Trader MP, Level 3 subscriber, sums up his trading for the day on Monday. Let's use it as a lesson:
"Hey Floyd,
I am using this email as some of my journaling.
Today was an interesting day.
First of all...this was the first day that your signal was the same exact option that I planned on using for my scalp trades. So that was a bit weird for me. I wanted to keep them separate but today I decided to use them together to see what would happen.
Let's begin with your signal. Your best buy was 9.10 or less. I bought one contract for 9.00 because when I try to hold out for a better price...I usually get burned. So I bought 1 contract for 9.00 only to see the price drop. That got me a little frustrated but I was OK with it since I was prepared to make a second purchase if necessary.
The DOW dropped to 11,240 and sat there a little bit. I felt that this would be a good time to scalp 5 contracts b/c we were at good support and significantly below prior day close and best buy. I was able to buy 5 contracts for 8.40.
The DOW actually dropped further and the 580 call hit 7.90 in price...at this time I was looking at a $400 loss and I was a bit concerned. But I hung in there.
Originally..."something" told me to put my sell order in at 10.50 for all 6 contracts...that would be a $1200 profit and I'd be done for the day. Because price wasn't moving too much...slowly creeping upward..I "sense" the voice in my head telling me that I am getting greedy by looking for a $2 profit. These thoughts were telling me that I am supposed to be only "scalping" five contracts and only letting one contract ride...and again...that by looking for a $2 profit on an option is greedy.
So I changed my scalp order to sell at 9.00...5 minutes later she shot up and filled that for a $250 profit. I was ticked off because the DOW went up pretty sharp after that. So now I am here sitting with $250 profit as well as 1 contract (about another $200) but all I keep thinking about is that I could have made $1200!!
Anyway...this made me want more. It was like I was not satisfied with 400-$500 (which I would be more than happy with..until I actually get it...such greed).
So I began to look where I could scalp again. I watched the DOW tiptoe along the 11,300 support level and so I tried to nickel and dime the market to death so I could get the perfect price. It never happened. I got so angry because I couldn't get filled at the price I wanted. I just wanted to scalp for another 50 cents but I was being too fine with my BID prices and I watched the 580 call go from 9.40 to 11.20 and never get filled b/c I was being too cheap.
THEN... I was just sure that after the DOW hit 11,380...there would be a slight pullback before she shot up again...so what do I do...I let price come down from 11,20 to mid 10 dollar range and I went for it...because I KNEW that she was going to keep going up!! Anyway, I THOUGHT that I bought buy 5 contracts for 10.60. Thank God I messed up and only purchased one contract. So now I have 1 at 8.40 and 1 at 10.60...average price of 9.50...guess what...I sold them for a loss at 9.30. Now I am really pissed off b/c my total profit on the day is only $200!!!
I went into the other room to play with my girls and cool off a bit. I felt pretty good 1/2 hour later and looked at the chart. Well it wasso obvious to me that the market was poised for a rebound since it was sitting above S1...I thought "What an easy way to make money and finish the day....I can buy some calls again for less than prior day close and cash in a quick profit for the day!" I buy 5 contracts for 9.10 and I'm feeling like I just outsmarted the market and that I can smile all the way down to the bank....WHAM!!
She continued to drop and I lost $550 on that trade..
So where does that leave me? 1 for 3 today with a net loss of $340!!
If I would have followed my intuition earlier...I would have made $1200 combined on two trades. Even if I didn't..I could have easily made $400-$500 today...I actually had that money on the table and lost it all. Now I walk away with a $340 loss.
I can't tell you how frustrated, angry and confused I am right now Floyd. This is what is bothering me.
#1 - I didn't listen to myself this morning. I was nice and calm. I placed a good trade this morning but then I second guessed myself, changed my plan and I fell apart after that.
#2 - I left money on the table - TWICE - and that bothers me a lot!
#3 - I could not see the sell off at 3pm because I was so convinced that the market was going to go up in the afternoon. It amazes me how bad my presuppositions blind me from reality.
We see things not as they are, but as we want them to be. It can't work in the market.
#4 - My confidence was shaken a bit today. I have this underlying sense that I will NEVER figure out how and when to take profits.
#5 - I don't like the fact that it appears as though I'm never satisfied. If you asked me last week if I would be happy if I made $400/day trading...I'd tell you that I would be thrilled. Yet when I have an opportunity to get $400...I don't take it...all of a sudden $400 is not enough. I don't understand that. I don't want to be greedy like that but I don't know how to break those thoughts? Is the solution to just take small profits and quit for the day?
Find what works to YOU and utilize it.
#6 - I don't like the fact that losses bother me so much. I understand that I can't win every trade so then why does it bother me so much when I lose?
Losing is part of trading.
#7 - The enemy within continues to tell me the following: "If you can't win on paper money...how will you be able to do this with real money?" OR (when I do win) "The only reason why you won today is because you weren't using real money...you'll never win with real money."
Self esteem issues. Analyze why you are having them.
How do you get rid of those thoughts?
Michael
PS...I trust you did well today?
I'd like to share the above with subscribers to help traders see the steps.
Conversely, here's an interesting trade from JW:
"Floyd, bought the 580 at 8.00 and sold at 10.50. Bought it again at day end, and will hold. I watched the bottom again, and the first top to the market. The support and resistance worked like clockwork. Nice 2.50 a contract and I hold issues for the a.m."
Two way trades are likely around the FOMC today. We will trade to the upside potential, suggesting whipsaw could occur, but that a call position will rebound to new and stronger highs before end of week.
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