The quest for consistency - Q3/2013 results

In my prior blog post almost 4 months ago, I commented at that time that I was profitable 6 out of the prior 7 months in my swing trading account.  Since that time, performance results have continued to remain consistent. 

Around that same time, I also made some changes to my swing trading.  I had a nearly forgotten IRA account at ETrade, and the account had been primarily in a money market fund making paltry < 1%/year.

But I was notified that the money market fund was shut down, thus leaving the account in all cash.  Well, at current money market yields where they are, being in all cash isn't much of a difference, but at least I was now "free" to trade in that account.

So I began actively swing trading my IRA account around the end of June. Here are some specifics of that account:

1. Due to IRA status, it is a long only and cash based (no margin) account
2. A steep $10/trade commissions. So that's $20/round trip, and even more when scaling out of a position.
3. The starting balance was a little over $30k, so it larger than my prior swing trading account.

So how did I do swing trading that account, with a much less favorable commissions cost structure?  Given the conditions, respectable.  Here are my actual results:

Performance by month from Tradervue.com

June - October 2013 statistics from Tradervue.com

Trade distribution from Tradervue.com

TRADE AND ACCOUNT RISK MANAGEMENT

From the trade and account risk management perspective, my risk management was even more conservative than with the prior account:

1. Except for a few dividend yield plays, my risk per trade was generally around 0.2% to 0.5% of my total account, often on the lower end of the range
2. Position sizing per trade was generally < 5% of the total portfolio
3. Total position leverage was on average < 50% but maxed out at around 85% for a short period

MY THOUGHTS

• This swing trading method has worked for me over the past 10+ months, and appears to be process with which I can remain consistent.
• However, a one year performance is nothing in the world of trading.  And I'm always wondering if the markets will change enough to negatively impact my future performance.
• How would I do in a overall downtrending market, since I'm in a long only account?
• Had I used a less conservative position sizing and/or more aggressive risk per trade, my returns could have conceivably been 2x higher.
• How much can I really size up my trading before I run into growth limitations?
• Commissions accounted nearly 25% of my gross profits (!!!), especially since my positions were usually small, only just a few hundred shares.  Had I used IB or TradeStation, my net returns would have been significantly higher.
• Even with swing trading, I still fight revenge/rogue trading at times, but it's very infrequent compared to daytrading.  I realize that this challenge will likely never go away.
• Trading with small risk per trade has been key.  I simply trade the solid setups, and follow the rules with little emotions.
• My greatest challenge now is to stay motivated and to remain consistent with following my overall swing trading process. 

LOOKING FORWARD

As my discretionary trading continues to improve, my trading time continues to get squeezed due to increasing family commitments. 

My main goal now is to work hard now to diversify my trading business so that by doing so, I gain more time for non-trading activities in the future.  I'm continuing to explore autotrading services, as well as ways to trade other methodologies and products.  I've also reignited the development of mechanical trading systems with some promising results.
 

It's a very interesting and exciting time for the retail trader, with tools and services currently available that most (especially me) could not have possibly imagined even 10 year ago. 

Recap: Week ending 10/19 - Tough week but good finish

The week ending 10/19 was another tough week as I continued my long journey to find my way.  It ended on a good note, but it was full of difficult moments.

STARTED THE WEEK OFF WRONG
I started the week focused on maximizing P&L -- not on my goals to limit the number of daily trades to 3 and to limit my profit targets to +2.00 ES points.  I wanted to CRUSH the markets.  That should have been a big warning sign.  Sure, it felt OK that I ended up making a decent profit to start the week, but in the back of my mind, I knew I fell off the program.  I know was cheating myself.

CRACKS FORMED ON TUESDAY
Whether it was from guilt or who knows what, the cracks started to form on Tuesday.  Just prior to lunch, I called it a day barely exceeding my # of trades goal and although it shouldn't matter, I had a slight profit.  Nice job, I'm getting back on track.  But...in the final hour, I went on tilt.  I took what I thought was solid setup to end the day on a really good note, only to realize I totally read it wrong.  Yes, got greedy, got stopped out, revenge traded, and ended down a few points.  Ugh.

