Posts Tagged ‘pulling your stops’

Improve Trading Performance

Thursday, October 20th, 2011

Today is Thursday October 20, 2011 and want to first post a video of the trading day. I started out a bit rough, with a couple of losses early on as I tried to wake up for the open. I don’t know or think that helped me, but it is what it is.

In the video above, you can see I was a little off in my third series of trades and felt like I was trying a bit to hard. In looking back, I really just needed to relax and not have in my mind making up for yesterdays stop out day.

With that in mind, I did see a big trade brewing and was in it with a market order short, and all was really OK, but it was taking its sweet time before cracking open.  I did allow doubts to creep in and take my big trade away from me for what appears to be no good reason and will be the basis for my discussion and follow up in this series of trading psychology issues that traders face on a daily basis.

I did get the second half of that big move, as the market did move exactly to a “trade to target” that was called. Scaling out along the way made it easier to hold to the bottom and is taking the conservative approach to the move. I did send off a training video to members pointing this all out ahead of time and did continue in the call saying that the bottom would be 1193 in the S&P, followed by a very big move up.  It all came down exactly as described and is a good feeling to see it played out as such.

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Our thoughts control our actions as it all starts with a thought. The thought of me trying to make up for losses, did lead me to enter early on some trades here today and that is not a good thing. The market will do what the market does and we as traders need to go with that flow. Forcing trades is trying to impose your will on the markets and will not change anything except create a little frustration and some unwanted loses.

It starts with a thought, the thought to get a better price, the thought to get in early so you don’t miss the move, the thought of making up loses, etc.

If the thoughts are not healthy, then it will produce bad fruit. If on the other hand it is healthy, it will do what it is designed to do, produce gains that are with little struggle.

Day trading should not be mentally strenuous event, but it should be something you enjoy. If it becomes a battle every day, it will soon send a message that there is something wrong and that will send unwanted hidden messages from your brain to your soul, (mind, will and your emotions).

So, when trading and looking for what makes up a good trade, you should be relaxed and not uptight. If you are able to breath and relax and then wait, the move will come to you. You don’t have to go hunting for it. If you miss one, that is OK, the next one will be along shortly.

If you miss a trade, don’t fret about it, as that is the most easiest thing to do. To dwell on something you can not change, you end up creating a stack of emotions that will find its way into your next trade. Again, this started from an unwanted emotion, but that emotion gave birth to the feeling by “thought”. When the thought comes to mind, you will only get in trouble when you act on that thought and be entertained by its lure, especially if it is from a bad tree.

How do you judge if the thought is good or bad?  Well, you need to have trading discernment which can be cultivated over time, but most of the thoughts you will know right away if it is good or bad.

If the thought is telling you to pull your stop, you know that is a bad thought. If it is saying, re-enter the trade and it is your third attempt on forcing the trade your way, that is a bad thought. If you get a hard lock on market direction and miss the easy trades in the opposite direction, you know those are bad thoughts.

We should all be familiar with our weak spots, so if it comes up in a thought, we will be ready to dispel the bad thought and replace it with the truth. This all may sound a little simplistic, but I will tell you, it is some of the most important things you could learn as a trader.

It is so easy to get into a emotional tailspin and not be able to get out of it. We should never allow ourselves to be or get into that kind of position. We have the power to choose. Don’t forget that. We choose all the time to act or not to act, to move or not to move on a trade. In choosing what and when to act, this too comes from thought and should be healthy thoughts that line up with our method to enter the market.

You don’t get rid of negative trading thoughts by not trying to think them, (because you will only think of them more). You overcome them by choosing the truth and keep choosing the truth, until the negative thoughts are drowned out completely, replace by the trading truth as per your method.

If traders want to improve there trading performance, then the above message will be a very good tonic. It is hard, not easy to do the above and it takes first courage to face these kind of issues, but progress is won by doing the hard things. Taking the easy road is the path the masses take. We need to separate ourselves from that group and rise to the top and fulfill our trading dreams, that to starts with a thought.

Trade well, trade committed ! Vince



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Strength to take your Losses

Friday, May 14th, 2010

Today is Friday May 14th and what a sell off from the top as called.

