Bullied Around

Another quick review as I need some more time to regroup again today.

How Did It Go

Well... At first I felt a little bullied around by the market. With some light volume periods, the market seemed to bob around more on me. As the day went on, I started to realize that I was the bigger Bully. I was being my own worst enemy and beating myself today more than the market was beating me.

For some reason I would question my entry signal and not take it. Then I may even not take the next signal on the same trend move. Then I fell into bad habits. Too many trades. Worse yet, too many of the trades were "jumping on late" in a move where I had little hope of capturing much profit. Actually trying to hold onto these trades often ends up being small losses instead of winners.

Yet for some reason I I can get into a mode where too many of my trades are like this.

Summary Trade Review

Here are some thoughts from the notes I typed throughout the day.

Initial probe – My initial trade was best described as a probe for market direction. It was a long trade based on a new setup that I'm still working on perfecting. The signal quickly informed me I was wrong. By acting quick I was out for only a couple of ticks loss.

Lets try that again - Only short now. I missed the Declining issues making a lower high and turning down. If I saw that sooner and acted on it, I would have taken +1, +1. I missed, and slightly did not trust the re-entry at 1511.00 and I’ll take my do over on that trade. Then lets not talk about my favorite blow a trade @1509.00 price level. How many posts reference a trade I should have taken at 1509.00?

Revenge Trade – Don’t do it, walk away. Do anything other than a revenge trade as they rarely work for positive results. To make matters worse, my short at 1509 is also classified as a counter trend trade by my measure of short term trend direction. :-( I should also have seen the 1 minute buy volume at 10:32 CT as a big warning too. What was I thinking, oh... that’s right you don’t think right when you put on a revenge trade. Well there is a loss for all those 1509 trades that would have been winners. I bailed as fast as I could on this one, but damage done as the market took off FAST to the up side.

When price had troubles getting below 1506, I should have bought. I had that area as the prior weeks Value Area Low and flagged as a high importance area. Also NOTE – The low at 1506 was 1 tick away from the low defined by twice the price range created by the first hour of trading. Hmmm… Still trying to figure out how best to profit from this occurrence. Any thoughts or ideas let me know.

Saw that one coming – Saw what I figured would be a fake double top. Price action did press higher and I got short on my entry confirmation. How ironic, if the market puts in a fake double bottom at 1509. So tempting to take 2 points here, but I still like the short side right now. We will see. Well... when I started seeing more sustained buying on the up ticks than selling on the down ticks, I should have exited the second half @ +1.5 points. But price did not seem to want to go higher. So I felt price could go either way and I tried to hold on. After price stated bumping into 1510.25 I waited for the Bids to dry up and then covered for +1 point.

On non-trend days, like I'd classify the morning trading for today, I have had really good luck fading the NYSE Tick extremes. The morning High above 1513 @ 9:14 CT, then the low that touched 1507 @ 11:44 CT are good examples of these trades. I feel these are examples of when the Market is probing for stops and trying it's best to force people, you and I that is, out of trades that favor the direction the market is going. Why did I not try a long above 1507? When the market had no troubles powering to a higher high I should have been only taking long trades from this point on.

I was lulled into losing track of this important detail. The market consolidated for over an hour to help me lose my focus. I'd have to admit that the market did "it's job" on me today. That is to keep me looking the wrong way and not "seeing" what the plan is.

It is always easy to see in hindsight, but I had what I classify as 4 "Must try" long signals in the consolidation period. But doubt and hesitation chopped me up instead. Properly executing my plan, I would have capture no less than 1 point on each of these trades.

Lessons Learned or Still needing to Reinforce

Too many to list today. But I'll give it a try.

First and foremost is to trade my plan. I have only given hints so far in this blog as to the triggers for my trades. If you have not reviewed any trades in detail, I'd have to admit that this is a very aggressive trading style. When I screw up like yesterday and today, it can really hurt profits.

I pulled back yesterday, but today I'm down in more ways than one. Down about how bad I followed my system and down in the P&L too. I must just blindly start taking my trades, no second guessing. This is leading me into the the "missing out" feelings that eventually get me to "jump on" near the end of a move "Hoping" that it keeps going.

My purpose for this blog is to get the "Hope" out of my trading and stop using "Hope" as a trading discipline.

One other item I noticed about my trades today. I have two options for the second half of my entry.

1. Grab Maximum profits for the "Swing" I'm trading.
2. Be willing to risk the second half profits in order to hold for the "bigger" move.

There are many factors that make this a complex decision. Some of the things that come to mind are as follows:

1. Entry Price - How good is the entry price. Expect the market to test most prices at least once. Often before a bigger move, it seems that the prices are tested two, three, or more times.
2. Support and Resistance - Are there any "key" levels near by that price may react off of that could bounce price back to entry. This includes: Pivot levels, Market Profile Levels, and recent highs and lows (for today, yesterday, and overnight as well)
3. Price Action - Choppy day or trending day
4. Volume - Is volume increasing in the move or decreasing. Expect counter trend moves to occur with lower relative volume.

I know it is not a "easy" formula, but one that is well worth figuring out.

Today I think I got too caught up in the immediate price move and did not "step back" often enough to make sure I was not losing sight of the big picture. I also had troubles "trusting or believing" the bigger picture when I should have "blindly followed" my system to execute my plan.

To put it simply, maintain discipline and trade the plan. No second guessing.

Trade Wise, Trade Well
John