MONKEYS RAN AMOK
So when Wednesday came around, the monkeys ran amok.  Shortly after the NY open, I already had 3 losses in a row and it was all downhill from there.  My initial thought was, "We just opened!  How could I stop trading so early in the day?"  My will was weakened, I took one more trade, realized I did something I shouldn't have, which then snowballed into "what the heck, I blew it", and my behavior for the rest of the day ended up being yet another big ding to my psychological capital.

RADICAL SHIFT / DO SOMETHING DIFFERENT / DO WHAT WORKS
Just around that time, I realized that the S&P was in overbought conditions based on the interpretation of the daily charts that I have used for many years, primarily on the forex charts.  The high probability setups only happen once or so a month, and I just don't have the patience to simply wait only for those signals. 

$ES_F - daily chart - 10/19/2012

But I needed to do something different to change my ways and make new habits after a rough start to the week.  Swing trading has worked well for me in forex products, so why not try something similar to that in the ES?  And when I am swing trading, the setups are very infrequent, so it's much more difficult to get into the rhythm of impulse trading -- another plus.

THE PLAN
So Wednesday night, a plan was made to establish a swing short in the ES, very similar to what I do with the forex trades.  A couple indicators I use on the daily timeframe showed a nice clean overbought condition, so it was time to find a good short entry.  My target was 1425-35 area.  I entered the short Wednesday evening and by Thursday morning, I was up over +5 at one point.  But then came the big Thursday morning grind up where I got stopped out just 1 point before the erroneous Google earnings release that spooked the market around lunchtime.  It was tough to get stopped out so close to the highs, but I followed my trading plan and felt good about that.

I ended up taking a few solid day trade setups to end the day with a slight profit.  And after the market close, the daily charts looked just as bearish, or even more so than ever.  So Thursday night, I reentered the short, utilizing some good resistance areas from earlier in the day.  That short ended up being 1 tick below the high of the night and following day.

PATIENCE IS TOUGH BUT WORTH IT
At the Friday NY open, something strange happened.  The market gap opened below yesterdays close and ended up having an "opening drive" lower.  That means it sold off strongly after the open with very little rotation/swings higher.  This was very unexpected based on pre-market action as well as other factors. 

A very key point to remember is that when there is an opening drive, there's about a 50% chance for a trend day.  Since trend days generally happen < 20% of the time, those are pretty compelling stats.  As the ES tanked and continued to fall with minimal rotations higher, I knew there was a good chance it's going to be a trend day, and that trend days generally end at the extremes of the day -- in this case, the lows of the day. 

$ES_F 30m  10/19/2012

I couldn't be near the charts for very long, since the temptation to exit would become stronger, so I took frequent breaks.  Having patience to just sit on your hands on trend day is tough. 

But I ended up exiting once the market started to consolidate a couple hours before the close, weary of a reversal bottom that would rip higher into the close.  And most importantly, it was right in the middle of the 1425-35 range that I had targeted for profits.  I followed my plan, although it happened 1-2 days quicker than I expected.

As it happens more often than not for trend days, the market did end up closing at the lows.  I left about +6 ES points on the table, but I'll consider myself fortunate that I was able to book almost +24 points.

RANDOM QUESTIONS AND THOUGHTS
The week ended on a good note, but I still have many questions and issues floating in my mind that I will need to evaluate and address.  This last trade hardly resolves my many challenges.  So although both my financial and psychological capital have been somewhat replenished, there are still a lot more obstacles to overcome.

