Home > Uncategorized > $Should Debbie Be Ticked At Herself After Today’s Trading Session?

$Should Debbie Be Ticked At Herself After Today’s Trading Session?

Today (Oct.8.2009) I had one of my best P/L days to date up until about 12:0o or so. My nice P/L that I worked for in the a.m. disappeared, went negative, and came back net positive by a smidge by the end of the day.

First, a brief description of what happened to me today. When the market opened I followed my usual routine and then waited for price action to tell me its story. AXP was my top pick for a long position and the market gapped up, weakened a bit, and then found some strength about 30 minutes or so after the open. AXP opened at a significant level, broke out of its opening range, and I got involved. It trended all morning until approximately 11:45/12:00 noon. I stayed involved. I got stopped out of my last 100 shares on a pull back as I was trailing the trade with a stop loss.

I waited for awhile and then got involved again, twice. I had in my head that today was a day to push it in AXP because it had trended (despite the fact that the SPY did not).  I widened my stop as my expectations were high. I took two good sized hits as I went in with some size. My daily profits were sucked away and I was left in the negative.

As soon as that happened I felt myself getting what I will classify as “worked up” inside. This is the feeling I get especially when I feel that something has been taken from me or I have lost something important to me. I quickly asked myself one question. “What would I do, in this very situation if it was 10:00 a.m. in the morning instead of early afternoon”? I answered myself, “My plan says step away and reevaluate when you are not in sync with the markets and it’s reflected in 2/3 loosing trades”. That is what I did.

I looked at AXP and I looked at the SPY. The SPY said RANGE BOUND and AXP said RANGE BOUND. Debbie read the afternoon session inaccurately. Then I said to myself. “I trade range bound days by watching and waiting for the one opportunity in the day that may arise in the strong stock (if market bias is up) or weak stock (if market bias is down).”

I took another look at AXP, identified the lower end of the range at that time and entered a position as the SPY moved toward the high of day. I did this twice and booked profits quickly. I got myself to net green on the day by a smidge and stopped trading.

Then, for homework I took a look at the SPY for October and reminded myself that we have technically been range bound in October. This is what October has been like so far…

October 1st broke down, sold off, and trended to the downside (intraday), the 2nd was a range bound day where the highs of the day were basically the lows of the previous day, the 5th trended up in a “bumpy trend”, the 6th was a gap up day that broke out to upside after the opening range and made new highs only to close on the low of day, the 7th was range bound, and the 8th gapped up again and took out opening range only to fall back inside the daily range.

Today my trades were all in AXP and it was trending so as a trader I must trade the stock not the market. I did so but what were my mistakes?

I would have to admit to one mistake and that is failing to identify early a change in momentum in the direction of the obvious order flow. If I had done so I would have realized a shift and either remained on the sidelines or kept things real tight.

Now the big question. Should Debbie really be ticked at herself for giving back her hard earned daily capital? After much thought and reflection on my trading today I must say NO for the following reasons.

1. I expected what was supposed to happen to happen as AXP was in a strong uptrend. As a trader, based on my expectation, I must accept a risk amount. I accepted the risk amount even though it wiped out my daily profit and took me negative for the day. I recognize that this needs to be adjusted as protecting intraday gains appropriately is a must in order to build monthly gains.

2. Once I had lost, I went back to my plan and acted on what my plan tells me to do and I was able to bring myself green on the day. 

3. I stopped trading once I was net positive on day because I can’t allow myself to think that I must or need to make my loss back. Psychologically that is a death wish to Debbie and she realizes it.

4. I protected my monthly capital.

5. I was able to keep my psychology in check by talking myself through the situation.

5. I analyzed my trading and my day and I can honestly say that I traded well and followed my plan.

6. I can also say, with conviction, that this will not happen again as I have learned from it.

Debbie should only be ticked at herself if her trading becomes undisciplined and sloppy as a result of her not following her plan.

 

 Profitable Trading ALL!

Debbie

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