Out Loud

As I've mentioned in the past, everything sounds good often in our head, but when we begin to verbalize things, they don't always sound as good. Meaning, as we talk things out verbally. I've found when I have to explain my trades, even if it is to myself, sometimes what I thought was a good move ends up being a bad move.

Today I've traded (realtime practice) for 2.5 hrs today, 21 trades, gross $600. That is still within my $300+/day.

Here are the stats:

Futures: ES (S&P emini's)
Profitable trades: 12 (57% ratio) - range is $25 - $187.50
Costing trades: 9 (43% ratio) - range is $12.50 - $187.50
Profits = $1500
Costs = $900 (60% of my profits)
Commissions = $83.79 (14% of my profits)
Net = $516.21
Contracts = 1 ($500 margin)
Day ROI = 103%

Inspite of the many mistakes I made, there were a number of things I did right. Focus on doing those right things and minimize on the things that are not good trading.

What are the correct things?

1. Got out of trades that went against me when they broke my short-term trends
2. Verbalized trades, talked them through before getting in or out of trades
3. Did not get into or out of trades that did not meet my trade strategy
4. Waited
5. Took incremental profits

What did I do incorrectly?

1. Jumped into trades without verbalizing
2. Waited too long after my signals were met to get in or out of trades
3. Got distracted with the phone or something
4. Impatient
5. Didn't allow for all my trade strategy criteria to be met before getting in or out of trades
6. Did not take incremental profits
7. Hope

I certainly know how to make money. However, keeping it is another thing, and cutting costs is also another thing.

Some things to look at are that I did was:

1. Get into a DOWN position when the overall minor trend it was in was up and it was nearing support. Not a good time to take a DOWN position unless it breaks that uptrend, and often even if it does, it comes back to test, so it's better to get in when it makes a 2nd attempt to head back down below where it broke the uptrend. This works similar to the UP side.

2. What is volume doing? If the trend of the bearish volume is going up as the price is moving down (this would be "closing" price), that signals traders are more bearish. However, is this strong volume or is the overall bigger trend weakening. Keep in mind the micro and macro timeframes you are trading. So, if you get this action happening and then all of a sudden a bullish candle shows up, what do you do? As long as it's not violating your written trading strategy, and though the bullish candle may be big, if the volume is weak and you see the bullish volume trend is weak, then be patient. They are just testing to see if buyers will come up. But, you must have a point that says when you will get out, though.

For example, I usually trade 3 and 15 min. timeframes. You have to know what your goal is and if it's to take quick profits, trade that way. Don't oscillate and say, well, my position is going against me, so I'll go to a longer timeframe. Your position went against you. Get out. Start over or stay out.

3. Know where you are. Location, as in real estate, is very important. Are you nearing a place where traders have rallied a lot before? If so, taking a DOWN position without any trends being broken may not be wise in the short-term. Remember the timeframe you are trading and stick to it.

4. Get good at pattern recognition. I'm not only saying this with the price action, but also for the indicators you use. I use RSI, volume, MACD and each of these indicators have patterns. Are you nearing support or resistance in these?

5. Know when to stop. In profits, I made more than double my daily goal. Stop trading and go back to analyze your trades. I know that if I was really sharp, my profitability ratio would be higher in the 80+% instead of where it is. I'm not ready to fund my trades yet.

6. Be humble. The market doesn't owe you anything and it's not out to get you. It does what it does and it's perfect (well, as anything could be in this fallen world).

Trade well!
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