• Over the past couple years, I've been successful at simply swing trading, so why do I keep trying to trade more like a scalper that goes for big wins?
• Oh, but what would I do during most days just waiting for a swing setup?  One part of me likes the "action" of daytrading!  [** Flashing lights and "Danger Will Robinson!" alerts going off **]  Trading should not be something you do to help pass time.
• Ending the week on a strong note is nice.  But this only means I need to be extra careful not to be overconfident on Monday.  And how will I feel if the market tanks another 20 ES points...without me on board?
• Am I getting closer to the point where I will stop chasing success?  The pieces of this trading puzzle seem like they're starting to come together, but I've said/thought that many times before.
• Cough medicine and the recent correlation to trading performance, so strange.  But correlation is not causation!  Or maybe not?  If so, what does this really mean?
• Why is limiting myself to 3 trades a day so tough?  Sounds so easy, doesn't it?  What if I had originally set the daily trade goal to 6, would that have made any difference?
• Although I have my fair share of really tough days that have hit my psychological capital hard, I still believe from my core that my dreams of trading success will become true.  It's only a matter of time.

Back to the drawing board

Well, that didn't last long.  My plan was to focus strictly on only two simple metrics: 1) A max of 3 trades per day and 2) limit profit targets to +2.00 ES points.  P&L wasn't supposed to matter.  I didn't even last 2 weeks before I had a big blow up of my goals.  I had a couple days last week with around 30 trades.  What a disappointment.

Week ending Oct 12 / From Tradervue.com journal

It was like asking someone who loves and eats a chocolate bar every day to suddenly being allowed to eat only 1 tiny square after getting a job at a chocolate factory surrounded by thousands of bars.  Or someone who drinks 3 cups of coffee a day, to cut back to 1/4 cup.  And whatever other example you can come up with.  Not impossible, but very difficult.  And very much subject to the binge effect.

Then there are those days, like Friday, when I felt I was in such tune with the markets under unusual conditions.  I had barely 4 1/2 hours of sleep and felt emotionally "hollow".  I was also on cough medicine, both huge warning signs.  However, the lack of sleep and cough medication was a strange combination -- one which required me to only interpret and act based on what I saw on the charts, with very little emotion or mental chatter. 

Instead of looking only for setups, I also kept talking about the markets from a "story line" and "contextual" perspective, from both the bull and bear viewpoints.  That was different.  For example, when the better than expected Prelim U of M news came out at 9:55 ET on Friday morning, the market moved strongly higher with initiative buying. 

But something happened.  The market could not continue higher and began to stall.  Price action didn't jive with the better than expected news.  So when one of my favorite bearish chart pattern appeared, it screamed SHORT! 

There were many of these types of moments on Friday, and maybe that's one of the reasons why I keep trading with hope. 

Trading only a single contract, my MFE (Maximum Favorable Excursion) for all my trades on Friday was almost 28 ES points, double the RTH daily range.  Yes, it's not very likely to close out anywhere near 100% of your MAE.  But I ended up with about 1/3 of it which is so-so, but came oh so close to booking about 1/2 of it of my total MAE. 

Something was definitely different about Friday and I really hope it wasn't due to the effects from my cough medicine, because I'd rather not become some sort of cough medication addict to improve my trading!  So was it just a lucky day?  Was it just some false hope, like a slot machine that pays off just enough to keep you sitting around longer to ultimately lose everything?  Or was it an glimpse of more progress to come?

This weekend, I went back to review my blog entries from a year ago.  At first, it was disappointing to see that I've been essentially working on the same key issues back then as I am now.  Same story over and over and over again.  I feel like I've been spinning my wheels for an entire year. 

But the successful method I've been using for my forex swing trades have essentially remained unchanged.  And on another positive note, I do believe I'm wiser and better educated now from regarding trading methodologies vs. a year ago.  However, being smarter means nothing when a weak mental game prevents proper execution of trading methodology.

All of this raises even more questions.  I'll take some more time reviewing my journal entries from a year ago, to help understand what I did or did not do over the past year to address and take better control of my issues.  It's back to the drawing board.

In the past year, I also realize that my psychological capital has been hit much harder than my financial capital, but my will to succeed continues to burn strong. 

