How The Last Few Days Have Made Me A Tougher Trader

It’s been a tough few days on the markets for me with confidence seemingly oozing out of every position I had open. I’m sure you can all imagine how close my finger has been to the close position button on all of my trades but, mostly, I somehow managed to hold on.

I wrote on Friday about how the market seemed to suddenly lose momentum and I was struggling then to decide whether or not to cash in or hang in my open positions.

With the support of other traders, I came to the conclusion that I should hang in and stick to my plan to let my revenue-generating positions run until they showed a clear signal in the opposite direction. I made this decision despite every trading demon inside of me hurling barbs of fear my way and teasing me to cash in my positions and sit things out for a while.

On monday, my two positions in Drax got stopped out. One on a trailing stop for a breakeven trade and the other for a small £12 loss. I saw this during the trading session and went through that panic you experience when things look like they’re all going the wrong way. I almost closed everything out and did a runner at that point.

I have to confess, in the end the fear demon did take a bite out of me and I closed out two of my winning positions in Marks & Spencer and Debenhams shortly after. I won’t be so bold as to say I caught them just in time even though their prices fell shortly after I closed them because even now, with a couple of days of price falls since, neither of them have taken enough of a hit to signal a reversal against my original position.

Nevertheless, it did make me feel good to close out these positions – as if a weight had been lifted from me. They are both still on my watch list and I am waiting for another buying opportunity in both – indicated by what I feel will be the end of a pullback (heard someone call this a ‘retracement’ the other day, I’ll have to look that one up).

The really important point to note here is whilst I didn’t trade to my plan in these instances, closing the trades gave me some kind of psychological or spiritual boost – enough to help me make the next big decision which, now I look back on, I am extremely proud of.

I left all of my other positions running even though they had suffered a substantial reduction in equity.

I can’t tell you how much these polarised decisions have fortified my spirits. They may not be the most profitable decisions but they sure feel like good ones.

So, yes, it’s been a really tough few days because I’ve seen my open equity fall from £230 to £90 but I am strengthened by the hard decisions I’ve made to keep the rest of my positions open and ride it out.

To conclude, I may not be a better trader yet, but I do feel like a tougher one.

 

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5 Replies to “How The Last Few Days Have Made Me A Tougher Trader”

  1. Well done, you are clearly a step closer to becoming a trading Jedi. I have also seen my account drop from 150 to 105 running p&l this week, and I have to admit I closed a trade in RPC rmanually this week, something I never normally do. As I normally hold and hope it doesn’t hit my stop – dangerous tactic. But It did feel good and was the right decision as it kept falling.

    1. Thanks Sean, I truly hope the force gets stronger within me!

      After reading your comment my mind flicks to one of several quotes I use to reinforce my trading ethos
      “hope that your winners go higher and be afraid to lose more money”

      Trading is so tough because we are all trying to enforce mechanical systems and remove all emotion from our trades but the one thing that is impossible to remove from the equation, no matter how hard we try is basic human instinct.

      We may succeed every now and then from removing it from our own trades but it will always be present in the underlying market. We are a bunch of animals that for the most part, act on animal instincts and perhaps, just perhaps, there is a very small argument in there somewhere to listen to our instincts every once in a while – as long as they’re part of a larger mechanical system.

      We may have made the wrong decisions to close out our trades but we feel better for doing it – and I think that is not to be understated. If 90% of trading is psychological then keeping our mind strong, even against our system, might actually be the right thing to do.

      Tomorrow though, stick to your system 🙂

      ps. on a sidenote, I tried to comment on your blog yesterday and today but got swamped out (and irritated) by the need to sign into a google account or some other system to post. If you can add twitter as a means to sign in and comment it would be useful for those of us without ‘google accounts’ as such.

  2. Good Luck Lee.

    Most Bulls took a hit today and even my SHORTS rose when the rest of the market was dropping. Was an exciting day that saw my own portfolio equity drop from £2404 to £2237. I used to get quite hung up on the money side of things but these days I see it as more of a process.

    Every business has costs and these losses are to me just like running costs. Sometimes they are large, sometimes small, the goal is to finish up in profit at the end of it all, but there will always be bad and good days.

    I didn’t stop out on any trades today, the benefits of longer term outlooks and massively wide stops. A few more days of this sort of activity and i’ll start to lose some serious cash. But if you zoom out of your charts and look at things longer term, today’s fall was bad, but not THAT bad.

    I’m buoyed by the fact some US stocks are starting to announce some good profits. $FB came out after the bell today and posted some good news and is now up 8% since US close (at time of writing). This might go a small way to thwarting the falling markets we’re seeing these past 3 days. I’m hoping it doesn’t go on too much longer. I’d say open some SHORTS but 40% of my book is SHORT and most of them rose up today. Typical.

    Even if I lose all my positions, I’ll be thinking about the next 10 trades I get to make, also, I suppose this market will turnaround at somepoint. So might be a few cheap stocks available.

    Good luck pal.

    p.s. keep an eye out for stocks that didn’t drop today. A good sign of strength if your wanting to go LONG.

    p.p.s. in addition to the above, don’t take advice from me or listen to a word I say. I’m a novice and havent got a clue. 🙂

    1. Clear thinking from you, as usual, Chris.

      Yep, I absolutely buy into the idea that trading is a business and the costs are part of running it.

      Interesting thing about businesses is that according to businesslink most fail to return a profit until 3 years down the line and even the smallest of businesses can take up to 18 months to properly start covering their costs.

      I keep this in my head to remind me that if I’m serious about this (and I am), it’s going to take time.

      No one can be a consistently profitable trader with less than a year’s experience – at the very least.

      I also agree that on my long charts (even the ones I closed), I still look to be trading with the trend, so I do think it could be a natural general market pullback. However, I am cautious, having watched this amazing presentation yesterday about bubbles – and in particular the ‘shape’ of bubble curves…are we in an equity bubble??

      It is because of this and just an animal instinct that I am quite confident I need to get more shorts into the portfolio.

      Great tips on stocks too, I’m using ADVFN to find equities that held up over the last few days despite general market losses and looking for strong trends therein.

  3. “keep an eye out for stocks that didn’t drop today. A good sign of strength if your wanting to go LONG”

    just re-read that and wanted to add that I’m referring to stocks that have been trending LONG and continued to today. Not many around but if you find any put them against your system and see if anything fits.

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