Yesterday someone on Twitter told me when he incorporated bias into his trading plan, he did better. And I thought about that a little. For the last 4 days, value has been moving higher:
This is what I use for my “trend”. Wednesday (the 3rd profile from the left) was slightly tricky in that price went down. A friend of mine, in email exchanges, challenged my statement that the trend was up and even pointed out that price had went down. I asked him what value did. This is something I learned from Dalton. If price is down but value is still up, then the direction is still up.
Here is my P/L the last 3 days:
I did well from long side and was breakeven on the short side. Why am I trading short when the “trend” is up?
Even more interesting is Friday’s results:
So the trend is up and what did I do? I traded the short side. I thought I did very well on Friday. I got 7 pts and I traded one lots all day. My expectancy was 1.75 pts. I traded very well.
Unfortunately I missed out on a great opportunity on the long side. I took the short on the pullback to Open Swing Low and I rode it to 35.50 where I had a support zone (yday VWAP & low of yday EF pullback). When 34.50 was taken out I was no longer looking to get long. I saw weakness.
But what I didn’t see was that 34.50 was taken out but quickly rejected. It spent less than 5 minutes there and was back up into the value area. That combined with the trend being up should have told me to get long.
Actually I did get long but I did it on sim because I didn’t want to risk giving back my profit for the day and because the market looked to me like it was going to be a slow day. So fear kept me out of a good trade. BTW I took it with 2 (my normal size when I’m not scared) and got 4 pts total (on sim). So it was a good trade.
So to summarize:
- I’m not taking advantage when an obvious trend exists
- I’m afraid of losing
Let’s look at the weekly PL:
I’ve been on real money for 12 weeks now. 3 of those weeks had disappointing results. All three were caused by me taking a big loss. And that is my main problem.
I’m not that good at taking small losses. So when it comes time to put on a trade, there is some fear that it could be a big loss. So if it doesn’t look really good, I don’t take it. This results in a really high win rate (86% in the last 3 days) where losers are infrequent but costly. I used to be proud of a high win rate. I went an entire month without a single loss last year. But now I know that a high win rate is not the most efficient. I could take twice as many trades, have twice as many losers, and still make more. All that is required is that trades have a good R:R.
This is why I’m still trading 1-2 lots, I can’t increase size until I overcome these issues.
Next week’s plan:
- 3 pt max stop, and ideally get out with losses of 2 pts or less
- Trade more with the direction of the value areas
- Be more thorough with my homework so that less decisions need to be made while trading
- Start up the journal again (yes I slacked off)
I plan to really focus on these and report on the status during the week. As always, writing about this really helps me to confront these issues. I also really appreciate all the feedback and encouragement I’ve received. Thanks for reading & sharing in my adventure.