Review: Week ending October 5 - mixed results

MONDAY
The week started off on a success.  I had the patience to wait for the solid setups, executed well, limited my profit targets to +2 ES points, and I stopped trading once I made 3 trades.  PASS

TUESDAY
Only 1 trade.  And nothing else I saw was good enough to take.  It didn't bother me a bit.  I'm on a roll.  PASS

WEDNESDAY
I started with 3 losses in a row.  Uh oh, I'm no longer on a roll.  I was ready to quit and made the decision to move to SIM.  However, another setup came up, I took it, realized it was a live trade, but didn't immediately close it out. 

It ended up going +2.25, which means a +2 target would have filled.  But the problem was, I had moved my profit target way out.  I broke my +2 profit target rule.  And the traded ended up b/e. 

Monkey alert!

I knew this had the potential to get bad, was quite aware of it, and even told others about it.  For the most part, I thought I had successfully quit at 4 trades.  But the damage was deep, because in the last 30 minutes of trading, I executed *6* more trades. 

Looking back, I had very few breaks during the day, I was fatigued, and my willpower was weak.  All I thought about was making up my losses for the day.  It was comeback time!  And it completely backfired.  FAIL

THURSDAY
No repeat of the prior day.  I limited myself to 3 trades and never changed the profit target.  PASS

FRIDAY
After starting with a scratch, the next 2 trades were a losses.  And it was only 9:50 AM.  What would I do for the rest of the day?  Less than 2 minutes later, I took my 4th trade, I broke the plan.  Another loss.  About another minute later, another trade entered, another loss.  And so on...

I ended up with 5 consecutive losses.  By this time, the damage was once again done, and my mind was all about getting my money back.  Total focus on P&L.  I was quite aware of it, but by that point, I had thought:

"I've already broken all my rules, so F the plan.  I'm going into comeback mode and getting my money back!"

Sure, it ended up OK from the P&L perspective.  But P&L wasn't in the goals of what I'm trying to accomplish this month.  My goals were to simply:

   1)  Limit my trades to 3 a day
   2)  Limit my profit targets to +2.00 ES points

So Friday was a complete FAIL based on both goals.

WHAT HAPPENED?
What was the trigger for those FAIL days?  Nothing new.  It was basically when I either start off with a loss for the day, or have more 2 or more consecutive losses in a row, revenge trading mindset becomes comes into play.

On a good note, there were many instances this week when I was quite aware of my plan as well as my emotions for that particular moment.  And I successfully kept myself out of trades.  Many of those passed trades ended up being profitable, but it didn't bother me too much.  That was great to know.  It was also good to see I was reading the markets relatively well.

NEXT WEEK
I will continue with the plan. 

I will wait for only the best setups every day and limit my day to 3 trades.

I will limit my profit target on every trade to +2.00 ES points.

Upon internal reflection, I'm making good incremental progress.  But I have far to go and it's time to step it up.

One week down, 3 1/2 more to go.

September update and new October goals

One of my primary goals for September was simple -- gain control of my overtrading by minimizing the number of trades per day.  The successful control I had through most of September surprised me (to average about 3 trades/day).  But as we approached the final couple days of the month, I let my overconfidence get the best of me and ended on a bad note. 

I was in "single parent mode" during the final days of September, which usually results in sub-par performance.  Add to that lack of sleep and being under the weather.  These were all major willpower weakeners.  I should have known better.

More significantly, I believe the minimal number of impulsive trades I had for nearly a month made me think I finally overcame my biggest challenge, I became overconfident and started to think the forbidden -- I now deserve to crush it and end this month with big profits.  Yeah, I started thinking about the P&L.

The only thing that got crushed was my psychological capital. 

October goals

In September, I had minimal regards for P&L since the goal was all about minimizing the number of trades per day.  So with the limited number of "bullets" per day, when I finally got into a trade, I found myself swinging for the fences more often than not, getting stopped out at breakeven many times even after being up 2 or 3 points and more.  It was a bit hypocritical, saying P&L was not important and yet still holding on for big moves.

