Deceptive performance - I pulled 'da trigger but...

Thursday, December 8
Total gross profits:  $262.50  +5.25 ES points
Total trades:  8  [1 scratch]
Accuracy:  65.0%

NOTES:
With 10 trades today (I pulled the trigger and they were all within the trading plan) and many more profitable trades that I passed up (continued sign of discipline) or simply missed (can't get them all, I'm human), one would think that I would have cleaned house and banked more coin than usual.  But the "average looking" bottom line results today is a little deceptive.

During the trading session, I wasn't paying as much attention to the "what could have been" with the trades that didn't quite work out -- just trying to focus on taking good setups and solid trade execution.  So when I reviewed my trades today, I discovered that the element of "luck" was not on my side, much more than I thought during the day.

There were several trades that hit +1.75 and didn't get quite at or beyond +2.00 for a fill on my profit limit order.  So I got stopped out at breakeven or a couple ticks profit.  In total, when you add up those "unlucky" trades as well as the other actual trades taken but with errors, my opportunity cost (i.e. what could have been) would have added +7.75 points to my bottom line.

Which means, if luck was on my side, I could have had a +13.00 day.

From the execution perspective, there weren't too many errors, although there were a couple.  I didn't scratch the first trade as I should have.  But what was much worse was my second error -- my personal bias kept me from staying with Renato's alert to buy.  I was short biased entering the trade, and when I was almost stopped out, I exited at +2 ticks instead of sticking with the trade.  And of course, the trade eventually made at +2.00 points.

Looking back on today, I like this new mindset of focusing only on good trade selection and executing properly...according to the plan.  Forget about everything else.   Day by day, with the foundation of the Diamond Setups methodology on my side, I'm realizing that if luck is NOT on my side, I won't get hurt too bad.  But if luck is on my side, the potential for having a great day is really possible...a lot more often than I would have ever imagined.

Did I forget how to pull 'da trigger?

Wednesday, December7
Total gross profits:  $237.50  +4.75 ES points
Total trades:  3  [0 scratch]
Accuracy:  100.0%

NOTES:  After what I thought were the less than perfect conditions over the past couple days, we end up with a day like today where the ES seems to be working the way it's supposed to.

You know those days, where you say, "It'll go up/down from here", and it does, and again, and again...  There seemed to be great setups all over the place in the morning, as well as the afternoon once the usual lunchtime doldrums passed.  I could have had ten or more trades today, and perhaps booked +15 ES points or likely much more.  It was that good of a day.

But...only 3 trades today
But today, I only had 3 trades and all of them were before lunch.  Whereas Renato and his Diamond Setups alerts had at least 10+ points and few more trades.  I missed some of the DS alerts simply by not being here, or having an order not get filled.  But there was one DS alert late in the afternoon that I deliberately passed (bad decision, it made money, and rule #1 is to take all of Renato's trades).

The one that got away
And another near perfect setup I missed (I returned to my computer about 1-2 minutes too late) was late in the final hour that ended up riding the news driven move sharply higher.

ESZ1 30m - The one that got away

I am too critical?
Perhaps the pendulum has swung the other way a little too far, and now I'm being too critical of my setups?  Did I forget how to pull the trigger?  I thought about that, and for now, I believe everything is OK.  After trading in the style of the Wild Wild West for the past month or so, any type of rigid discipline will feel quite restrictive to me.  This is only my 3rd day on "the plan", which is restrictive and focused by design, so I consider all of this a part of my adjustment period.

Bottom line - Success!
With that in mind, I was very successful today.  No rogue trades, and many setups were rejected (and nearly all were profitable).  I was very disciplined.

Next time...
In the future, when I see this type of day come up again, I'll be ready.  Interestingly, I don't feel any regret or disappointment with today, since I know this isn't the last time we'll ever see a market like this again.  So when days that are "in tune" with your trading method come up and you're in the zone, you really have to capitalize on it and go for the jugular.  As a trader, I believe there are absolutely no excuses not to pounce hard when great opportunities presents itself.

OK execution but mistakes cost me a lot

Tuesday, December 6
Total gross profits:  $75.00
Total trades:  10  [2 scratch]
Accuracy:  50.0%
Contracts per trade: 1

NOTES:
After an uneventful day yesterday, I was pretty sure today would provide better opportunities, but it was only a little better. Most of the regular trading day was in a choppy narrow range, except for a sharp 9 point news driven move, both up and down, during the final 1 1/2 hours.

EXECUTION REVIEW:

• Of the 10 trades taken, it was clear that 2 of the trades were not traded according to plan.
• Rogue trade #1: Took place when I exited a short trade generated by Renato's DS alert trade while it was still active, only to take a long setup that had a full -2.50 stop. Renato's trade went more than +5, so I could have gotten at least a +2. OPPORTUNITY COST = 2.50 + 2.00 = 4.50 points.
• Rogue trade #2: Was when I had gotten stopped out of a trade due to yet another Euro bailout news, and then tried to short against the news driven move before even waiting for the 30min bar to close. This was partially revenge driven and resulted in a -2.25 trade.
• I missed Renato's final call of the day and missed a fill by just a few ticks. Based on how I usually execute his alerts, it would have gotten hit, but for whatever reason, I entered a more conservative entry level. That trade went as much as +9, but I count this as a +2 "could have" trade. 

