Are You Frustrated With Your Progress?
By Cliff Clark
The trading business isn't like other activities we pursue. This is especially true from a psychological standpoint. One of the things true of the trading business is that your progress from beginning to professional trader is different from the progress seen in other activities.
Take for instance running. When I got out of the military I started working for a company and was assigned to second shift. With nothing better to do during the day I started going out for daily runs. I started out at 2 miles and quickly worked up to six miles. A coworker told me about a 10K race coming up so I decided to enter. I completed the race in 58 minutes. Pretty slow for a young guy but I started out way to fast and ended up dying the last three miles. I decided to try again, the second race I completed in 52 minutes and the third in 48 minutes. By the end of the first year I was down to 41 minutes. The second year I lowered it to 38 minutes and the third year 36 minutes. I finally set my personal record of 33 minutes after about 10 years of running. As you can see progress had slowed over the years. Not only did progress slow but the effort I had to put in to make relatively small gains was intense. Over the years I added things like speed work, tempo training and hill training. It's amazing the amount of work that had to be put in to make just a few seconds gains over those last few years.
In trading things are somewhat different. Progress is very slow at the beginning. As a new trader you have to spend countless hours in order to achieve little or no progress. And in fact progress is also different in another way. When you set out to become a professional trader, you won't see the consistent progress that is seen in a beginning runner. Progress in trading comes in leaps and bounds, but not in a any consistent way
What do I mean by this? Don't expect progress to happen every day. You'll be stuck at one level for months, and then you'll have a piece of enlightenment and you'll be able to climb to a higher level of consistency, seemingly overnight. Then you'll be stuck at that level until a new level of enlightenment will take you to the next level. What are these enlightenments? Perhaps it'll be a deeper understanding of money management. Perhaps it'll be finding a perfect niche in the market for you. It's different for everyone. Just keep working and the progress will come, one level at a time.
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.