So for October, I'm going to add on another simple goal -- every trade will have a +2.00 ES profit target, no more.  I may exit earlier if conditions warrant, but I will NOT be holding for the big winners.  That will happen in the future once I start scaling out of entries with multiple contracts, and then letting a runner run.

Therefore, I'm going to continue to keep my goals simple and easy to track for compliance: 
     1) Average about 3 trades a day (focus on solid setups)
     2) Profit targets at +2.00 or less (lock in higher probability profit targets)

In the big scheme of things, I feel pretty good that I was able to maintain control for a decent (at least for me) stretch of time.  So now, it's time to just step it up and execute.  Let's do it.

Update $AUDUSD: Out +10 pips

I woke up this morning thinking I was still in the AUDUSD long trade, but found out my breakeven stop was triggered last night.  However, it was interesting to see that since my stop was placed at the exact low of a sharp move, I ended up getting a positive +8 pip slippage, resulting in a +10 pip gain.

This trade eventually went on to go about +87 pips from entry (~3.3R), hitting the first target of .9800.  So the takeaway is that when taking a counter-trend trade based on the higher timeframe (daily chart in this case), exit (or perhaps large scale out) at the first clear target area (.9800 as mentioned earlier).

AUDUSD 15 min

Belated update: $AUDUSD stopped out -10 pips

Here's a belated update of my AUDUSD short from 0.9945 last week. 

$AUDUSD 15 min chart as of 5/18/2012

• I was stopped out pretty quickly for a -10 pip loss, since I lowered my stop way before I was supposed to.
• Not sure why I lowered the stop, since it was already pretty tight at -25 pips.  But I suspect there was bad mental spillover from my ES daytrading gone bad
• The trade has gone as much as +150 pips, which would have been about a 6R return.
• It's time to take a little break from trading to revisit my plans.

Attempting to slow down -- Resulted in +8.50 $ES_F

Since I've discovered that my wheels have the potential to wobble and fall off when I trade $ES_F more than several times a day.  So I'm taking a hint from my forex trades and cutting back on the number of trades (being more selective), and then going for longer duration moves (letting them ride).

Today, this "slow down" strategy worked for +8.50 ES points over 2 trades, both winners.

What part of this is due to luck?  I don't know, but although there was some luck, I know there is definitely room for improvement upon review after experiencing some unlucky situations today.

On my long 1360.00 trade, I was not lucky to reach my profit target at 1370.75 by 2 ticks, and ended up closing the trade for +6.50 (instead of +10.75).  There were some signs that the trade was no longer working, and I believe I could have saved a couple handles. 

Last week, I had my first > +10.00 ES day and it was also based on a slow down/let it ride strategy.  Maybe I'm on to something -- a method that's a better fit with my style and personality?  Although my desire is to be able to scalp my way to consistent profitability, maybe because it "feels" more like work with less potential boredom. 

But the slow down strategy seems to have a lot less wear and tear on my psychological capital due to less decisions that need to be made during the day.  And most importantly, if it turns out to be profitable, then why mess with it.

I'll continue to take this current overall strategy and mindset, especially the "I really don't care unless I see a solid setup" attitude, and see how long I can consistently follow this current path. 

$AUDUSD closed +175 pips

$AUDUSD daily chart

$AUDUSD retested the daily trendline at 1.0265 with oversold stochastics on the daily, and the ES looked like it hit a short term bottom.

So I exited with +175 pips.  With initial risk at 35 pips, this was a 5R trade.

This resistance area around 1.0265 is solid, but not quite good enough for me to buy.  However, it was good enough for taking profits.  I'm now looking for a solid buy setup for a short term retracement higher.

Day trading discouragement

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.

A scratch day that's a breakthrough day

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 never expected. 

About 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. 

So 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.

Earlier 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. 

$EURUSD - stopped out to the tick

After only several hours, the swing short $EURUSD from 1.3231 was stopped out to the tick for a -31 pip loss.  I got the high print of the day so far.  Better luck next time!