Screenshot from my Tradervue.com journal - it's great, it's FREE!

SUMMARY:
6.75 points -- that's conservatively how much the rogue trades cost me today. 4.50 + 2.25 = 6.75. Wow.  I'm not even including the +2 trade based on Renato's final alert that I missed.  Shows how a couple of mistakes resulting in losses and lost opportunity can really impact the bottom line.

Therefore, a +8.25 day, that's what today could have been vs. a +1.50 day, had I been more careful and executed well against my plan. Perhaps I need to reconsider what I wrote in the first sentence above!

CHART:
I only took advantage of some of the key areas today (highlighted in dark green) as appropriate with my current trading plan.  This is NOT a part of the Diamond Setups.  In the future, I will utilize these charts to better supplement the Diamond Setups trades. 

I believe there is great synergy and opportunity, but for now, I need to keep things as simple as possible and just execute well against my plan.

ES 5 min 12/6/2011

Back trading live and it's a scratch day

P&L shows loss on the 5min bar after I had already exited the position.

Monday, December 5
Total gross profits:  $0.00
Total trades:  4  [2 scratch]
Accuracy:  50.0%
Contracts per trade: 1

NOTES:  First day trading live since last month, and the gross P&L of $0 pretty much explains how most of my trading day went today.  Only 4 trades today, which is also unusual.

However, there were definitely some moments of action that moved the markets. A planned ISM news release at 10:00 AM moved things a tad, but it then chopped sideways in a 7.50 point range for several hours.   There was also unexpected news around 14:00 regarding the pending downgrades of 6 countries by S&P, which really woke the market up.

But for whatever reasons, I was not able to capitalize on the volatility. The chatroom was also pretty much close around break even or up a small amount today...that is, up until Renato made a final call to short that triggered around 15:00, made at least +7 to +9 ES points.  Since I'm only trading one contract and can't scale out, I had at least +1.50, got stopped out at breakeven, and then saw the market really tank.  Can't get 'em all!

Execution Review:

• Of the 4 trades I took, the setup selection quality was good to excellent, and the trade management execution (moving stop orders) went well.  I'm satisfied with the results of the trades taken.
• Even though there were a couple instances where I was stopped out at breakeven even after the trade was +1.50 to +1.75 profitable, I followed my rules.  I feel absolutely no remorse or disappointment that I did not close out with a profit vs. breakeven, because over time, learning to hold on through the shake outs will be more profitable (for example, when I start trading multiple contracts to scale out).
• There were a few other good setups that I missed, but missing trades will be relatively normal and acceptable. What's absolutely critical is that I don't offset my missed trades by taking low quality setups.
• Speaking of which, I did NOT overtrade, which was a BIG WIN today, especially since choppy periods have historically lured me in and chopped me up.
• During the morning and through the lunch hour, I was bitching and complaining how everything was choppy, range is too narrow, how most setups were not "clean", etc. My plan is to wait for the close of the 30min bar to help determine the next course of action, and that was vital in keeping me out of overtrading trouble. One way I helped accomplish this was to leave the computer and return by the close of the 30min bar.

Today was a day when there weren't many "no-brainer" setups.  But for the first day back live, I'm glad that this type of day took place.  I'd rather have as many days with adverse market conditions to experience while I'm learning on SIM or trading small, so that I'll be better prepared in the future.

Final days of SIM trading

After accidentally trading live last month, then saying "what the heck" and continuing to trading live, then suffering some ugly meltdown losses, then going back to SIM with tail between legs, then doing a lot of various experimentation with trading styles, then digging deep into the psychology of trading, then understanding my strengths and what works for me, then finally settling down and writing down a trading plan I'm totally bought into...it's time I start trading live next week.  

This time, I'm ready.

* * * * *
The final days of SIM

Thursday, December 1
Total gross profits:  $87.50   +1.75 ES points
Total trades:  4  [1 scratch]
Accuracy:  66.7%
Contracts per trade: 1

NOTES:  Wasn't able to start watching the markets until 1:00 PM, and I ended up taking 4 trades, one of which was a loser and 1 scratch that I closed out at b/e. However, if I had just stuck to the plan, the scratch would have turned into a full win. Opportunity cost was $140.

Friday, December 2
Total gross profits:  $400.00   +8.00 ES points
Total trades:  14  [0 scratch]
Accuracy:  71.4%
Contracts per trade: 1

NOTES:  Late start, did not start trading until 10:15 AM, well after the unemployment report was released.  Ended up having a lot more trades than expected (and desired), since I became fixated on the 1250 level during the lunch hour and had 6 trades during that time.  Although the bottom line was fine, I was less than satisfied with the quality of trade selection during that lunch hour -- net result was -$100 gross.  There were also 3 trades that went nearly +2 (missed by a tick or two), and closed just above breakeven (just wasn't lucky).

* * * * *
An interesting update is how well the 5 minute chart I update during the day is integrating well with the Diamond Setups system.  In the chart below, the dark green highlighted areas represents good locations for trade entries. 

So when a DS setup also lines up in those particular areas, I believe it increases the confidence level for that particular trade.  Therefore, this may help to increase the overall accuracy and profitability of my trading, although further tracking and research is necessary to make sure I'm not fooling myself.