Market Summary

The tough thing to do is to post to this blog right now - it would be much easier to just walk away and put on a happy face for my family. However, the reason for doing this blog had nothing to do with perpetuating self deception, in fact it was just the opposite with the hope that I could shake the smoke and mirrors that I put in front of me when it comes to trading. So, with that, I follow through with my post responsibilities - if to no one else than myself.

Needless to say, the losses experienced today were the worst one day losses that I have ever experienced trading futures. Yes, I did exit my long contracts before the end of the day - but not much before the end of the day. The most difficult part is that I was fully aware of the action and should have had the most profitable day ever. Just to look at my posts today, it was obvious that we were going down. But it was my stubbornness and refusal to take a loss from yesterday during the chop session that resulted in what I experienced today.

On the good side, I allot less than 10% of my investment money to futures trading. As noted previously, I sold down half of my equity positions to raise cash.........for exactly this reason! I'll get excited about that later, what I am dealing with now is my inability to implement a disciplined plan for futures trading. What is the reason? Why did I get myself in the position I did yesterday. Exploring that a bit may lead to some answers.

It actually started Wednesday afternoon when I went long at the end of the day following two "impulse" plays. I call impulse plays those trades that are based on nothing related to trade setups. Before this, I was up nicely for the day but had just experienced a head-fake on a break of the doldrum lows. The loss was not significant and I was still up a respectable amount. I think I have an issue with losing trades when all indicators line up - I feel like I was dooped. Another words, I take it personal. So, my response was to jump into two impulse plays because I didn't have time to wait for those fucking indicators to trigger. What resulted was my being negatively positioned and holding into the evening. Then comes the justifications for being in this trade overnight. The justifications were coming fast and furious - INTC, YHOO, IBM earnings, tech is going to lead the way. I had a million of them. And then the worst thing that could happen happened - I made money on my false justifications. This perpetuates these off handed trades for me. This set the stage for Today. Funny thing is that I said that very thing when I cashed out with my nice profits. I said that this approach that I use was one day going to burn my account.

Yesterday I was up a bit less than the day before by following my signals - but I was up. I do remember getting frustrated by the choppy action and jumped into an impulse trade just before I put on those ridiculous long positions at the end of the day. I think part of it comes, in part, from feeling frustrated working all day and not having my P/L show as much as I believe it should. So, a quick impulse trade will boost the bottom line right? Well, sometimes but a few blow out loses like today negate each and every one of those positive outcomes....and more.

In reading my recent blogs, I noticed that I was slowing justifying this approach. I was pretty crafty in doing it too. Claiming that there is a place for "intuition" in the market, or that "...this is trading", etc. I must put out to anyone that may read this that I am not posting to this blog to educate anyone but myself, so the only sound advice I can give to those that read this is to not follow any of my recommendations. I am using this blog as a mirror on days such as these so that I can correct several wrongs that I have worked into my approach. With that said, I continue. One more point about that. The reason I am doing this is because I genuinely enjoy trading and know that I have flawed approaches that are deep seated in my personality, so I am determined not to give up or to blow out my account.

Impulse took over again on Thursday afternoon due in large part to frustration and boredom with the choppy market. Following the close, I again justified my approach...well, it's pretty obvious if you read last nights post. I basically got myself into the negative position, did not allow myself to accept a loss that was 1/10th of what I experienced today, and came up with a hopeful thesis that ended with praying as a means to have an acceptable outcome. I should have sold right when I typed in those words. I knew what I was doing but was so stubborn and unaccommodating of market realities that I allowed disaster in the house.

Enough of that, now for some solutions:

1. Doing nothing and not panicking is a good approach but not for highly leveraged vehicles such as futures. All positions shall have pre-defined exits that are entered and not moved throughout the trade.

2. All trades shall be based only on accepted setups that are recognized in your trading plan. Missed opportunities are just that - missed opportunities. There will be plenty more. To "miss out" just means that you did not possibly make money, but it also means that you did not lose. The downside of "missing out" is so much more than the upside. Stay out if no setup.

3. Recognizing that I have a problem with losing trades no matter how small they are, I will amend my trading plan to include provisions for getting away from the trading screen immediately following each loss. "Revenge" trading is the core of my bad trades - it's not personal, it's the market. Remedies should include getting up and away from the desk if even for just a few minutes. I will also use the blog to post each and every futures trade made so as to give myself a vehicle to immediately analyze trades made.

This week was a disappointment due in great part to my inability to stay disciplined all day long. I started off great each day, but slid into my old ways. It seems that the beginning of the day is the "new me", while the end of the day descends into the "old me". I just get lazy and unfocused. With that said, I will also consider doing absolutely no futures trading in the afternoon session. I may just focus on equities in the afternoon. I will give this more thought over the weekend.

The other disappointment was the deception that I thrust on myself with the write ups in this blog. The bog was intended to give me honest, truthful feedback and I found myself continuing with the deception. Now that I have blown past that, I will endeavor to be completely open and honest about my every trading move.

Enough of that for now. I am off to review the days activity on the equities side of things. FWIW, I lost 25% of my futures trading account today. How could I have possibly allowed that to happen with my 2% rule? Amazing. Thank god futures makes up less than 10% of my account. Probably the smartest decision I made.

I will come back from this as long as I stay open to the markets uncertainties and stay honest to myself.