Date: 8/23/2022
Author: Chris Hood
Last week wasn’t particularly great for me.
I was net profitable, but my overall performance was undercut by one silly trade I did on Friday.
It set me back a bit on my daily and weekly goals and left me scrambling to make up for my mistake.
Notice I said mistake…MY MISTAKE.
As a trader, you first must realize that EVERYTHING that happens is your fault. It’s the basic principle behind a book I read recently by Jocko Willink called Extreme Ownership.
He writes:
“All animals, including humans, need to see the connection between action and consequence in order to learn or react appropriately.”
So very true.
Here’s what happened in a nutshell. I was way above my goal for the day when I decided to buy a call on SPX. A cash-settled index option on the S&P 500 that I often trade.
The trade got smashed, and I was suddenly well below my target for the day.
I don’t blame the market; it was just poor decision-making on my part.
I even remember talking to the other trade room participants about how risky the trade was. I didn’t know if I should make it.
I decided to take the chance and got burned.
It wasn’t that I lost that bothered me; it’s why I lost. As someone who searches for the problem with every losing trade, I was a bit disgusted with myself because I didn’t follow my own rules.
According to my assessment, here were my critical mistakes.
1) Not respecting the intraday buffer
2) Not respecting my stop loss
3) I forced the trade when I should have stepped back; I’d already hit my goal but got greedy
The tools my subscribers and I use are proprietary, some powerful composite indicators that have taken me a couple of decades to refine.
They’ve been exceptionally profitable for us.
But I didn’t follow the signals on my Intraday Clearing Range tool and suffered the consequences. Completely my fault.
That was the first mistake.
The second problem was the stop loss issue.
I’ve discussed why I don’t enter stop losses into my brokerage platform but rather set alerts to get out of losing trades.
However, I held on and paid dearly for it.
Maybe greed, hope, or some other emotion took over. I don’t usually let emotion cloud my decisions, but I’m human like you.
Third, I just had no reason to make the trade at all.
If I say I want to make a specific dollar amount daily and I’ve already hit or exceeded that target, why not stop?
Maybe I just wanted some excitement. Who knows?
So I ended last week still positive but well-below dollar amount goal I set for myself. My profit factor was 1.2, which is barely acceptable to me.
I just had to shake it off and do better the following week.
Rather than beat myself up, I shook it off and saw Monday as a fresh start. I doubled up on my determination to follow my rules.
The result was typical.
I did much better yesterday, starting the week with 8 winners, 3 losers, and a profit factor of 2.48. I’d doubled my daily profit goal on the first day of the week.
What I’d like to stress is that you must be brutally honest with yourself when your performance is sub-par.
Make a plan to fix the situation and execute it.
And never let one bad day take away your winner’s mindset.
Cheers,
Chris Hood
