I Better Shape Up!

Yup – that’s right – two days in which 3 of my 4 trades go against me, won’t bode well, if I keep that kind of pattern up long-term. Can’t say that I’m fretting about the long-term prospects, I’ve had some pretty miserable trading days in the past, and always remain confident in my ability to bounce right back.

Over the past two days, four trades have seen about a 1% decrease in my portfolio value. Couple of things can be linked to my performance: 1) I rushed into two of my trades. The earlier you trade, the less information that you have, because the market hasn’t quite revealed its personality like it usually does by 11:30 or 12. My first trade was a short in SPY and the candle formation wasn’t an ideal type, but once I saw that the market had hit the highs from three days ago, and then immediately sold off, I decided to short the ETF.

The following 30-minute candle completed a definitive bullish engulfing pattern which obviously goes against my holding. Instead of waiting for my stop to hit, which I knew would inevitably happen, I took my loss in SPY right away. That was a $144 loss. The management of the trade was great – saw the writing on the wall and got out early, instead of losing capital that wasn’t necessary; but the timing and the decision to go short so early on, was an error in judgement.

My second trade in the NASDAQ ETF (QQQQ) was a great entry but poor management (I guess you can’t have your cake and eat it too!). Nice hammer establishing a solid entry and stop-loss, nailed the entry, but while I had gains of $390+, I walked away with $27 (before commissions). After having one losing trade on the day, and after seeing the trade go sky-high in a short period, probably should have booked gains. Didn’t though, and it cost me.

So after this point, I am down 0.5R on the day, so at the end of the day, I trade in Apple (AAPL), which by the way, our swing trade is working out phenomenally in it. Believing that since the market hadn’t made any substantial sell-off or even attempted to, that we could possibly see another rally into the close (why not, we’ve only seen 11-straight days in the index), I went long on a pullback, but once my entry was triggered, the stock dropped right down to my stop-loss and I took a full 1R loss. So that put me at my limit, to where I won’t trade anymore, and as a result it took 1.5R in losses on the day. For more information as to when I stop trading, make sure you read my article by clicking here.

So overall a pretty crummy day of trading. On SPY, I pulled the trigger too quickly, without a clear ideal for where the market was heading (much like yesterday), and in QQQQ, I was too passive with my trade by not aggressively booking gains where I should (an ongoing struggle for me, for sure). AAPL could probably have been avoided all together, since I clearly did not have a feel for the market whatsoever on the day, and by placing another trade only bruised my ego a little bit more.

There you have it – my honest and transparent analysis on what went wrong today. Hopefully you can learn from my mistakes, fom both a knowledge and a financial standpoint. Tomorrow I am going to be pressed against my -3R trading loss limit for the week. A single -1R trade tomorrow and I’m done until Monday – so let’s hope that doesn’t happen.

The day in the life of a trader is never easy, Mr. Market inherently wants you to lose so you have to be constantly learning and correcting your mistakes – and most of it has to do with the mental game as we saw today.