Backstepping Happens
by Cliff Clark
After my borage of articles on emotions I can hear some of you saying “few things are more infuriating than being told to calm down when I'm angry, upset or annoyed. As if it's that easy!” I understand anger doesn't come from nowhere. But it can't simply evaporate while the cause remains unchanged. You need to get to the heart of the problem before you can transform your emotional response. There are times when I might suggest taking a deep breath so that you don't allow an issue to get under your skin. That's not always going to work. Don't be disheartened when you take a backstep. It takes time to develop and implement your emotional strategies. You know you are making strides if you can identify your backsteps as they happen and don't compound them. That is half the battle. The other half of the battle is fixing the backsteps but that takes time.
See my article “Fine Tuning You Emotional Game” for tips on working on your emotional issues:
Note: With the term backstep I am not referring to your normal 1R losses or when you trading properly and not making money. I am referring to the trades where you might not have taken a stop or some other silly error and lost multiple R's.
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.
