Angry? Take the Day Off
by Cliff Clark
I talk a lot about emotions in these articles. Why is that? Mainly because emotions are what is going to cause you to lose or make money on any given day. In order to succeed you need to trade with as neutral a frame of mind as you can muster.
With everything going on in the world these days it's no wonder many of us are walking around in anger or frustration 24/7. Everybody is being accused of being something they probably aren't or being accused of being entitled to something they are really aren't entitled to. I can feel myself steaming every time I scan through my Twitter feed these days. Our freedoms are being systematically stripped away. It's no wonder we are all pissed off. Your anger can come from many places. Perhaps you had a fight with your spouse or your daughter ran a key down the side of your Maserati while she was riding her bike. Whatever the source of your anger it should be dealt with before you begin trading.
You can't trade successfully if you are in a heightened state of anger. If you don't believe me track it. Add a column to your trade tracking spreadsheet to indicate the emotion you were feeling when you took the trade. I'd be willing to take a large bet that the days you are emotionally high are better than the days you are emotionally low. Being at an emotional low can cause us to do some stupid things.
When you are coming into the trading day angry I'd recommend taking the day off if that's what it takes. All of your emotions affect you when you are trading not just the ones that hit you due to your trading. If you are sick or emotionally off balance you need to take a step back to recharge and to get your head on straight.
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.
