I’d love to be in tune with every ebb and flow of the market each day I sit in front of my screens, but I know it’s not possible. I know that on occasions I will just misread the market. My head won’t be in the game, I’ll just struggle to focus. History has shown me I have on average 3 losing days per month, I’m trying hard to lower that (there are top guys out there who have 3 per year) but in the meantime the important thing to me is to limit the damage a losing day does. In other words the losing day should be no more than my average winning day.
How do I do that?
I acknowledge when I miss great setups, when I hesitate, when I don’t get the optimum entry and scale back my size. If my poor trading continues I’ll end the day early regardless of the PnL status.
Friday was a bit like that for me, I missed the absolute short gift at the open, I was dithering and pondering the setup. I’ve no idea why as it tried several times to push through a very significant resistance level, one that has been in play for week. It was one of my perfect setups.
I decided instead to take the lesser quality long for one more probe higher. My timing was off and I took a stop.
The warning signs are building………missed a bread and butter opening setup, pulled the trigger too early in a low quality setup. I put myself on amber alert…..so I waited until the data was due before doing anything else.
Data came out and the market pushed down through the last low. Setting up perfectly for the pullback short, target was clearly the gap fill.
The market pulled back and I got short just beneath the last low, (half size as I was in cautious mode). I got my 10 tick 1st scale but that was it, no follow through, so a scratch on the second half. Ok so it was a good setup but it didn’t give me my targets, that’s why I scale; no trade is all or nothing.
It tried to probe the highs again but failed at the 10800 level once more, this time the volume picked up and the selling became more aggressive with a new low in the TICKS. I waited for the pullback to the break level which coincided nicely with a tick pullback to 0. Well worth a short.
My target again was the gap fill, I got my first scale but the market fell short of the gap fill by 3 ticks. Usually I’d be tape reading the action as we get towards the gap and if I see a strong adverse tape signal I’ll close the trade rather than being stubborn for an extra few ticks. Today I didn’t and I ended up giving back 14 ticks of profit.
I took this last optimum exit miss as my cue to call it a day. One of my major rules is to really press the throttle and get aggressive when I’m in tune with the market. But more importantly to ease off when I’m not. Today was one of those days when I needed to ease off. Our job is not only to make good calls in the market, but to make good calls as our own personal trader manager. Know when to tell yourself to walk away and that tomorrow’s another day.