EURUSD 1 min chart

Closed $AUDUSD for +207 pips

After nearly 1 month, the AUDUSD short I entered on 3/26 was exited yesterday for a profit of +207 pips.  Based on my initial risk of 40 pips, this trade returned about 5.1R. 

The 1.0250 area provided solid support, even after relatively bad economic news released late Monday night, which indicated to me that there was a decent amount of strength supporting this pair.

While the +207 pips initial sounds like respectable outcome, this trade was held for nearly a month, so another way of looking at this is that it didn't quite average +10 pips a day.

Psudo-extended Spring break

My Spring break was extended inadvertently, since my son got sick and had to get picked up from daycare yesterday.  Since I missed a fill earlier yesterday morning, I ended up with no trades for Monday.  And today, I had to be the babysitter.  But as is the case with little children, he quickly recovered and was just fine today. 

One of my guidelines is that when these types of family situations take place, I should highly avoid trading.  I should just leave the computer off.  Or at least just trade on SIM.

But I didn't.

First of all, it wasn't a bad ending and I actually did end up doing OK for the day (+5.25 ES points), but at this time, I'm not going to count this day as a valid day.  For whatever reasons, it just seems like I should not have traded today.  Maybe I'm being too tough, so I'll let this simmer in my mind for a bit.

I spent about 30 minutes in the morning actively watching the markets while babysitting, and got stopped out trying to short the move up.  Then, I sensed a trend day about an hour after the open.  I flipped into trend day strategy mode, saw a bull flag, bought it, and headed out to lunch.

As soon as we came back and my son went to take a nap, I fired up the computer and spent a little more time monitoring the markets and ended up exiting the long position just about near the close of the day.  Wish it was this easy all the time.

Although I didn't have much screen time today, I did have some interesting highlights:

• When I did sense a potential semi-revenge emotion after getting stopped out, I really tried my best to really feel and understand the emotions I was experiencing.  It was a way of really trying to accept and hear what my mind was telling me. 
• While under stress, I also did my best to listen and to try and make the distinction between impulsive (revenge) vs intuitive (subconscious memory) suggestions by my mind.  Impulsive trades then to come quickly from a fast moving mind, while intuitive trade idea seem to be much slower, calmer and enveloping of the my soul.
• This brings up another point, perhaps my trading plan is too rigid with regards to setups being too specific and rule bound for my particular personality.  For example, even trying to write down and explain how to switch between trend vs. range day setups, will likely be quite difficult. Guidelines may be a better tactic.
• However, my trading plan will always be rigid with regards to risk management.  That's an area that does not have much room for negotiations. 
• And maybe I'm onto something with regards to making less trading decisions per day.  Similar to limiting the number of pitches from a baseball pitcher or minutes played by a basketball player -- we all have our sweet spots.  This can be accomplished by either limiting myself to trading higher timeframes, and/or by trading lower timeframes for very limited periods.

And on a slightly different note, tomorrow is my first yoga class during the lunch hour.  Not sure what to expect or if this will even improve my trading, if at all.  In the worse case scenario, at least I'll be more more flexible, yeah?  As always, I will continue to experiment with various ways to improve myself and then track to see how they are working. 

The fatigue factor

Total gross profits:  $-75.00  -1.50 ES points
Total trades:  17 [4 scratch]
Accuracy:  46.2%
Execution score: tbd%
Opportunity cost: $tbd 

Today was yet another day where I had a "no-duhhh" moment.  Although I've been daytrading nearly a year now, it's only today that I realized I can't trade without having a meaningful break during the trading day. 

But maybe it's because I got a bit less sleep than usual for the 2nd night in a row, I really felt the effect of fatigue today.  I was trading nearly non-stop from 8:30 AM until 4:15 PM, with maybe a few minute break several times throughout the day. 

I was doing fine in the morning and felt pretty good about trading with the new setups in my trading plan.  My performance in the morning to the early afternoon wasn't bad, and there were some more errors than usual with some of the scalp setups I tried out.  But as the afternoon progressed, I realized that my ability to make decisions and to interpret the charts for signals began to diminish.

