In a quest to get a post out before I get consumed in the world of family-packing, I will share one quick thought…….
Even though I am typically in many trades, the S&P e-mini future (which I refer to frequently here with the shorthand /ES) is my "backbone" trade. I trade it the most frequently, and it is the principal driver behind my profits (or losses, as is sometimes the case).
When the /ES is moving more or less in the direction I am positioned, it is a cinch to trade, because I simply keep ratcheting my stop down and let my profits grow. Tuesday was a superb example of this: it fell steadily all day long, and my profits on it just grew and grew. It's great that all my other positions were also moving the right way, but my core position in /ES was the reason behind my gains for the day.
Thursday, as you know, was a debacle, because the final 50 minutes of the trading day completely erased all the day's losses.
Some have puzzled as to what the big deal was: after all, if I ratchet my stop down all day long, what's the problem? Didn't I just get stopped out partly into the rise and still have some profits on the trade? No, I didn't, and the reason is that my entry price was a lot worse, and the day certainly didn't have that "stair-step all day long" characteristic that Tuesday had. It was a much sloppier trading day for me.
But that's not the point of this post. Thursday was a bummer, but I didn't fundamentally screw up in any way. Today, however, I had "Thursday on the brain." By that I mean I was short 10 /ES and was nervous about the position all day long. As the /ES inched up toward 835, moving into slightly positive territory, I freaked out and closed the 10 contracts in a hurry, feverishly hoping to avoid a rush up to God Knows What Price.
I was scared. I was worried the final hour of the day would be some kind of carnival again.
What really happened? It didn't get more than a point or so higher than my closing price, and toward the end of the day, the /ES started moving down, closing at 820. So I throw $7,500 into the gutter because I got scared. (15 points with a 10 contract position equals $7,500).
That was stupid, foolish, and unnecessary. I was trading emotionally, strictly out of fear of what had happened in the recent past. A stop at 840.50 would have made sense (the high of the day), but squealing like a little girl and fleeing the trade was just……pathetic. Take my advice. Don't behave like I did on that trade today. You'll regret it, as I am.
I'll be driving through a mountain of snow tomorrow morning on the way to Prophet North, so pray for me. I'll see you online sometime during the weekend (it's Valentine's Day on Saturday, so Mrs. Bear will be getting most of the attention).