We moved up to the 1177 area (1175) as called in the night trading two days ago and sold off yesterday with follow through to the downside today.  At 12:19 Friday West Coast time as I write this we are currently at 1127 with 1124 the low for the day That would make a 50 S&P point drop in two days since the call as of now.

As I mentioned I knew there was traders who hold positions overnight just waiting to catch the S&P short at the top. They even did not have to wait up, depending on the time zone as a strategy for those who make such moves is to sell short at a price, say 1174 and put a price in to cover, say 1178. What happens here is if any time during the night the price trades to 1174 or better, they get filled and then there buy stop gets activated at 1178. This is a little risky because you should always watch your positions before entry, but I know it is done all the time for those who can take on the risk.

If that was to much risk, there were low risk area’s to get short in yesterday’s market, especially late in the session at 11:25 (West Coast) as the market dropped nicely. I don’t play the long term swings but I like to follow it, to better stay in touch with the general flow or rhythm of the market. This way, when I come into the market, when ever that is, the open or more likely mid day, I am not having to do as much analysis to get up to speed on the big picture.

In today trading I have a u-tube video of the trade working. I only took three trades today and picked up my minimum daily goal. I don’t always try and make the huge days every day. I find it easier to just trade to a modest target and stop, but that is not every day. Some times when the market is moving nicely, I will take advantage of the movement and go for much more. Traders, I feel need to keep a handle on always wanting more. If you struggle with this, to often you will not only lose what you had and more, as you find yourself saying, “should of, would of, could of”.

If you don’t what to find yourself in that situation, then you need to pick a modest daily goal and stick with that. On days when you see the trades easily and the market is just giving you the move, take those and add to your day for extra returns. I feel we need days like that a few times per month (3-4 minimum ) to help out with any bad or struggling days you may have previously had.

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Strength to take your losses: Every trader is going to have losing days, that is just the way it is, but you can keep it to a minimum by having a daily stop out point for yourself. Sticking to a daily stop point is just as important as not pulling your stops and accepting that you were wrong on that trade. We can not let our ego’s get in the way of attaining our trading goals. Those that do, will struggle more than they need to.

You need to come to the conclusion that you will not get all your trades right and you need to stick to your pre-defined stops. When you pull your stops, you are telling yourself that you are not ready to trade. You can not handle a losing position properly. That is only going to make it worst the next time you put on a trade as well. If you substantially moved your stop or pulled your stop and the market were to recover, you may think that you did the right thing, but you will loose what ever you recovered on this trade and then some on future trades, because you just programed yourself, for when you get in trouble, move your stop or cancel it and give the position more room to come back.That is going to set you up for only bigger losses in the future at a time when you least expect it.

With this kind of trading behavior, you are unstable. You will never come to find the consistent market gains that you so want. The harder you try to cover your losses the more you end up calling them to you.

What is a trader to do? The first thing is to accept that you will have losses and resolve that you will not pull your stops or move them except in the direction of your trade position (locking in profit). This is a mental decision that needs to be resolved before you put on another trade. Next, in order to attain the goals that you set, you will never achieve them by widening your stop, so don’t do it, ever. If you are not sure of the trade and feel uneasy about it, hit the close button and you will go flat and all stops will be canceled. It is better to do that than see your trade go against you when you know something is wrong and try and make up for a bad decision by doing what will never help.

If you are always getting stopped out, that is a sign that your timing is off. Trading is about timing, pure and simple. When to enter and when to exit. If you are getting stopped out, you need to look at your trading model. What ever you do, you need to be consistent in it, that way, once you find where your entries need to be, you will be able to repeat, again and again.

Below I have a screen shot of my T-2 trending model with only one indicator at the bottom. I have many more things to build on the charts to make it complete but only showing this part. This day up until 12 pm West Coast had 18 trades (23 whole day) of at least one S&P point profit in it and carrying only a 1 point stop. I see virtually all winning trades for the day. This is just to give you an idea that timing is the key and it is possible to find if you understand how to trade price action with some help from the indicators to start. As a note, I would not be trading all of these turns and teach how to screen out the best trades in my mentoring program, again, just showing what could be possible.

Have a great weekend to all !   If you need or want help, email me at vinnie@sniperdaytrading.com

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