By Cliff Clark
Have you ever been working on a complex jigsaw puzzle, a crossword puzzle or perhaps a Sudoku puzzle and come to a moment where your shoulders slump, and you get impossibly stuck and begin to feel beaten, and even regret the time you've wasted on an impossible exercise? You finally just give up and walk away frustrated. You focus your attention on something else, perhaps a walk or maybe cleaning your house. A little while later you walk back by your puzzle and a missing piece practically jumps off the table into your hand. Then as if by magic all the pieces begin to fall into place.
So what happened? Walking away allowed you to clear your mind. You were probably looking at that missing piece the whole time but because your were frustrated your couldn't see it. So what does this possibly have to do with trading? Well, it's the same exact thing we experience in trading. When you find yourself having a bad day and begin to get frustrated just get up and walk away. Take some time to relax even if that means closing it down for the day.
When you get frustrated or angry you can't possibly trade well. You lose focus which can lead to additional losses. Walking away for a bit can allow you to calm down and relax a bit. It should put you into a better frame of mine. It might not mean you'll find the next winner right away but it will increase the odds that you don't do something stupid!
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.