My vision turned into tunnel vision, the wheels started to wobble, and I caught myself moving my trailing stops in much sooner and tighter than usual.  I started to tune out the rest of the world.  And before you know it, a +5.00 ES points day that was pretty much locked up in the final hour turned into a -1.50 loss in practically minutes. 

My tired mind said to go for a strong finish into the close with profits after having a few frustrating breakeven trades, I listened, and I doubled up.  However, instead of having a strong finish, it turned into a wipeout of my profits for the day.  The ultimate ANTI-comeback day.  Casino style gambling at its finest.

At least I realized what took place today and how most of my revenge trading has taken place late in the afternoon, most notably in the 3:00 PM hour.  I now realize that fatigue is one key trigger to rogue and revenge trading.  Now that I'm aware of this, I will take steps to control this situation.

Roller coaster day and change to trading plan

Total gross profits:  $137.50  +2.75 ES points
Total trades:  10 [1 scratch]
Accuracy:  44.4%
Execution score: 65%
Opportunity cost: $-200  -4.00 ES points
  <- A rogue trade was favorable

Today was a roller coaster of a day and I was fortunate to catch 2 decent moves. 

One was rogue, based on my "hunch", likely from reviewing so many charts in the past, and the other was a near perfect short setup just before the FOMC minutes were released.  Both only scored half credit for my execution score, since I let them run for more than +2.00 ES points. 
  
Trading plan oversight
And speaking of which, the execution score was not so great once again, but much of this is based on an oversight that I really didn't realize until today.  I have yet to update my trading plan to include some new setups, so every time I take one of those trades, it counts against my execution score.

This could have created some unintended subconscious impacts, since in my mind, those setups were not "official" trades, and the stats have shown that they are effective.  Therefore, I always felt that I was doing something wrong when I took those particular setups.

I'm making them official
Therefore, I'm going to add those new setups to my trading plan and make them "official" and acceptable to trade.  Let's see if this helps curtail some of the temper tantrums (i.e. revenge and rogue trades) by recognizing and acknowledging my subconscious personalities and monkeys that they have been heard and that their voices count!

However, the only problem might be if I have too many different setups, and begin to get too overwhelmed with too many setups.  So that will be something I will monitor closely. 

How many warning flags does it take?

Total gross profits:  $-825.00  -16.50 ES points
Total trades:  10 [1 scratch]
Accuracy:  11.1%
Execution score: 27.2%
Opportunity cost: $+625.00  +12.50 ES points
   <-  It should have been
         about a -4.00 day

Late last week on short notice, my mother's burial was scheduled for today due to some botched up planning by the cemetery.  Unfortunately, I couldn't fly across the country at the last minute due to my family, which is probably something my mother would have wholeheartedly supported.  But still, it's not a good feeling to miss out on something like that.  Warning flag.

Early this morning, I saw a setup that ended up working but couldn't take it since it was the time to get the kids ready.  Of course, it worked.  And after I returned from working out and was getting my charts setup, I saw another setup or two that worked.  It was a good to know I was seeing setups that worked and was feeling confident for a solid day, although there was a slight sense of missing out.  Warning flag.

But then it appeared that a trend day up was starting as potential signals came up to short the market.  I kept saying this looks bullish, but kept shorting.  I couldn't pass them up, because they were valid signals, as well as my fear of missing out.  Internal conflicts.  Warning flag.

Before you know it, I had 2 full stop losses and I said I should quit here after being down about -4.50 ES points.  They were based on valid signals per my plan, but I wasn't pleased.  Warning flag.

I entered another trade and yes, it was a short against the trend, and I started to say shortly thereafter how it looked bullish.  Around this time, my sister called distraught about my mother's burial service -- the funeral home gave us the wrong urn -- it wasn't the ashes of my mom.  Ooops!  Warning flag.

Fast forward to about 3:10 PM, when I exited a 2 hour short trade with a small loss -- only 2 ticks below the high of the day.  Ugh.  Had I kept my original stop, I would have been fine.  Yet another warning flag.

