Dumb mistakes

The week ended on a sour note for me as I lost another 3R on Friday. As I thought over things this weekend I think I've come up with some reasons for my poor performance the last two days of the week. My mistakes stemmed from three different sources:

1) Overconfidence
2) Impatience
3) Emotions

I guess number three could cover all of them, but I wanted to break things out a bit so I could focus more clearly on what was going on.

It seems so silly to me that emotions play such a large role in trading success or failure. I consider myself a very logical person who is rarely overtaken by emotions (some of the scenes in Finding Nemo and Dances With Wolves are exceptions for me--yeah I cried a bit). But during the trading day, my emotions often take over and I make boneheaded decisions.

I think part of the problem is that I'm still in that "trading is a hobby" mode. It hasn't quite hit me yet that my SOLE INCOME is now depending on whether or not I can pull money out of the market consistently. That "hobby" mentality sometimes causes me to trade with reckless abandon and only after the day is over do I look back and think, "Hmmm, that sucked."

Friday was an excellent example of my lack of patience. There was no gap at the open, but we moved higher on several strong pushes by the buyers. My first thought should have been, "This looks like it might be a "trend day" and watch for confirmations. Instead, because playing pullbacks to the 20MA has worked so well lately, I focused on that and made a trade that eventually went against me.

That was OK, but then I let my biases and emotions get in the way and I made the SAME TRADE again, right after I had stopped out. My thinking was that it didn't work the first time so it HAS to work the second. I stopped out again--down $1,000. I should have just quit.

Finally, as I sat back and watched things develop, I was able to determine that we were in a trend day and it was time to take trades accordingly. I did, and I made back my $1,000. But immediately, the market started going against me and I panicked. I moved my stop up above where I had logically placed it, and wouldn't you know, price dropped just below my stop, took me out, and then moved higher--down $1,700 and done for the day.

I've got to learn (and quickly) to avoid rushing in and trying to put on positions. There are so many opportunities each day, and I need to only take those high probability trades that I can feel good about taking even if they go against me.

We'll see how week two goes. If it ends up with results similar to this week, this could be a very short experiment.