Jun 282012

Tuesday shook me up a little and gave me a reality check.  It was 5 days in a row of losses, most of them very small losses but still losses nonetheless.  So I cut my size and focused on the essentials:  entering exactly at my levels and holding for the next level.  The result was a big success.  I think Wednesday was pretty easy to read and that should account for some of it, but most importantly I pretty much stuck to my plan.  I did scratch a would-be-winner and I did cut two short by a point, but overall I traded well and my results showed.  I made +7 trades just one lot, making this one of my best days per contract in a long time.

I will continue trading 1 lot for a few weeks and will not go back to 2 until I have a couple consistently profitable weeks where I’m sticking to my plan.  Trading 1 lot is a great exercise in patience.  I realized that scaling in and out was making me careless.  I wasn’t pinpointing my entries, I’d just enter one and know that if it got closer to my level I’d enter the second.  So why not just wait for my level and enter both?  That’s what gives the best R:R and lowest risk, in exchange for potentially missing a few trades, which in my opinion happens less than we think.

Scaling out made me careless as well.  Instead of going for my next level, which is the logical place for the market to go, I’d just take one off when I felt uncomfortable.   Remember FT and Rob can do this because when they take a small scale, it’s just a small fraction of their position.  If I do it, it’s one half of my position.

It’s too early to judge by one day but I know it just felt much better.  I can accept the 2 pt risk much easier with one lot and I can detach myself from it and let it play out.  Well almost.  But making a lot of progress.

The two winners I cut early – the first one was because price was stuck at VPOC and I wanted to go for my run.  I should have just let it ride, accepting I may give up my 2 pts in exchange for the more probable event of getting an extra point or two.  But risking my 2 for 1 more didn’t make sense at the VPOC where I felt it was 50/50 up or down.  So I closed it out.  I guess I wasn’t completely detached.

The second was on news.  I took a stop Tuesday on the news and like Great White sings, “Once bitten, twice shy”.  Oh that’s a flashback from a long time ago, I’m dating myself.  So I panicked and just got out.

I hope your day went well.  My expectation is that we poke above Wednesday’s high and then head lower, not sure if the lower part will happen this week, Sunday’s globex, or next week.  But I don’t think the move down is over.  Just a hunch, I’ll just be taking it from one level to the next, no matter which direction it goes.


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