Hi all,
Wasn't planning on posting today but my trading at the open today I feel is worthy of sharing as a good illustration of the discipline and risk control required if you want to be a trader; and how experience can really help in all of this:
Market opens at 8am around the 15960 level (off the top of this big scale chart) and immediately drops off to test and form, not unexpectedly, a consolidation box around the big figure 900 level. Now, as the consolidation box has formed after a downleg I would normally look for a short trade here as that is trading with the current flow, but the opening gyrations can be anything plus sharp bounces off big figures are common, so I am less fixed in my viewpoint here. It happens we first see a test of the 96 low at 8.14am and as the market just dips below and snaps back and I am tempted long at 02 with my usual 12pts hard stop and soft target. It gets as far as 11 and +9pts before reversing back sharply and I scratch on the return to 02 - there is after all obvious risk of another downleg here. As it happens the market did carry on down and would have just stopped me out fo a -1R loss at 90 if I had held on and hoped. This test of the 90 level also immediately bounced back and tempted me into another long, this time at 97 back inside the consolidation. This second trade works and I immediately make my 1R profit at 09 on the continuing snap back.
What I want you to see here are a few points:
- my willingness to risk a loss by taking the long trades; you don't ever know what will happen, it is always only an educated guess
- that this risk of the guess proving wrong is controlled by virtue of a predetermined hard stop in place
- my scratching the first trade as it reversed; you have to follow the evidence the market presents regardless of your trade hopes
- my willingness to have a second go; if it is a valid setup for your method you have to act regardless of prior experiences.
If I had not been willing to take these really quite uncertain trades, or if I had not acted correctly (for my method) to scratch the first trade, my net +1R outcome for the morning would not have been realised. The reason I want to highlight all of this is because I know that in my earlier years I would not have managed what I just did here. I would have either not taken the trades or left the first one to drop to a -1R loss. My ability to manage it without any real internal stress today is entirely due to experience: I know from long experience that these trades are OK to take in aggregate. They may well not work out today, further downlegs are extremely common but as a trader I have to take trades with unknown and uncertain outcomes. As long as they fit my method, I control risk and manage the trades appropriately I know from experience that I will be OK over the long haul.
The moral: spend a long time trading in tiny size until you build up the necessary experience and internal confidence that you will be OK as long as you trade steadily according to your method - and know you will unwaveringly be able to do this!
Wasn't planning on posting today but my trading at the open today I feel is worthy of sharing as a good illustration of the discipline and risk control required if you want to be a trader; and how experience can really help in all of this:
Market opens at 8am around the 15960 level (off the top of this big scale chart) and immediately drops off to test and form, not unexpectedly, a consolidation box around the big figure 900 level. Now, as the consolidation box has formed after a downleg I would normally look for a short trade here as that is trading with the current flow, but the opening gyrations can be anything plus sharp bounces off big figures are common, so I am less fixed in my viewpoint here. It happens we first see a test of the 96 low at 8.14am and as the market just dips below and snaps back and I am tempted long at 02 with my usual 12pts hard stop and soft target. It gets as far as 11 and +9pts before reversing back sharply and I scratch on the return to 02 - there is after all obvious risk of another downleg here. As it happens the market did carry on down and would have just stopped me out fo a -1R loss at 90 if I had held on and hoped. This test of the 90 level also immediately bounced back and tempted me into another long, this time at 97 back inside the consolidation. This second trade works and I immediately make my 1R profit at 09 on the continuing snap back.
What I want you to see here are a few points:
- my willingness to risk a loss by taking the long trades; you don't ever know what will happen, it is always only an educated guess
- that this risk of the guess proving wrong is controlled by virtue of a predetermined hard stop in place
- my scratching the first trade as it reversed; you have to follow the evidence the market presents regardless of your trade hopes
- my willingness to have a second go; if it is a valid setup for your method you have to act regardless of prior experiences.
If I had not been willing to take these really quite uncertain trades, or if I had not acted correctly (for my method) to scratch the first trade, my net +1R outcome for the morning would not have been realised. The reason I want to highlight all of this is because I know that in my earlier years I would not have managed what I just did here. I would have either not taken the trades or left the first one to drop to a -1R loss. My ability to manage it without any real internal stress today is entirely due to experience: I know from long experience that these trades are OK to take in aggregate. They may well not work out today, further downlegs are extremely common but as a trader I have to take trades with unknown and uncertain outcomes. As long as they fit my method, I control risk and manage the trades appropriately I know from experience that I will be OK over the long haul.
The moral: spend a long time trading in tiny size until you build up the necessary experience and internal confidence that you will be OK as long as you trade steadily according to your method - and know you will unwaveringly be able to do this!
9