Trader Self Evaluation: Week of Jun 22 to Jun 26
It is the end of the trading week. It is time to look back at the week, reflect on what went on and evaluate the performance. Out of 5 days of the week, I did fine on 2 days, suffered breakdown on 2 others. And given what I did yesterday, today was a 50-50 day.
Monday Jun 22: Lets start off with Monday. I was short going into close on Friday last week. The run up in Globex Sunday night left me sleepless. So, it was quite pleasant to wake up to a gap down.
Before I describe to you my goof up on Monday, let me share with you a lesson from the week of Jun 15th – June 19th. The day we briefly visited sub-900 on the ES, I was short even then. But I closed all my short positions at ES903 and tried to go long on NQ with a tight stop. Two minutes later, I read a comment on Tim Knight’s blog which went like this: “I am waiting for a tick under 900 to go long". The statement is pretty profound because it implies two things: (a) the market WILL not reverse before breaching 900, (b) the market WILL breach 900, but will bounce back immediately. It also encapsulates the human psychology perfectly. Since 900 had already been breached on ES briefly, I believed that the market will accept a sub-900 level on ES, but this time around a tick under SPX 900 could be potential bounce point. In spite of knowing this, I closed my short positions around SPX 902. Turns out that later that day, the market went onto accept sub-900 price levels on SPX as well. If I had held onto my shorts till the bottom that day, I would have tripled my profits. Oh well…
Lesson: Be Patient. Let the trade come to you. Do not try to second guess the market. Let the market hit your stop/buy stops for you to exit/enter the positions.
Tuesday Jun 23: Nothing much to talk about. I just managed my positions ahead of the Fed the other day. And went net long before close.
Wednesday Jun 24: The market gapped up and again there was an itch to take the comfortable profit and walk away. However, Monday EOD I had spent 15 minutes talking to myself internalizing the lesson learnt that day, and today I was hell bent on sticking to my plan. I moved my stop losses to better than break-even right after open. I started watching the tape for any signs of reversal, and pretty much closed out all my longs at around SPX 910 (which was the top that day). By waiting till SPX 910 to close my longs, I more than doubled my profits that I had right at the open. Soon after, I legged into short positions before the Fed – small sized positions, not much.
Thursday Jun 25: At the open, part of my short positions were in profit, part in loss – I closed them all for a net profit. My indicators were telling me that a bounce was coming and I went long ICE and wanted to go long AAPL (dip to $135 when rest of NQ looked racing ahead). However, I got distracted for a minute and missed AAPL and it was off to the races. Having missed this trade turned out to be very costly. I did not do the mistake of chasing AAPL (which would have turned out to be fine)… Instead I waited and then started trying to short AAPL, a trade where I am deep in the red. I had a lengthy self talk about what I just did that day after the market had closed. I am quite confident that I will not commit this kind of mental error again. Outside of trading hours, I am able to keep Confirmation bias out. But when the game is on, it does creep in every now and then, and impacts my judgment – something I need to sort out pretty quickly.
Lesson: Do not less a missed trade affect you. Do not chase it. Do not let it change what you see in the market.
Friday Jun 26: Today was mainly spent working myself out of the mess that I had worked myself into because of yesterday’s mental breakdown. I am glad that I closed my SPY and IWM puts in a timely fashion because by the time the day ended, I would have lost way way more on those positions. Also, when the market was going against me, I stuck to my plan and did not close out my USO puts position in a loss. My assumptions regarding EUR/USD staying within 1.4100 had not been violated and I stuck to it.
Lesson: When the market is going as planned, it takes guts to hold onto a losing position. Sometimes, on a bad day, it is quite easy to sell the losing position and walk away. But that is not how money is made. Its all about sticking to the plan.
Turns out that it isn’t much use writing up a trader self evaluation at the end of every day. I will instead do this at the end of every day for that day – better for me as I can capture my thoughts and feelings much better that way.
