Sunday, April 1, 2012

Rogue trading day hangover - monkey was in control

Total gross profits:  $-250.00  -5.00 ES points
Total trades:  17 [2 scratch]
  <- Scalp mode but 
      mostly overtrading
Accuracy:  47.7%
Execution score: 38.2%
  <- 5 trades were rogue :(
Opportunity cost: $-150.00  -3.00 ES points 
  <- But did better by 
       breaking rules

Earlier on Friday morning before the trading day began, I caught my self thinking, I'm really going to crush it today and make some serious P&L.  I've been reading the markets well the past couple days, but I just wasn't executing well based on what was possible, so things were gonna change. 

Then I caught myself -- I'm thinking only of P&L, tisk tisk.  The best mindset is to know that I have to patiently wait for the right setups according to my trading plan and simply execute it well.  Still, there was a certain sense of anxiousness I couldn't ignore, but I thought I could maintain my cool.

I was treading water during the morning, doing relatively well from the execution perspective, until I got a full stop out on a valid setup.  It should have been something that was just another trade, but I took it personally.  A full stop loss is usually a trigger for bad behavior, especially if it's the first trade of the day, or if I get two full stop losses in a row.

The stop loss was a direct hit against my mission (and ego) to maximize my P&L.  Ooops, I'm not supposed to be thinking like that.  That's when I knew the wheels started to wobble, especially when I started to double up or scale into some trades.

At around 10:50 AM, I wrote notes on the high likelihood of a V bottom day with new HOD as long as 1396.00 holds.  Not sure why, but it was one of those subconscious calls.  Another read that ended up being "right" in hindsight.  I was long from 1397.50 but I got stopped out by a tick with a trailing stop that was way too tight -- one of my weaknesses.

Within minutes, I started going short against my bigger picture scenario, again and again.  I was shorting against a move that I thought was going to new HOD's.  Conflict.

HUH?!?  Then why did I keep shorting against my bigger picture view?

I really don't know why, other than to get back at the market for stopping me out by a tick?  And before you know it, I was down about -10 ES points.

It was comeback time. 

I made some progress, recovered about 8 points, so with 10 minutes left in the cash trading day, I was down only about -2 points at one point. 

Do I stop now, or see what I'm made of? 

Then I thought, it's a quarter end Friday, so we should see some fireworks at the close.  Gambler Grove was was clearly heard from way up in the peanut gallery.  And he had a few monkeys sitting next to him.

OK, bring it on.

On the very next trade, I double clicked the DOM by accident.  Dohhh!  I didn't have confirmation turned on and since I was entering a 2 contract order, I was suddenly in a 4 contract trade -- way over my risk plan. 

After seeing what price action was doing, it wasn't moving in my favor so I panicked, ejected.  Lost 2 ticks (for a total of -2.00 points) within seconds.  Thud!  Bad start to the comeback.  Ouch.

After a few more trades, I ended the day with a loss of -5.00 ES points.  Better than the -10 I was down earlier.  Worse than the -2 I had just a short time ago.  It just wasn't meant to be a glorious comeback day where I ended the day solidly green.

Now as I reflect with a "rouge trading day hangover", it's back to trying to figure out, why? And what's with all these banana peels around here?

Trading is conceptually very simple -- just wait for those setups that have a good edge and execute the trade according to plan, period.  I've done my homework to know there are certain setups that have an edge over time, so combine that with good money and risk management.  I've proven that my method works over stretches of 1 to 2 weeks, assuming I execute properly.

But what is it that keeps me from doing the right thing, consistently, all the time?  Are my expectation too high?  Is my trading plan for ES not suited to my personality?  Why is it that my "comeback mode" turns me into a different type of trader?  Or are my comeback days just an illusion?  Why do revenge trades keep coming back after I was sure I had them under control?  How come it feels like I continue to run into the same brick wall over and over and over again? 

What can I do to improve?

The mental aspect trading is one of the biggest challenges I have faced in of my life.  And that's what keeps me so motivated -- the tougher the challenge, the more I rise to the occasion.  Another weekend to reflect and figure out the plan for next week.

* * * * *
Addendum: Since writing the majority of this post on Friday night and Saturday morning, I've since discovered a big gap in my overall process.  This may also help to explain the recent shifts in execution scores and opportunity costs.  Still working on it.


FX said...

It's nice to read somebody's else words and understand every little detail because exact same patterns, feelings and developments are also part of your trading experience. It's easier when you can see that it's not just you, but that those kind of problems are universal to traders. It's certainly needed that person has to be enough introspective and open to himself to admit everything and not just turn it under the rug.

You can see in my last blog post (somewhere in the middle labeled March 7) how anger brings out revenge trade mode going in opposite direction of just identified opportunity. It happened before, this is just last time that it occurred.

Grove Under said...

Hi FX,

It's great to know there are others out there that can read what other traders write and completely understand where they are coming from.

I'm sure if my wife read this blog, she would have absolutely no clue what I'm talking about, and would most likely say I do nothing but whine on this blog.

But then again, this is a blog about my "trials and tribulations", and I sure do have many.

Your March 7th post makes total sense, especially about how "it's far from easy" to change our internal wiring. Totally agree.

Thanks for your comment, and good luck trading this week!