Reaper had a good point in a post on his new blog this weekend:
I’ve lapsed into hesi-trading after my blow-out days (losses of 5% and 3% of my account two days in a row). This has corresponded with some choppy and range bound sessions since then – so the set-ups have not been as obvious. I’ve had three days in a row where my work schedule has calmed down and I’ve been able to completely focus on trading. However, I have been over thinking and not pulling the trigger on trades.
Scott from Fear & Greed Day Trader revisited a lesson weaved through many of his posts:
Now, I need to log in more hours to get even close to where better trader’s are at – but I spend way too much my time talking myself out of entering a position. I said this in a post last week, but there is nothing to fear if I have my stop order in! I can’t be right 100% of the time. I will have losers. Cut these quick when my analysis is wrong. Let my stop order protect me, and don’t double down. But right now, I’m afraid to be wrong in addition to fearing losing money. So I’m sitting on the sidelines more than I need to.
I agree with what Reaper said above in this – NOT trading is way better than over-trading (too many transactions) or revenge-trading (trying to make up for a loss) or gamble-trading (complete guessing) – which were all things I did on the days I lost way too much money.
Scott’s post has a ton more than trading with your first instinct, but taking the baseball metaphor a little further – even if there are no called strikes in trading: not all strikes are the same.
I joined a new softball league this year – going from coed to a men’s team. I love it – but we only get two strikes (for a strike-out) and three balls (for a walk). My play has been up and down all season mostly because of mental lapses and lack of concentration – paralleling my trading.
So the big thing with just two strikes, if you take a beautiful first pitch, it’s likely the next one will not be as good, usually just outside the strike zone too close to pass on. Even though I have a good eye, getting behind like that forces you often to have to swing at less than ideal pitch. I’ve been working on swinging on all solid first-pitch strikes.
I need to do the same with trading – swing away at the good set-ups without over analysis and let my stop-orders and other money management rules protect me from blow-out days.
Watchlist: HBC EMR VMC UBS PBG PEP ADM VRX PPL CTSH CAM TRW
Market Structure: CHOPPY-OPEN (Bullish Bias) ~ Equal number of stocks gapping up and down. Overall market opened up flat or slightly down (unlike yesterday). The morning had another bullish-bias but not as a sharp reversal as we saw on Monday. At noon, six of the eleven stocks were trading over their ORH.
| Tick | # | Gross | Fee | Net | Set-Up | Actual |
| CTSH | 200-Long | 20 | -3.34 | $16.66 | Bot-Bou | Bot-Bou |
This stock moved in my favor right away – very bullish. I took partial profit at twenty cents, which was a good decision on such a choppy day. However, I put my stop at break even at $33.08, but support-wise, under $33 makes more technical sense, and I would still have a half position right now if I had don’t that with $35 of unrealized profits.
PM Update ~ Several observations and things I’m bringing forward:
1) Be ready for reversals between 9:45am and 10:15am.
2) I usually whittle my watchlist down to about 10 stocks, but I want to start having a hotlist of 3 within the bigger list to really focus on because of exceptional range and momo.
3) I need to return to drawing in lines for whole price thresholds onto the charts.
4) I want to start drawing alternative ORH and ORL lines to tighten-up a range when a wick is the cause of a wider range; the top or bottom of the candle body usually acts more as ORH/ORL than a wick.
5) Stocks that gap down like 3% can still blow threw their previous day range, which won’t necessarily act as hard resistance – play the price action and don’t doubt bullish candles if they keep coming.
