Psychological Dysfunction - Don McCullough
I just came across that title while reading CTCN Trader's April CTCN article. Today, while watching tick, 3 min and 5 min bar charts of the S&P market, I was perfectly dysfunctional. (Funny and not so funny!)
What a great day for trading the S&P! About $2,000 up and then about $3,000 down per contract. What did I do about that? Not a damn thing! Not one trade, and I sat and watched one good signal after another pass me by. How can that happen? Here's some of my best reasons and there may be others I'm not aware of.
Though I have been studying (and trading a little) the markets for around 9-years, I have never done any daytrading until recently with the Mid-Am bond market. It's a very good jump from that, and similar trading to the mighty S&P market. Also, I just had a $20,000 check cleared for trading yesterday and the "shock" of confronting the fact that my big test with the markets is upon me is probably another reason. Its been a long, hard road to this kind of "Judgement Day" and I am flat-out shy about "pulling the trigger."
Both CTCN Trader and I have mentioned the difficulty of consistently trading your signals in this newsletter. Now, you are hearing it from "the horse's mouth!" It's not the fault of my signals. My signals couldn't be more definite or easy to see. It is my fault and I believe after a few trades, most of this not trading my signals problem will be history.
The only comforting fact about this great day for trading the S&P is that my signals were, as always and for the most part, "on the money." I have long been aware of how losses can cause one to miss the next good trade. What I confronted today was how not trading the first good signal of the day can screw up the whole damn day!
So, it's not just losses that can screw up your daytrading, but also good signals that should definitely have been taken. So ... here I've given you a little road map to psychological dysfunction and it was possible even though I have great confidence in the merit and high probabilities of my signals.
My final analysis of this great-bad day with the S&P market is: I was afraid to take a loss. It's that simple. There is no way (I've known this for a long time) I am going to be in the market for the winners, unless I'm willing to be in the market for the losers. NO WAY. Another problem I had today (and it just occurred to me) is that I wanted my first big trade, of what I expect will be a long and very successful trading career, to be a winner. Stupid ego problem!
I have had no problem taking losses in the past. I didn't like to, but seldom stayed with a loser longer than I should have. The losses wouldn't have been that bad. My studies of the S&P market along with my style of entry dictate placing the stop loss $150-250 from the entry point, on the volatility of the market.
I'm reminded of an old saying about how to make it in the markets that goes: "Plan your trades and trade your plan." Well . . . I've planned the hell out of my trades--now on to the second, and many say, hardest part!
Note: We operate open member forums and
consequently reserve the right to publish some public type of communications
received. Please indicate "confidential" or
"not-for-publication" on any correspondence sent us
which you want kept private. Thank you.
Copyright by Webtrading.com - All
Rights Reserved. Webtrading/CTCN,
Phone 623-551-6832 . For comments about CTCN Home
Page design or connectivity, please contact our
Webmaster. This page is maintained by
Webtrading Internet
Services.
