Getting Buried
by Cliff Clark
As one of the more respected traders in the room I get a lot of people private messaging me during the week for various reasons. Some with questions on a trade I may have taken, or to thank me for the trading tip I put out that day or sometimes to ask if I can help them with an issue they are currently dealing with. The ones that pain me the most are the ones that tell me that they just experienced a huge loss. I can tell from the message that they are really hurting inside. I've had no less than five of those messages in the last month or so. In each case they state that they had just suffered a loss of $10K or more with the highest being somewhere around $40K. These are all folks who are in the room trading right beside us. They have all taken PTS. On the surface each case appears to be different. But I believe the thing they have in common, is on a deeper level it all comes back to emotions. I can point them to information but the work to fix themselves has to come from inside.
I don't have anything new for you today. I just wanted you to be aware that this can happen to any of us at any time if we cannot control our emotions. There isn't anybody in this trading room trading good enough to trade with a risk level that would allow them to lose over 10K on a single trade. None of us are that good. Most of you are working on your technical game. Make sure you put at least as much effort into your emotional game!
I'm not interested in hearing anymore large loss stories so I urge all of you to go back and review these articles and work on your emotional issues everyday:
90% of You Are Going to Fail
Fine Tuning Your Emotional Game
Chasing Losses
PS: Sorry if that sounded like a Dad yelling at the kids! ;-)
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
