I truly believe the stuff I have read that if things are not functioning well in your personal life then your trading will suffer badly. Some say the market is a mirror of yourself so if you feel negative then your trading will be negative. Recently some things happened which impacted on my trading.
I had an internet outage for 3 days at the start of October right when the market had crashed down to the August level. Having traded through the August crash I was ready to buy. As there was nothing to do I took the opportunity to visit my parents. When I got back the following Monday the market was at the top of its new range and showed no signs of turning around. I had missed the move and I traded badly for the rest of that week as a result. I was preoccupied with stuff over the next weekend and I drove into the back of somebody at a traffic light (someone distracted me making an illegal u-turn). I decided that I could not afford to point the finger at others as it was my own behavior that was causing the problem here. I went through a period of reflection. I was worried that I was engaged in thrill seeking. On days I did well I often threw it away and on days I did badly I tried too hard to get it all back. I decided to look back at all the things that I had found that had worked in the past in my trading. I had early success in the summer months but my draw downs were bad too. I had more money in my account back then but it was too soon.
I had another one of those kinds of days yesterday. My computer died on Sunday and I spent most of Monday trying to fix it. I got it working in the late afternoon and I took a look at the charts. Without having watched the market during the day I felt I was ready to put on a small trade. It made a small gain. I did another and it lost. The market started to sell off and I thought it was premature. I was hoping for a rally and suddenly all movement stopped at 20.15 at the lows for the day. I thought it was strange as it was an hour early. Then I realised that the States was still on daylight savings time. My lack of preparation and my preoccupation caused me to miss this vital piece of information. I should have not traded yesterday but I know this in hindsight. What was frustrating was that I thought I had gotten past some of these mistakes but they were still lurking in the background.
I now realise how important my daily routine is. I need to wake up thinking “there is money to be made”, even if the overnight moves are huge. I need to eat a healthy breakfast and take a walk or go for a cycle. I need to take care of anything that is outstanding and then I need to catch up on the news and do my homework. Only then am I ready to trade with a clear mind.
Anyway, what happened on 11/01/11: I am happy to say I had as close to a perfect trading day as I ever had. Very few of my trades went against me and my entries and scales improved as the day went on. I traded the DAX during the US Premarket to get in tune with what kind of day we were going to have. I promised myself I would be more flexible than I had been the previous day and not get hung up on a single direction like “one way harry”.
The DAX was -4% and this was not helped by the difficulties traders were having with their brokerage accounts. Longs did not seem to be going so well initially so I took some shorts. I refused to get shaken out and and I was ruthless with any additions to my positions. They either improved immediately or they were set to break-even.
I took a break and went to the shop. Getting outside is so nice, rewarding myself with some blackberries for doing the right things. I came back and switched to the ES an hour before the European close. It was hovering around the the initial balance low / overnight low. I love to buy in this area. It was at 1210.75 (@ time 16.09) with negative delta. It tested mid with a decent delta push. It made a higher low and delta did two. Then it slumped back to the low of the day on no selling pressure. There was major positive divergence here. I put an order in to buy just above the low of the day and it got filled, then suddenly the rumour mill caused a volume explosion. My trade took off on the biggest single green bar I had seen in a while. I scaled half at vwap and trailed my stop up. I took the rest at 1123 – it was the fastest 11 handles I ever made. I felt it would pullback to vwap again so I stood aside. It did return to vwap and then tried to take IBH and 24 hr mid.
Someone commented on twitter that 24-mid should be enough for bulls. Others I chatted with were selling it too. I sold it and waited, target was mid. It caused me little pain and I took the money.
The double bottom at 1216 seemed like it was worth a long and just after I took the money at 1224 vpoc it fell down again. I was done for the day.
I had caught most of the moves and had done it according to the textbook. The end of day V-shaped bounce was vicious and I was glad I was already out.