Tuesday, February 23, 2010

A Loss, a Gain, and a Goal; Tech & Psych Today.

After the opening volatility there was a nice flat 2m base and we were all waiting for the Consumer Confidence report. The base broke, I watched. 20 point NQ drop in 15 minutes. There were a couple of pauses that were entries, but I've never been able to trade these am moves that we have had for a long time now because my trading plan calls for using established support and resistance of intraday internals that haven't printed yet.

In the low volume, low volatility, no opportunity aftermath, I was analyzing and started thinking how all of the internals never seem to align much lately and how my system is difficult to follow for that reason. I was wondering if there was a priority or if it is so discretionary that I might as well just follow price. What I didn't realize is that I was feeling frustrated from missing the move and I allowed it to influence my behavior, an old habit. So without confirmation, that my system requires, I anticipated a double bottom, went long and got stopped out. It took a while for me to figure out what happened. At first I thought it was just a good stop but as I realized and documented everything, it was a painful mistake.

After lunch I was almost fully back to the right mind. Found the bear flag, saw that it failed and there was a bull flag following it. I didn't enter after the bottoming tail bar long, that was a nice signal that I noticed too late. Then I was given a lot of extra time, as price was going slowly, to enter the first pullback after the bull flag uptrend confirmation. Small gain, but it really helped.

I then documented again, and missed the next couple of dips that also followed thru, but I was just glad to have recovered.

Experience today shows me that I need to realize how much I am affected by not being in on a large move. I keep trying to rationalize it away so it won't affect me, but that doesn't work. Somehow, I need to know it, rather than deny that I am feeling, and then have those feelings sneak in and mess me up. I have to somehow confirm, accept, observe, or admit that I have been affected and then somehow deal with the feelings, in order to remove them or minimize their potential impact, before they affect my thinking. I don't want to give in to them, I am trying to control them, I am trying to say that they aren't there, but since I can't do that, I can try to cover them up, but they are too strong and they influence my thinking and mess me up and I make a mistake.

My plan is to consciously say to myself that I saw a large move. That's a start. It is getting me into that feeling already. Then, I will say to self that my trading plan does not include that large move, however my plan does have an edge that works. Then I will put the index card up that says, “The plan works, bring up the documented charts with all the gains of my plan from the past.” Then I'll pull them up, or remember them.

Question: Does anyone know where Dr. Brett Steenbarger references this in his 3 books? I have them all and I'll be searching tonight. It could be that this is everywhere in them. Leave a comment, thanks. - J.


  1. glad you found the video useful.
    a family friend of mine www.trade4edge.com often posts his trades - it is actually him who put me onto Pride Trading from Atlanta - Alexander has helped my trading improve dramatically

  2. I found Feb 23/10 afternoon session was tricky. Turns out that patience was the best tool, as it took over 90min. before the market revealed its hand. That hammer reversal just after 2pm was the tell.