OK...deep breath...no revenge trades, no rogue trades, no revenge trades, no rogue trades...


At 3:12 PM, I went long for the first time.  And I kept scaling in and getting stopped out.  At 3:30 PM, I got a sell signal, didn't want to believe it, and kept buying, even when the critical swing low got taken out. 

After missing the buy side all day, I must have been trying to make up for lost profits.  After I finally scaled out and went even, this one revenge trade campaign cost me -8.25 ES points, and my opportunity cost on this single trade was a whopping +10.00 ES points.  Crushing.  That might just be an all time record.

So, did the personal issues at hand help make this trading situation worse?  Perhaps.  Maybe I was taking out my frustrations at the market.  But had I done well, I could also have said that I was bolstered by the personal issues and how I rose to the occasion on yet another comeback.

But the bottom line is that this was a day where there were enough warning flags, one after another, to either not trade at all or to just stop early.  Instead, I didn't listen to my inner voice.  How many flags does it take to make me change my behavior?  I must to do a better job of self-managing myself, otherwise I will have a short trading career.

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.

Eye-hand "discoordination"

Total gross profits:  $175.00  +3.50 ES points
Total trades:  5 [1 scratch]
Accuracy:  75.0%
Execution score: 40%
Opportunity cost: $+37.50  +0.75 ES point

I started the day with some trades that missed getting filled by a tick or two, which of course turned out profitable.  And that got under my skin.  I had to regroup and throughout the day, I continued to have some execution issues.

It was a case of eye-hand "discoordination"

I could see pretty clearly what the markets were going to be do, so I was generally in tune with the markets.  However, I couldn't make my hand click what I saw, and then put it into appropriate action in the form of a trade.  Not sure why, but it'll be something I need to continue working on. 

And then there were the conflicting signals

I actually did well today when faced with a conflicting signal by standing aside.  However, the problem with a conflicting signal is that regardless of the outcome, one of your signals will be correct.  And it's so easy to assume that gosh darn it, you know you would have picked the trade that would have worked, right?!?  So then comes the feelings of missing out of a good trade.

Perhaps there are too many conflicting voices in my mind? 

So maybe I need to fire everyone in my mind and start with a new streamlined staff for more direct communications from mind to hand.  Or in more realistic terms, start to focus on a limited number of setups, continue hitting singles, and then start expanding.  But on the other hand, my mind seems to crave trying to make a simple buy/sell/wait decision from complexity.

On the bright side, it was nice to feel as though I was generally in the "zone" and that even with some mishaps, I ended the day positive.  I can only hope that all my "discoordinated" days end profitable!

Wheels went wobble wobble

Total gross profits:  $-125.00  -2.50 ES points
Total trades:  11 [4 scratch]
Accuracy:  42.9%
Execution score: TBD%  [but it was low]
Opportunity cost: $tbd

Sounds like our kids are a little sick, so it's a quick update today.  Read the markets pretty well, but execution was lacking.  

Early on, had multiple +1.50 trades which didn't get +2.00, so that created some anxiety.
A couple of full stop losses then triggered the anti-discipline mode.  Tisk tisk.  

And the trades following the stop outs were all closed out at breakeven since they went at least +1.50, that is, until the last one (trade #11).

I was short most of the day, thinking it was going to be a trend day down.  But for whatever reason, I could see that the double bottom was going to hold around 14:30, and that there was going to be a sharp move to hurt the bears.  

So I bought at 1394 and held as long as I could.  It was a rogue trade, one that my subconscious told me to take.


 My target was initially 1399 area.  Placed a tight trailing stop, which got tagged just under 1397. It eventually hit 1401.  Pretty much worked according to plan, but didn't execute well, since I was just trying to protect profits, vs. going for big gains.

Another day to think about what I did today, and why I did what I did.  Maybe my trading plan is not suited to my personality and needs to be further adjusted?  Tomorrow will be another day to improve.