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| I’m a Phillies guy, but sometimes I channel DiMaggio. |
Well, another month is in the books. A couple of weeks ago I wrote about how I had found myself in the biggest slump in my career. My trading success is built on consistency, and for the first time in nine years I was heading for a losing month. I can happily tell you that after two weeks of rededicating myself to the principles that got me here, “the streak” continues. I came into the 9th inning 0-4, but I came through in the clutch (with a little help from a hanging curveball). This week I am going to discuss how I got out of my funk back into green territory and what I will do to make sure the same scenario never happens again.
With one week to go I was on my dead low P&L of the month. I was as frustrated as I had ever been in trading. What was I doing differently? Why was my confidence so shaken? Doing this as long as I have, I know slumps are inevitable. One would think I would be able to handle my emotions a little better than I did. After three weeks of pouting and basically taking my work home with me and making life miserable for everyone around me, I decided that enough was enough. For the next 6 trading days I would only trade the right setups for me (bull/bear flags, pennants, etc). That’s my strength, not jumping into a stock because it had news or looking at AAPL because it just went up five dollars. I was trading only stocks that had breakouts or breakdowns with well defined stop losses. MMYT, REE , MCP and CCSC. Those were the stocks that had set up well and got me back on my feet.
This job is much easier when you take all the excess noise out of your trading. By following your own rules and trading only your own ideas, trading life becomes a lot less stressful. You will always make the most money in your own ideas. I “tuned out” all the other stocks that I don’t make money in. I didn’t care that BIDU just went $7. To me, that is not my forte. And I know it. Unfortunately, it took me 3 weeks of beatdowns to realize that I needed to get back to basics. Also, a little luck played a part in keeping the streak alive. On the last day of the month I was long CCSC on a great looking bull flag set up, sitting right under all time highs. Being that this was an IPO, I assumed that if we took out the high, maybe I could make a dollar more on a squeeze. I walked out of my office to pick my kids up at the bus stop. When I came back in, I was up $3500 in the trade. I sold the stock, finished the month green and stopped for the day.
Now knowing what I had to do to get back to green, it is definitely not the ideal way to make money. Like in a football game, having to overcome a deficit requires you to alter your gameplan, which will often result in failure. Being that it’s the beginning of the month, I highly suggest having a basket of stocks to watch. Get to know them. Make them your best friend. Know the players in the stock, the way the stock moves and how much of a move you can expect. My current basket of stocks that I will trade every day and know like the back of my hand include MMYT, REE, MCP, JKS. When you can do this, the rest of the task is easy. Making money isn’t hard, it’s the process of how and where to find it that is difficult.
