Made a lot of mistakes but two dumb decisions in particular turned what should have been a green first day back to live trading, into a max loss day instead, to the tune of -$165.50.
I tried to be patient and wait out the first 30 minutes after the open (as per my rules) before taking my first trade but went long $ETSY just before 10am thereby breaking the aforementioned rule. Although I don't want to be too hard on myself for breaking this rule and more over taking a mediocre set-up due to my anxiety to get some skin in the game; there were 2 glaring reasons for me not to have taken this trade. Firstly, the low of the pull back in $ETSY undercut the low of the opening 5-minute candle where as this was not the case in the $QQQ. Secondly, none of the other 6 ideas I had on watch from last night were trading above the previous day's high unlike the $QQQ which was. This glaring divergence should have kept me on the sidelines or at least from taking any long trades. None the less, anxiety got the better of me and I jumped in only to suffer an early loss on the day.
My second trade came in $SQ and this one was an extremely poor trade! After just tweeting that I was looking to short one of the high beta names but would not chase and instead wait for a low risk short entry; I ended up chasing $SQ short! lol. I recognized this and took 1/2 my planned loss. Once again breaking my initial plan. Ironically, if I had stuck with my initial trade; I'd never have gotten close to getting stopped out!
My third trade of the day was once again in $SQ and the set-up I really should have waited for. What should have been the trade to save my day and make up for all my earlier errors turned out to be a 3rd loser on the hop instead!
I made 2 critical decisions that turned my day into a sure red day. Firstly I opened a second position (my 4th trade) in $MOMO. Given that I only allow myself 3 stop outs for the day, had already suffered 2 stop outs and was risk of suffering a 3rd with the $SQ open position; I shouldn't have touched $MOMO. Further I only allow my self one open position at a time unless I've already locked in profit and have my stop at b/e on the open position.
As a consequence of being worried about suffering a daily loss in excess of my max planned loss; I pre-maturely adjusted my stop loss in $SQ (breaking my trade plan yet again) which invariably got triggered just before $SQ wound up rolling over. Then not long after; I also got stopped out of $MOMO sealing my faith of a max loss on my first day back live.
Things I did well and need to continue doing:
1. Waiting out the first 30 minutes after the open (for the most part);
2. Identifying and trading with the trend of the market indexes.
3. Shifting my bias to the short side once I noticed the indexes break down and stocks on my watch list turning down. Then adding 2 high beta names to my watch list to play off the market.
4. Not revenge trading after taking the early hit on $ETSY.
Mistakes:
1. Not identifying the divergence between the indexes and the stocks on my watch list.
2. Over sizing on excess buy sizing for a stop loss above the pivot low which did not make sense.
3. Chasing $SQ short when there was clearly no set-up at the time.
4. Not sticking to my initial trade plans and waiting for them to play out.
5. Opening a second trade when I was already at risk of hitting my max. daily loss from the first open position.
Plan for Monday:
1. Build my usual nightly watch list on Sunday night.
2. Vet gappers for interesting set-ups in the pre-market.
3. After the open until 10:00am; a) identify which direction the indexes ($SPY, $QQQ and $IWM) are trending in if at all. b) identify whether or not stocks on watch are confirming the move in the indexes or diverging. c) concurrently, monitor my 2% breakout and breakdown scans on Finviz for further interesting ideas. While also looking for any trends in terms of breakouts vs breakdowns, sector/industry trends that may give clues as to what stocks to trade and what my bias on the day should be.
4. Wait patiently for low risk intra-day set-ups (near the 5-minute 9-ema) the that align with the overall market intra-day trend, trends or divergences I have picked up on as well as the daily bias of the individual stock.
5. Come up with individual trade plans after identifying A+ set-ups with better than 2:1 risk/reward and then letting them play out if I get triggered in.
6. Remind myself that you can be a profitable trader once I follow your rules!
I'm so looking forward to trading on Monday but I'm gonna relax and enjoy my weekend until then. HAGW all!!!
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