It's May and it's time to get back to business.
I spent most of April trying to learn as much as I can about the mental
game of trading and thereby better understand my own trading. It has
been a tough month and at times, mental nerves have been touched that I had
90+% of what I read and focused on last month revolved around trading psychology. So when I started to read the same messages and themes (from different
authors written decades apart), I realized that I've probably dug into
the topic as far as I can.
The biggest issue I have as a trader? Revenge / rogue / overtrading / impulse trades.
that's why I'm very proud of my scratch performance today. I only had
one trade -- on a big trend and reversal type day. These are the types of days
that had a higher likelihood of hurting me in the past from trying to fade the big moves as well as overtrading.
in the morning before taking my kids to school, I was short, looking
for a big move down with a initial profit target about +13 away, because I knew a bad 10AM news had the potential to juice the move. When I returned, I saw
my position get over +3, only to get stopped out at breakeven by 2 ticks.
Revenge was totally on my mind, but I realized what
was going on and did my best to let it pass. And of course, had I gotten back on board with a revenge trade, it ended up
going up as much as +4.
Then the big 10AM news was released.
It was much better than expected and
the market shot up. In the past, especially after feeling as though I
was wrong (e.g. stopped out or missed trades), I would have tried to
short the big move up, getting stopped out several times, trying to
prove that my initial short thesis was right. This time, I sat, took no
action, and simply watched.
I knew the 1397 area was key
since that was the prior day's RTH high. I saw it break through and
pullback to retest the level slightly, and thought about buying. But it
wasn't a setup in my plan and instead of taking an impulse trade, I
once again passed (and it eventually went up +15).
Then I decided
it's time to call it a day, well before the lunch hour. Passing up all
those impulse trades and then making the decision to stop trading early
in a very active day, was huge. This is something I never would have
done in the past. So this is very different. And I felt relatively at
peace with myself based on this decision..
I feel very strongly
about how this day, as minor as it may seem, was groundbreaking for me personally.
One day a trend does not make, but if I'm able to consistently maintain
this mental frame of mind of preventing revenge and impulsive trades,
and only wait for the solid setups, the positive impact on my P&L
will be considerable.