Wednesday, March 21, 2012

Mental meltdown in the final minutes

Total gross profits:  $-250.00  -5.00 ES points
Total trades:  11 [0 scratch]
Accuracy:  36.4%
Execution score: 45%
Opportunity cost: $+275  +5.50 ES points

Up until the final minutes of the close, it was going to essentially be a breakeven day.  I had some sloppy execution errors earlier, but all in all, it could have been a little better or worse.

Then I went long about 10 minutes prior to the close, thinking that we'll see a nice surge into the close, primarily due to a upward trendline that had worked well earlier.  But instead, a sharp selloff took place slicing right through the trendline.  I ended up taking a full loss.  The full stop loss was a perfectly valid trade.


For whatever reason, I decided that I had to make it up, with only 5 minutes remaining until the cash close.  But wait, there's still 20 minutes before the futures close.  Revenge trading, here we go.

In a span of less than 15 minutes, I took 5 trades.  To put things into perspective, I usually take one every 30 minutes.  I continued to fight the trend, trying to buy as it went lower, then getting stopped out.  Rinse, repeat.  Again.  And again...

When conviction trumps discipline, we know how that usually ends -- I ended down -5.00 in less than 15 minutes.

What were the triggers?

On the trade review today, it's also easy to see that when I have a full stop loss, the following trade has a propensity of being a rogue or revenge trade.  In general, this is not uncommon for me. 

3/21/2012 VanKar Trade Analyzer output
There were also some cracks in my discipline forming, when I decided to go for more than +2 on some earlier trades.  Why on a relatively narrow range day, when the odds of a runner are much lower?  Again, it started happening after a full stop loss.

As an example, after trade #3 in the VanKar Trade Analyzer chart to the right turned into a full stop loss, I went for the big redemption trade with trade #4, and only closed out with a +0.50 after it went well over +2.00.  Cracks in the discipline.

After my full stop loss on trade #7 was closed out at 3:55 PM, "the meltdown" of 4 more trades took place.  On the bright side, at least the size of my losses on each successive trade kept going down.

And from the personal side, I had extra childcare pickup and dropoff duties come up at the last minute, which created a higher level of stress.  My available time shrunk considerably, and this stress was easily spilled over to the trading side, especially when luck was not on my side.  

I've mentioned it many times that some of my worst performances are when I'm in single parent mode.  The week when I lost 25% of my account back in November quickly comes to mind on a day like today.  At least the losses today were minimized, and the backstop of the market closing helped to prevent a long term meltdown.

Back to basics, again

So this is yet another reminder for me to handle these types of days differently and with extra caution.  Either learn to take these days off or just trade on SIM.  Time to get back to the basics, again.  Forget about the P&L, it's all about following the plan by executing my process as flawlessly as possible.

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