Trading Notes For March 10th

Trading Notes: March 10th was not a profitable day, but it was a good learning experience

Today was an amazing learning experience but an unfortunate day for profits.  I was able to realize a number of valuable lessons that I’d like to share and reflect on with the goal of improving.  Just after I posted yesterday about my success so far with trading, I got put back in my place today.  It seems like every time you get on a roll, and when you get the slightest bit overconfident, that’s exactly when you get burned.  Today was that day for me.  I acted the same way I did back on my last loss, on March 1st, which was impulsive, impatient, and under prepared.

Trading Notes For March 10th

What Went Wrong

To understand what went wrong you have to understand how I trade.  My trading style is Scalper/Day Trader.  So I don’t hold positions overnight to reduce risk, and I skim, taking profits when I see them.  Sometimes just 2 to 4 cents gain is all I need.  I profit off small, meaningless fluctuations.  I trade ETF’s that follow the price of Crude Oil.

For today, I was looking at HOD and decided to enter an order near the low price of the day.  I set a tight stop limit order and ended up getting stopped out.  Then I emotionally attempted the same trade again trying to make the money back that I lost.  The trade would have worked out had I have set a more relaxed stop.

“The way you come back is to show up the next day” – Jim Cramer

The Positives

There’s always tomorrow and you can always show up the next day.  Also my 2nd day of losses was easier to handle than the first time.  And this is the mindset you must have as a trader:  you will have losses.  That’s just part of trading.  The way to look at it is knowing when to stop trading for the day to manage risk and to come back better tomorrow.  The other positive is that I was actually correct in my assessment of what was going to happen, since oil dropped after as expected.  Every trade completed is more experience gained.

What Could’ve Been Done Better

• Use less money when less certain about a trade to manage risk
• Wake up earlier to be more prepared. Even 15 minutes would have helped
• Be less impulsive & more patient for confirmation
• Don’t make the same mistake twice
• Slippage. My market order instead of a limit order on the buy caused me to pay nearly 8 cents more than expected.
• Re-think stops. The trade was right in theory but I got stopped out because I set tighter stops than I usually do in attempt to protect gains this week.  The more normal 2-3% stops tend to give me a better success rate

Question: What are your best practices for trading?