5/2 – Good Oil Trade +1.7R (sole trade for Wed) + psych review

Oil Trade setup shortly after 5pm following the Weekly Oil Inventories a couple of hours earlier.  A nice descending triangle in bearish sentiment, with the base right on the $50 price level (big round number) and just above key level  around $49.60.  I was actually having a long chat with Mr France in the office when I saw this – that’s what you call lucking out.

oil feb4

And now for the psychological review…..

Feb4 (Wed) trading session – 1W  +1.7R 

Key Points: Thoughts continue to be in turmoil during open trades but are not influencing my actions; hypothesize that loads of testing and real trades will shrink the mental turmoils

  1. For each completed trade, who was in control? Was it the proficient trader inside me?  Or was it the destructive George?  What picture or image is evolving for both of these traders?
  2. How much of the trading session was spent “trading well”, and how much of the trading session was spent “trading badly”?
  3. How could I have increased the amount of impact that the proficient trader inside of me, had on the trading session?
  4. List and describe specific examples of good and bad trading from the day’s session.
  5. Why did I do the “bad trading”?  What, such as specific events, or patterns of thought, caused it?
  6. What other observations, in the context of Chapter1, can I make?

1.  I didn’t spend much time looking at the charts in the afternoon.  It didn’t seem that a lot was happening, and it certainly didn’t look as if I had missed any setups on any of the three instruments during the morning or the afternoon.  The setup on Oil looked quite convincing and clear.  The proficient trader was in charge here.  Because of the clarity of the pattern I used a sell-stop order 15-20 pips below the base of the triangle.  I waited for the breakout candle to complete for the remaining portion of the trade.  I was quite calm and relaxed – thus the Destructive Trader wasn’t get a lot of energy.  In terms of the management of the position, I did set a target and then moved the stop down as price moved in my favor.  I could feel some emotions inside me trying to create greed and fear – but I didn’t let it influence my actions – I tried to remain calm and quiet.  I also continued to glance at the psychology post from earlier in the day in which I tried to focus on my actions – on trading well.

What image is evolving?  The proficient trader is a calm, relaxed guy.  The destructive trader is anxious, has a high heart rate and wants a lot of action.  He manages positions in order to try to manage his emotions of not giving up unrealised profits thus often exiting positions earlier than he should (when price moves massively against him or massively for him).  The latter are actions, rather than image – but regardless it is helpful.

2.   The trading activity in general was very low. I just observed the charts for a little bit, didn’t see anything.  Had conversations with two of my trading colleagues – that took about a good two hours on its own.  Once I was in the trade I traded very well – proficiently – though my actions were proficient, my thoughts were still in a bit of turmoil.  All in all, most of the session was traded well!

3.  Traded well, can’t think of anything.

4.  Good trading: Casually monitoring the market, being patient in entering setups, mechanically managing the positions.  Bad Trading: None?

5. N/A

6.  Other observations? My current issue is that although I trade proficiently – my thoughts and emotions continue to be ‘boiling’ – that’s probably the best way that I can describe it.  I think the key issue at hand is that my brain is telling me that I should be adjusting the trade based on what I am seeing in front of me – in other words – yes, I have an initial stop and a T1 and I have a rough plan for when and how to move my stops.  My brain is telling me: “look at this candle – it’s telling you that the market is going down – why are you still holding on”. “Why are waiting for price to actually hit your stop”.  “Look, it made this high already and then sold off, it’s not going to get back there.”  “your trade is not working out”.  It would be nice if I didn’t have these thoughts.  What is causing turmoil inside me is knowing that I can let the thoughts influence my actions.  I am not 100% sure whether the right approach is to let things ride or whether I should adjust based on all available and recent market information.  However my gut feel is that the more I rely on more recent information, the higher the chance that my trading will effectively be ruled by my emotions.

The more testing and trading that I complete, the more I can rely on my instinct – because I will become more and more comfortable and confident with my trading strategy.  (**) So the way to get rid of these thought turmoils is to engage in more testing and more trades.

Well – I am certainly working on Psychology this month – bloody hell!

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