The early morning session started with a limit order to short that didn't get filled at 1399.75, and ultimately went as much as +10.50. Fear of missing out was actualized full-on. But I was actually fine and chalked it up to bad luck. I continued to feel under control and didn't trade the rest of the morning session.
The 2 losses in a row trigger
After the lunch break, I entered a valid trade that got stopped out. And then I entered another valid setup that got stopped out. Uh oh, 2 stop losses in a row. And like clockwork, a revenge trade or two came up.
That raised all kinds of red flags and sirens in my mind. It's quite surprising how quickly I went from feeling like having a positive breakthrough day yesterday, only to experience great discouragement this afternoon. It's good to know that my self-awareness levels are up, but I believe this level of discouragement is a sign that my psychological capital is running low.
And then the voices started
Although I ended the day with a winning trade, my inner voice started to question whether I am mentally ready to day trade. Part of self-awareness is knowing when you just don't have the right mental frame of mind and then having the ability to stop trading. I'm just about there.
My trading strategy works just fine -- it has an edge and I've proven it with data. I have confidence in it. I've said it many times -- eliminating just half of my revenge trades would be a huge positive impact for my P&L. So my issue is the ability to wait for the solid setups and to avoid revenge trading after a loss or two in a row. In other words, it's all in my mind.
Time for another break?
Therefore, I will likely take an extended break from day trading and return only after I have regained a much greater sense of control over my actions. I'm seriously considering hiring a trading coach / psychologist to help with my psychological challenges. They're not cheap, but I'd rather make a serious investment in making myself a better trader over the long term, rather than continuing to lose money via revenge trades in the short term.
Although I may stop day trading temporarily, I will continue to swing trade in the forex markets, since my bottom line performance has been good so far this year. Perhaps I have not given ES day trading enough screen time, because I still have no doubt that I can become a consistently profitable day trader. Or maybe this is a sign that my strength is not in day trading, but in swing trading the currencies. Time will tell.