Monday, March 8, 2010

Accuracy & Level Headed Restraint in the Face of Frustration in a Range Day


Traders can become personally invested in a bias or a position taken. They may fall into defending their belief in being right or wrong. Other psychological influences on a trade could also be wanting to be in a position, letting a position ride, embracing the risk even if it has increased, etc. Today I was successful in killing a trade for the right reasons.

This seemingly insignificant event is significant to me since I've had a lot of interference in accurately assessing the current status of a position that I am in. Another interfering thing is anxiety. Frustration with the position and the market environment could also influence clear thinking.

The morning was in a range. When this happens, midday is a good time to stay near the trading platform since it is more likely to move then. Today I split anyway and went out to lunch knowing this. When I returned for the pm session, generally around 2pm, I saw that I did miss a couple of opportunities. I didn't let this affect me. Unfortunately, it was back to ranging in pm.

My only trade was based on internals and price, as they all are. In the trade, I reviewed my anti-anxiety notes on index cards and this worked again for me. I cycled thru all the internals and price and determined that there was a change in the market environment and it was highly likely that my position was not going to follow thru. I decided to kill with a market order and I was filled at break even. Only lost fees.

The market did turn around but not in a setup that I was able to enter. Later near the close, I got strong feeling of intuition that the move over the most recent high was going to break out. I resisted trading because I know that many times I've lost on that kind of trade, but back in Q4 2008, an end-of-day move like that might have exploded 10 points. I was programmed for high volatility back then when I started so I know now to resist certain feelings that are incorrect intuition and to only be fully conscious of all decisions based on my trading plan. I sure was glad I just watched it. It did what it does lately, nothing. NQ moved 3 ticks on the breakout that I sensed and then pulled in near the close.

I feel as good as if I had a big gain. Earlier today I didn't; I felt like trading was hopeless but I now know how to manage my mood better and I'm optimistic, and ate food. Psych for me is tricky, but I can manage it so much better thru my painful trading struggles for the past 18 months.

1 comment: