is finally starting to grow up, and it feels like some sort of milestone has been reached.  This is encouraging, because I'm still just getting started on my grand journey ahead, and every little bit helps a lot.
"Foot in mouth" seems like an appropriate comment given my performance today, but on the bright side, with 8 trades today, at least it's clear I didn't bring out the machine gun.  

In fact, I really didn't feel as if I was in any emotional extremes at all -- the day rolled out in a relatively calm and uneventful manner, given the circumstances of such sloppy execution.  And a strong afternoon comeback mentality didn't really enter my mind either, which was strange.  Have I changed?

Looking back, one warning sign was when I had 4 trades during the 10:00-11:00 hour.  I usually have at most, 1 trade per 30 minute period.  So I did end up taking a break over lunch, as Greg suggested back in November:

One idea I heard somewhere, and I unfortunately had to implement it a few times, is this. Say your max loss limit for the day is -$1200. When you hit -$800, just walk away from your workstation and do something else for 20-30 minutes or so. Go have coffee, take a walk...but do something. Then when you come back, evaluate whether or not you think you should continue trading for the day, and what changes you think you should make.

When I did this, it was probably 50/50 the times I resumed trading that day. The other days, I felt like I was just out of tune with the market and was better off waiting for a better environment.

The advantage you have is you have a system you trust that generates a lot of signals...which means even if you leave for a half hour, you're not throwing away the last opportunity of the day.
The series of events that triggered my poor performance:
  • I missed the first trade of the day -- it made +2  
    • [Fear of missing out, actualized]
  • Prior to the 10AM economic news release, I knowingly entering a short trade -- I knew it was a gamble, got 1.50 slippage on stop loss   
    • [I wanted a quick win juiced by news...ended up with salt and lemon juice in wound]
  • The next 2 trades were stop losses by just 1 or 2 ticks   
    • [They were good setups, but bad luck]
  • Mr. Revenge then came for a short visit  
    • [The tipping point, cue the scary music...]
Whenever I run into a challenging situation, I welcome the opportunity for another similar scenario to take place again, and again, and again, until I finally get it right.  I'm certain there will be another day where I'll have 2-3 full stop outs in a row, all getting tagged by a tick or two.

So the next time that happens, I will most certainly remember this day.  And I will either scale back to become much more selective, or simply stop trading.  Now it's time to reset, regroup, reevaluate my trading plan, and get ready for the next day with a clean mind.


Greg said...

All I can say is, "trading is gambling".

One bit of advice I can say is, "STOP NOW" before you continue to lose more. You simply won't recover your losses continuing what you're doing now.

You CAN trade and make money, but you need to be very picky in your trades and have some sort of EDGE otherwise you're plain and simply gambling.

Think longer term on your trades, have a real reason whether to be long or short.

Too much scalping will get you in trouble and cost you a lot of money in commissions.

Hope this helps.

kroz said...

If Greg wants to be an economist or a seer, that is his choice. Others scalp because they don't care about making predictions about whether price will go up or down, because observing the irrational human emotions of greed and fear is more predictable.

Many scalpers would agree that it's much harder to predict where the market will be in 24 hours versus where it will travel in the minute after a surge of emotion gets supply and demand temporarily out of balance.

Grove, if you have found the style which suits you, which includes being at cash every night with only short-term risk exposure during the day, then I believe you have the analytical and introspective skills necessary to be successful. However, Greg is absolutely right that one has to find a way to only take "A" trades...it becomes less painful to wait for them when you realize your account goes up with a lot less effort.

Also, we should refrain from passing judgment on whether or not your setups have an edge, since you don't post screenshots of all your entries/exits.

Grove Under said...

Hi Greg:
I'm sure many folks out there will have differing opinions regarding trading styles and timeframes.

But one thing I'm sure everyone will agree with is your advice of:

"...you need to be very picky in your trades and have some sort of EDGE otherwise you're plain and simply gambling."

Spot on! Thanks for the comment, great feedback, very much appreciated.

Hi kroz:
Very well said, thanks a lot for your comment. Everyone has a different style that suits their personality, and I'd be the first to admit that I'm still working on that.

But it's that mental game of waiting for the best setups that is also a big challenge for me. I know there are setups that have a good edge based my analysis, but waiting for them can sometimes be a challenge. Mindgames.

Thanks again, great points.

Anonymous said...

read trader x post, he just posted yesterday.

ps see you tommorrow