I wasn’t meant to trade yesterday because my psych rating was only 5.5, but I traded anyway. What’s the point of setting rules if I am not going to keep them?
As a result of the trade, I am quite angry.
Entry – I followed all of my setup parameters and executed the entry carefully and also set my target, stop and my stop loss management approach. As it was Oil, I only risked £50 (rather than £100 for Cable or for the DAX). So all good thus far. Entry & setup executed well. This all happened around 12.30pm.
Position Management What happened next? Price started to go into my favor. At the worst point it had gone only 10 points against me. I had to leave the office around 1.15-1.30pm to head out for the afternoon. At that point the trade was around 15-20 points in my favor. I shifted the stop from 52.85 to 52.70, reducing the risk from £50 to £30, and then left the office.
Ultimately price plummeted somewhat to a low of 51.88 around 2pm. This meant price was trading 51.88 (bid) and 51.93 (offered). As I was short, the offer would need to fall to 51.90 for me to be “targetted out”. Unfortunately from this point price rallied back up to above $53/barrel, closing my trade at 52.70. Thus instead of having a nice winning trade of 55-60 points I had a loss of 20-25 points. Again, it’s not a lot of money we are talking about, because I am trading small. However in terms of the units of risk it makes a big swing in the results, and since my self-image/confidence/mood is heavily (albeit wrongly and irrationaly) linked to my risk-unit-based trading results, it really bloody annoyed me/is really bloody annoying me.
If I had been in the office I most likely would have shifted my stop to entry or to some profit level, once price had gone significantly into my favor. But I wasn’t in the office yesterday.
I only have myself to blame. I set the target. I left my desk. And I stopped managing the position.
Learning from (and not repeating) earlier mistakes – I remembered that when something like this has happened in the past, it resulted in me trading very badly immediately afterwards, ignoring trading rules, taking bad setups and managing trades badly. See the heading “LAST BUT NOT LEAST…SUNDRY OBSERVATIONS” in this October 2014 post if you want to read the details of that. (In terms of my new trading psychology material, it would mean that the Destructive Trader takes the driver’s seat for the day and tosses the proficient trader from the passenger seat onto the pavement!). Consequently, I will tread extremely carefully today, lest I go ahead and trade very badly. In fact given that my psych rating today is again 5.5, I will follow my rule and not put on any trades!!