By Cliff Clark
We all know that the darkest hour occurs just before the dawn. Yet it's not always easy to know when dawn is happening. When you look to see how dark it is, it's hard to tell because it's dark! So, does that mean we can conclude that dawn is just around the corner? I don't mean to be going around in circles here but that's what you've been doing in your trading. But what you don't realize is, the light is nearly here. You could be closer than you think!
OK, enough of my poor attempt at being a philosopher! What I am trying to say is that many of you that have been trading for awhile and are still losing money or breaking even are much closer than you think to becoming successful traders. You only need one or two tweaks to turn your game around. How do you find what those one or two tweaks are? You have to do a deep dive, ask yourself some questions and be honest with yourself.
When a trader asks for my help I usually ask them for some background information and some information about their trading. Based on that I then send them an email with some additional questions that I think might lead me to offer them some useful advice that will help them turn the corner. Here is a list of some of the questions I might ask:
- Do you have a trading plan?
- Do you have a pre-trade checklist
- Do you have a trade tracking spreadsheet?
- How many strategies do you trade?
- What is your current risk level?
- Do you think you over trade?
- When you break your plan is it usually just selling too soon? or...
- Do you ever not take a stop and have huge losses?
- How often have you changed your management?
- How well do you think you know yourself?
- Is your management mapped to your psyche?
- Are you a follower or do you take your own trades?
These are just some of the questions I might ask. Since I can't possibly work with everyone that asks, I am presenting the questions here in this article. Go through the questions and answer them honestly to yourself. Traders have told me that just answering the questions was helpful to them even before they heard from me. If you answered “no” to any of the first three questions that is obviously where you need to start. Without those items you won't make it.
When you've been trading for awhile and not making money, most of the time it's not your chart reading, your platform or the market causing you issues. It's likely an inability to deal with your emotions. Go through those questions, do a deep dive, refer back to other articles I have written. We have discussed many of the potential answers to those questions in the articles. While working with Jared, Anmol, Jeff or myself might give you some help. When you uncover things for yourself they will really stick. Keep working on you trading game. The markets are always changing and so must we!
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.
