CALA
Everytime I have a huge epiphany and boost into euphoria, I end up having a setback. Short comments specific to the actual trade today just because it's what led to the trade that was significant. The trade itself was nothing special, positive catalyst but not an ideal Go-To-Setup, F3 Pattern Pre-Market hours due to a News Catalyst of CALA collaborating with BMY (Bristol-Myers Squibb Company) on a evaluation of a cancer drug. Boredom from lack of plays yesterday as well as being physically drained from working nights/staying up after work to trade/not eating as well as I should/haven't been working out caused the worst ZOMBIE trade I've done.
I didn't set my risk, I didn't have profit targets, I chased blindly, I traded AGAINST the fckin trend. The worst part is that I finally made flash cards of my go-to-setups which I didn't bother utilizing. I didn't do my pre-trading checklist which the first question on there is to assess my physical/mental/emotional status prior to taking on trades. I felt like my mind wasn't functioning at all yet I somehow ended up being inside a trade that is not what I am used to, and a big size on top of that. I just wanted to take a quick scalp but was functioning waaay too slow.. finally mentally woke up when the market turned against me and was red on the day. Once It hit me hard that I was down, I quickly assessed where my mental stop loss was and cut my losses quickly once I realized the price was below it alrdy, I stopped a few secs to think whether I should wait for a bounce to get out of since i've done that before and the drop was pretty quick from where my entry was. I did alot better than my AKAO trade though and I cut my losses quickly instead. I did look back and I had a 2min period where I might have gotten out 10-15cents higher, but it sank where I got out right after and I would've been out twice as much within 20mins if i didn't get out. On a side note, I need to focus less on what the stock did AFTER i'm out. A comment from Arick Russell reinforced the fact that I should focus more on the stuff I have control of and not on the parts of the trade I coulda, woulda, shoulda/no longer in the trade emotionally.
Overall, completely upset in the fact that I pretty much blew through all the rules I've made/follow so far.. as well as revisited mistakes that I thought I have already learned from in the past. I mean, I have learned it already, but I guess the emotional consequence of the mistake in the past wasn't large enough yet where I am compelled NOT TO repeat it. History repeated itself today and I hate the fact that I fell for it.
I was in the trade for a total of 1 min and 12 secs !! Fckin' multiplied to an hour, I technically lost at a rate of $14,400/hour !! How much money am I going to let myself lose until this lesson hits me hard enough emotionally to change my habit/behaviour?
Anyways,
Completely lectured by The Daily Trading Coach when I was driving towards the cafe right now. All credits go to Brett Steenbarger, don't sue me please:
LESSON 24: TRADE WITH ENERGY
One of the important dimensions of psychological well-being is energy.
Happiness, enthusiasm, motivation, and general contentment are difficult
to sustain when you feel mentally and physically run down. Fatigue is the
enemy of concentration; physical vibrancy fuels a positive, energetic mood.
We are like laptop computers running on batteries: after sustained
operation, we run down. Concentration and attention require effort; eventually
we drain our mental reserves and lose focus. This leads to trading
mistakes: missing opportunities, overlooking important pieces of data, forgetting
key aspects of trading plans. When we are run down, we’re also
most likely to fall back into old—and often negative—habit patterns. When
we’re drained, we might find ourselves eating out of boredom, becoming
unusually irritated when things don’t go our way, or getting caught up in
negative ways of thinking.
Think of it this way: it requires sustained focus to remain goal-oriented.
To actively direct ourselves, we need an alert, active mind. When we become
fatigued, we lose this active direction. We become passive, responding
to events rather than making them happen.
This distinction between active and passive trading is all-important.
The active trader is one who researches markets, identifies distinct areas
of opportunity, and consciously executes and manages trades to maximize
that opportunity. For the active trader, nothing is left to chance: where to
pursue opportunity, where to sit back, where to take profits, where to limit
losses—all are preplanned. This takes time, energy, and a sustained focus.
Good trading, in this sense, is pure intentionality: it is a directed act of will.
When we are physically drained, we lose the ability to sustain this
intentional focus. We neglect our research; we fail to calibrate risk and
reward. We fall back on simple heuristics and enter trades based on
simple reasoning—chart patterns or price levels—that may well lack any
true risk/reward edge. Worse still, when we’re run down, we become emotionally
reactive and find ourselves chasing price highs or lows or robotically
enacting rules (fade weak stocks in a strong market) without taking
the time and effort to assess the broader context our decisions (an trending
day to the upside).
Managing your energy during the trading day may take little more than
ensuring that you:
- Get proper sleep and proper quality of sleep. Interrupted sleep
can deprive you of important stages of sleep and leave you feeling unrested,
even though you’ve spent a full number of hours in bed.
Eat properly. Highs and lows in blood sugar can make it difficult to
sustain concentration; an excess of caffeine and sugar may provide
temporary jolts, but can also lead to distracting rebound effects.
Maintain your mind properly. I’ve seen alcohol and drugs take a
fearsome toll on traders over time, as partying the night before leads
to diminished performance the next day. Conversely, those who are
focused and intentional in their personal lives tend to see this carry
over into their trading.
- Maintain your body properly. Physical exercise is one of the
most neglected facets of a trading plan. Hours upon hours sitting in
front of a screen do not promote aerobic fitness. Over time, we lose
conditioning—and our energy batteries lose their charge.
- Take the breaks. Not many people can stare at a screen and follow
market action continuously through the day without losing focus.
Breaks during slower market action can replenish the energy and concentration
needed when markets become busier.
A trading career is a marathon, not a sprint: the winners pace
themselves.
None of the above considerations is earth shattering, but it’s amazing
how poorly many traders score if they incorporate the five factors above
into a daily checklist. We prepare our trades, but we often fail to prepare
ourselves for trading. How can we stick to disciplined trading decisions if
we’re inconsistent in our personal discipline?
When you are your own trading coach, you cannot afford to run yourself
into the ground by working so hard that you can no longer work. Nor
can you so neglect your physical state to such a degree that, like that laptop
battery, your memory effects lead you to lower and lower energy states
with each recharging. Your assignment is to track your daily profits and
losses simply as a function of two factors: your energy level (high or low)
and your trading mode (active/planned or passive/unplanned). Add a simple
checklist to your trading journal to help you see the correlations among
your physical state, your concentration level, your intentionality, and your
trading results.
If you lack energy, you will lack focus; if you lack focus, you’ll lack
intentionality; if you lack intentionality, you’ll lack the ability to
follow trading plans.
Unless you calculate and appreciate these correlations for yourself,
you’re unlikely to sustain the motivation to address—with consistency—
the five areas above. Once you see that your energy level is directly correlated
with the quality of your trading (and with your trading results), you
will prod yourself to build a daily routine that addresses sleep, eating, exercise,
and a healthy lifestyle. You’ll also be able to overcome guilt or fear
over leaving the screen and realize that opportunity is not just a function
of moving markets: it’s also a function of your ability to capitalize upon
those markets.
C O A C H I N G C U E
Many traders neglect their family lives (spouse, children) in their absorption into
their work. The resulting guilt and distraction from those unmet needs wind up
interfering more with performance than the time it would have taken to spend
the quality hours together. The mental rejuvenation from vacations—even weekend
holidays—can renew family relationships and energize work. If you’re too
worn down for your personal life, you’re probably not operating with good efficiency
in your trading. It’s not necessary to have a totally balanced life—few of
us do—but if your life
feels unbalanced, that will undermine energy, concentration,
optimism, and effort.
