It's early Saturday morning and I've already been here at the computer for 90 minutes. MY frustration level is high because recent notable improvements in my mental approach to the markets regressed this past week. It is no small coincidence that on Tuesday Mrs. Bluecollar had a substantially upsetting event at her perennially lousy workplace that may threaten her job. I won't go into details but will only say that since the sale of my business in January, she has been the only source of income and source of benefits for the household.
This past week only further reinforced the fact that trading is mostly a mental exercise and that substantial emotional events will interfere with successful performance. I did well on Monday before the news and I have done well over the past three weeks, going to the computer each day with a calmness and sense of mental lightness and agility that has eluded me since the beginning of my journey to become a consistently profitable trader. Then, on Tuesday, the negative news caused me to "try harder." I let my stops run a bit before engaging them. On Wednesday, I had a good read on the turn upward in TNA between 10:25 am and 10:35 am. I went long at $43.95 and set a stop 18 cents lower at $43.77. TNA turned upward and I was in the money... as is often the case, it drooped in the next candle and I faithfully stopped out at $43.76. This was the bottom of the candle and the next candle (10:35) was a hammer but ended green; TNA had made the turn. I was early on a very good read, which is the same as saying I was wrong. The bottom print was $43.70, meaning I had missed the bottom by 25 cents on a stock which had already moved nearly 900% more than that since the open an hour before! TNA soared to $46.89 in the resulting trend, and though it pulled back from there, it later regained its strength and went on to post a new HOD near the close.
Regret is a horrible emotion when trading... if we cannot "forget" our trades which don't work, we are doomed as traders. The inability to do so on this day was a direct result of my "need for success" given our personal concerns. I later went short with a double-sized position during the uptrend at a well chosen spot, sensing a reversal. The reversal turned out to be only a consolidation as buyers stayed strong and in charge, pushing TNA up, as I mentioned earlier. I didn't stop the trade out... I needed a measure of success for us, and I had a good read that was "stolen" from me earlier by big players who jammed price down to trigger stops causing it to accelerate up. (I'm not playing the "victim" when I say that, it is a well-known and often-seen tactic to generate liquidity to fuel the reversal while getting a few extra ticks in their favor). I was insisting on a winner. The market did not comply. I did not add to this losing trade, I havent done that for so long I can't remember the last time. But holding a bad trade was bad enough... made worse by the extra size trying to "make things happen." Price, as it so often does, eventually came back to my entry area, and I sold out with a 34 cent gain. I sensed the change in momo, exiting at a very good spot, before it made the final push to new HOD near the close as I mentioned earlier. It's fair to say that I wasn't helped by the fact that I was rewarded for my bad behavior. So, my evaluation is this. I had good reads of the turns on Wednesday, just as I seem to on a day-to-day basis. My technical/chart reading skills are reasonably good. But my head got in the way.
And so it was for the rest of the week.
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My negative performance this week associated with unsettling news in my personal life brings me to what I've been thinking about this early Saturday morning, after surfing the trading blogosphere.
1.) Searching for and nosing through new blogs, I realized that self-doubt was the reason for doing so. I am a trader-in-training and don't make any money currently, at a time when it seems like a few extra bucks would be helpful. My concern is causing me to "try harder" by looking for more information. The truth is that I already have the knowledge I need about chart reading. My reads are good, and have an acceptable level of accuracy. I do not need to look for answers by watching CNBC or digging through more trader blogs (even the good ones).
2.) More generally, the reality is that most of us who understand charting fairly well, can't be helped by more books, charting education services, etc. The answers to our success are not outside information brought into us. Success lies in addressing the fears and other emotions we already carry inside. It is my opinion that most of the purveyors of books, plans, self-help manuals, like those I have seen this morning know this. I believe another book, or course, or on-line subscription is akin to buying one more piece of workout equipment to get you to a slimmer, fitter, you when you don't use the one(s) you already have. It ain't gonna work. It will never happen because just like all those trading materials and expensive subscriptions to trading sites, exercise equipment does not come with the willpower needed for the buyer to use it faithfully and consistently. And the buyer will always be searching for the next "tool" as the answer. How sad that they are easy marks for those willing to sell them exactly what they don't need.
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I just purchased and am reading one of the few "tools" a chart-savvy trader will ever need. It was inexpensive and is clear in its presentation. "The Inner Voice," by Michael Martin. It explores in greater detail and clarity all the underlying points that Mark Douglass covers in his great book, "Trading in the Zone."
Take note, the will to face any underlying emotional shortcomings, a necessity for success, wasn't shipped in the box with it. I didn't even bother to look...
