Today, I caught a huge rip in a couple of pretty bad plays. Fundamentally, I was getting too big on the long side when the market didn't indicate any support for such a move. Technically speaking, I wasn't trading on the best levels that I could and professionally... well, I wasn't really. I was allowing the frustration of getting stopped out and putting on a poor trade influence me to put on more poor trades. I think for all Intraday Traders, there's a point in our psychology that we say, "Fuck it!. Fuck! Fuck!" While driving around after the Close, I thought about the way I processed this information. What would the Professional Trader think? Surely, he wouldn't start dropping F-Bombs repeatedly in his mind. That's just a recipe for a blowup. Hm.... nice visual.
     I started this month with 5 consecutive green days, but took a terrible rip yesterday. I haven't pulled enough courage to think about it again. In fact, after the session ended, I just curled up in my bed and did everything I can to stop thinking about it. I felt miserable. How the heck could I have been that wrong so many times? Why did I trade this stock? Why am I buying this crappy setup? You get the point. At this point in my young career, I am convinced that patience and discipline far outweighs any other factors or skills in trading. And that means I've got some work to do! Let's examine my thought process a little more closely.

Situation 1: The "I lost in one trade so I'm going to make it back in another" Mistake.

Stock ABC breaks out from an important level and trends throughout the day. It's a little extended now so I have my alerts in case it pulls back for a better entry. I do a good job recognizing that the risk/reward isn't superb and bypass that. A few minutes later, Stock XYZ starts pumping volume. Similar setups except XYZ offers a far better risk/reward opportunity. It's everything that I want. The important level starts lifting and I get in with two lots. The level looks like it's holding wonderfully. The bid drops and takes me out. Small loss, whatever. The bid steps up again, I enter with two more lots with a hard stop on that lower shadow. The stock makes a new high, gives me a decent cushion and slowly rolls over. I take a scratch. I flip over to Stock ABC which is still strong. I decide to buy into it with two lots (normally, I'd start with a fraction of one). It's working a little, I add another lot. Red leg down. "Fuck it! Fuck! Fuck!" A few candles later, I get an alert to put on a position. I'm too emotionally beat to get in it at this point. I feel even more miserable watching it make new highs and trend for the rest of the day.

Situation 2: The "Holy Moly, There's News!" Spike


Stock LOL spiked with huge volume. Instinctively, I just buy the high of the next candle. Stupid play. Took a loss. It pulls back and looks like it's about to spike again, I get in with 2 lots now so I can "make it back." Goes my way about 20 cents or so. I notice a seller appear but I don't react in time and take a loss. Hands on my head, I ask myself, "Did I just give back my entire day? Fuck! Fuck! Fuck!"

Conclusion

The purpose of this entry is to confront my psychological mind state during these rips, something I've been very afraid to do. Why? I'm afraid to tell myself that I'm stupid, that I made bad decisions, and that I didn't have to lose so much money on these mistakes. I'm also very well aware that it doesn't have to be that way. Over the last year and a half, I have develop a lot of skills and knowledge to trade basic setups. I have developed the ability to combine my tape reading, technical analysis, and fundamental thinking to make high-probability decisions. The best way for me to survive this market is to make sure all of my trades fit my criteria for what a good trade is:

• Offers a 5:1 risk/reward opportunity
• Tape Reading to identify buyers/sellers
• Clean order flow either through fresh news or unusual volume

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