Handling Early Success

[SIUYA 11]

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It was interesting how my mental mindset mutated after my open profits evaporated and it infected my thought process. I sort of naively thought before this experience that I could compartmentalize each trade and that wasnt the case. I lost a signfiicant amount of money trying to "do the right thing" by sitting on my hands and then I wanted to get it back. Honestly, I thought I was beyond that. I also, wasn't happy with my trading size in that process. I should have been smaller.

...........

I am happy that I sat on my hands with the coffee trade, but I feel like I really made a mistake by consciously refusing to recognize the reversal off the bottom. I mean...it reach a significant new low and then sharply rallied above the previous day's high and closed near the high. I knew that this was significant and yet, I not only ignored it...I shorted more and carried an open position with negative equity.

.

 

good self analysis, and thoughts on why this is so hard. I thought the two parts I dragged out where interesting.

1....that your mindset changed when open profits evaporated

2....sitting on your hands is important, but so is then knowing that at some stage you have to raise your butt off the hands. I would venture to say that sitting on you hands is a great way to make money, but knowing when to get off them is a great way to keep it. It the trade off, and often re-entry into a trend is a tough one v sitting it out and riding it out even when you "know" a reversal is occuring. I would say that the biggest mistake was probably trying to short more into the first reversal when you are on the one hand saying you should cut your current short. This conflict is the mind f...k.

If you had sat and rode it out, had a trail stop or used TP on certain events then you have the other issue of trying to re-enter......you have to work out which you are most comfortable with and can best live with.....good luck with 2012.

[MightyMouse 12]

Here is an EOY update on my trading.

 

Since my last post in here, my trading has been much more erratic and far less disciplined. I am embarrassed to admit it and annoyed with myself. My last post in this thread was on Friday, Dec 16th and I was short 2 contracts of coffee.

 

I had been fairly decent with sticking with the downtrend and after reading this thread, others and some books I had made a committment to be more disciplined in riding the trend down and sticking it out. I was looking for a drop to the 200 level on the weekly. But flirted with the idea of covering my short in the 213 area thinking that perhaps coffee was overextended. But, I put those thoughts aside and wanted to be a good little trader and "sit on my hands."

 

At the Friday close, my 25k account had grown to just over $41k and was my highwater mark. On Monday the 19th, coffee traded below 213 and then sharply rallied sharply to close near the high. Honestly, I tried to short and scalp against this freight train. Dumb dumb dumb.

 

Even more idiotic, I kept my short position (which was way too big) into the close. It should probably be noted that this was the first time I carried a trade with negative open equity overnight. Thanks to some positive trades in Cocoa and Sugar, I was "only" down 3k on the day.

 

My open shorts then proceeded to move against me further until finally I puked the position in the 221 area. The quickness of the mounting losses was sobering. I mean, I knew there was fire there...but sheesh.

 

Coffee continued to rally hard into the 224 area. I recognized 224 as an area of resistance. I scaled into another short position at 223.5, 223.65 and 223.85. Coffee would high tick at 224.05. My stop was in the market at 224.10, I shit you not.

 

I really felt good about this trade. Coffee began to lose momentum and started to slide toward the close. So, what did I do? I covered my shorts at an avg cost of 222.5 and rung the register for a grand...and I knew it was a bad move as soon as I hit the send button. Nearly immediately after I covered, coffee would drop dramatically over the remaining 15-20 minutes of the session and close below 221. It would trade below 219 the next day. Thus I missed out on approximately 3k plus in profits.

 

Although I kicked myself, I was feeling rather fortunate to only have been down another $2,200 and my account rested at 35.9k.

 

The next day I learned a little bit about revenge trading and lost another $940 on a stupid trade.

 

I finally said enough and refused to trade the next day. On Dec. 23, I tried again but gave myself very little rope and was stopped out for a $200 loss or so. My account now stood at $34.7k and psychologically affected me in that now my profit for the year was under 10k.

 

Between Christmas and the New Year, I bounced my account around and ended the year at $35.4k.

 

Clearly, I have a lot to learn.

 

It was interesting how my mental mindset mutated after my open profits evaporated and it infected my thought process. I sort of naively thought before this experience that I could compartmentalize each trade and that wasnt the case. I lost a signfiicant amount of money trying to "do the right thing" by sitting on my hands and then I wanted to get it back. Honestly, I thought I was beyond that. I also, wasn't happy with my trading size in that process. I should have been smaller.

 

Even more troubling is that I found myself on some subsequent trades willing to risk more than 2%. Up to this point I felt I had been fairly adept at taking my losses prudently.

 

I am proud of the fact that even though I had taken some significant losses (for me), that I still had the moxie to get short again at a higher level and not be gunshy. Yet, again, I am not happy that I short three contracts even though they were within my risk threshold.

 

If you would have told me when I started in mid-November that I would be up over 10k at the end of the year, I would have said you are crazy. And yet here I am and I am unhappy and a little pissed and dejected by decision making.

 

I am happy that I sat on my hands with the coffee trade, but I feel like I really made a mistake by consciously refusing to recognize the reversal off the bottom. I mean...it reach a significant new low and then sharply rallied above the previous day's high and closed near the high. I knew that this was significant and yet, I not only ignored it...I shorted more and carried an open position with negative equity.

 

Anyway...just some New Year's rambling.

 

You are up 10k in 6 weeks and you are pissed about your decision making? I hope you are having fun since you are clearly playing games. I have to call bullshit (again).