What Should You Most Fear?
By Cliff Clark
I'm wondering what you think you should most fear in the markets.
Should you most fear your platform freezing after your trade hits but before your stop is in?
Should you most fear market makers taking your stops?
Should you most fear your stock being halted?
Should you most fear too much slippage?
Should you most fear your stock stopping out and then going to target?
Should you most fear the stock far exceeding your targets without you?
Should you most fear breaking news on a stock you are currently trading?
Should you most fear missing the big run on the latest “hot” stock?
Maybe you most fear something else?
There is a lot to fear and I think all of these are all valid fears, but they are not the thing you should most fear? The thing you should most fear is “yourself”. I say this because on any given day you are prone to errors in judgements that will cost you far more than any of these fears. The way to minimize these errors is to stay focused. Having a detailed trading plan and pre-trade checklist can help you maintain this focus. A pre-list checklist will help you enter only the best trades for your plan and a well documented and followed management plan will allow you to maximize those trades. Over time you'll gain confidence and won't fear any of the mentioned fears because you'll know how to handle them.
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.
