By Cliff Clark
So how is your trading journey going at this point? Are you still struggling? If you are, you are likely on the path that most of us were on when we started trading. It started when many of the strategies that we were learning begin to come together and we begin to see the light at the end of the tunnel. This sometimes happens slowly with a cautious trader who has been paper trading or trading with a small risk. This can happen quickly for aggressive traders as they start to have some big numbers in profit on some of their better days. However, while you begin to feel good, there usually are some lingering problems. While the light seems to be coming on, the account isn't really growing very much at all. It seems that every time some progress is made, something happens that stops the progress. It's ‘two steps forward and one step back. If this is something that you are experiencing you are not alone, read on.
The problem you are having is that you don't understand why this is happening. I think if you review your records you will likely find several good trades throughout the week and then that one killer bad trade. One so bad it really sticks out. So bad, it erases all the hard work of the prior gains that you had made. It may show up as several profitable days and then one day that erases all of those prior gains. If this is the problem you are having there is some good news and some bad news.
The good news is that you are now likely doing well with the technical part of trading. The bad news is that you are not doing so well with the psychological or emotional part of trading! Dealing with your emotions is not going to be easy. So what's the solution? First it's admitting that you have an issue. Once you’ve admitted you have a problem, you must learn to deal with your emotions. It will be an ongoing issue that never gets totally resolved but can be dealt with in different ways so that you can become a successful trader.
There are many ways to work on your emotional balance:
- Using a trading plan.
- Printing charts of your trades and analyzing them.
- Keep detailed records.
- Tracking and reviewing your progress.
- Making a plan to eliminate recurring problems.
- Using money management that prevents catastrophic trades or days.
Once you begin to eliminate some of your emotional issues you will likely see an improvement in your trading. Unfortunately that won't be the end of your emotional issues. If you are not careful even when using all of the above tactics to make great improvements to become successful it's possible to get over confident with your new success and abandon everything that got you there. The road will always be full of new challenges, if you want to thrive, have on ongoing plan and a commitment to patience and discipline.
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.
