October 2011: What Went Wrong

I came into the month of October after a week break from trading while my account was being switched to a new broker and in between that break I lost focus. Trading needs preparation and yes it requires a lot of it. It may sound to be a cool job to sit at home and trade, but believe me, it's the hardest job on the planet. The markets can humble any trader with one bad trade. Coming back to the first two weeks of October, I was in deep red, mainly because my bad habits started to creep in which is not doing day end analysis of the markets, not creating a set of stocks to watch intraday and not knowing the important levels to look for in the charts. I literally lost nearly 40% of my equity in a span of two weeks.

After a heavy setback, I told myself to trade small and look for best setups but again I failed in 3rd week and gave up another 10% of my equity. However, during the third week , I decided to set my goal as being green on any given trading day irrespective of what happens. I would have to say that drawdown of close to 50% of equity is no joke. I took it upon myself to turn things around and I made plan as to how to go about having 'GREEN on the SCREEN' again. I went back to basics, i.e. running daily scans to look for stocks with good setups which would give me an edge the next day to trade it.

Moral of the story, trading is a game, where if you want to play , you have be to prepared for it. There are no shortcuts or loopholes, you are either right or you are wrong. Developing a plan is necessary and is of utmost importance. If you have a plan you would know how hard you can get hit and how much can you gain. Executing the PLAN is my priority going forward.

I have been humbled by the market once too often and now it's time for me to get things right and succeed. Nobody can stop me from what I want or what I can achieve or what I wanna be. After 'ALL I CARE ABOUT IS WINNING'

My inspiration song for this week.

dchsn6

Stock Trader To Stock Junkie

The past 4-5 weeks of trading has been pretty disappointing. Since I have started with my new broker with 10K , I have officially redcuced my equity to $5K. Yes, a 50% decrease. To some people it would be surprising and they would be astonished but to me, it's just another learning curve.

When I started this blog sometime in June, I traded with passion and with a goal, somewhere down the line, I have lost the fire in my belly. The break which I took during transitioning of the account has hurt me a lot. As I felt I was trading brand new again, but nevertheless, when I sit down and review my trades, it has left me shocked and mad at myself. I look at the entry and exits and kick myself while I drive to my fulltime work ( I only trade till 1pm) and talk to myself how stupid I was to take that trade. Majority of the trades, I have taken looked like more of a junkie i.e addicted to trade rather than follow a game plan and executing the plan and now after horrible past couple of weeks, I step away from it and ask myself what is the reason I trade.

Here are the reason's why
1. To have an independent life , not answering to anyone and have my own working hours.
2. I am sick and tired of corporate world.
3. Trading helps me a learn a lot about life ( look up previous post ' Knowing  Thyself')
4. Trading helps me to be disciplined and have a goal in life.

Trading to me is like a game, where you have a strategy but you also need to be able to physically and psychologically execute the strategy. A bit too early or a bit too late can get you out or in awkward positions where you don't wanna be. I need to respect the game and not abuse it.

Making money from trading is a great motivation, but the more satisfying part is you risk a little to gain a lot which means your beating the all the HFT's and top institutional players in the game.

Winning is a bad habit I have and I am not ashamed to ask fellow traders for advice. Thankfully, there have been a lot of great traders who have helped me and I am sure in the coming weeks I would be able to get myself out of the hole.

dchsn6

Game Plan for the rest of the yr

Time and again I have achieved 100% return on my initial investment, only to see it giving all back. I have spoken to a couple of trading mentors and as most of the great trading gurus on twitter land say ; the last 3 months, have been the most volatile months for trading since 2008 and starting to trade during these times, is BAPTISM BY FIRE!  Two things can happen: 1. I can sit there and blame it all on the markets being volatile and all or 2. I can  man up and work on my game to get better and most importantly get back to winning. I choose the second option.
Gameplan
1. Stick to setups which I have in my playbook (which I have successfully developed)- any trade setup which is not what I have seen before in my playbook, I won't be pulling the trigger on it period.
2. Need to stick to my stops better. Since most of my setups are momo  (momentum) plays, all  my favorite trading setups usually have very tight stops with huge risk and reward.
3. Need to concentrate on one trade at a time and make it a HOLISTIC experience, where each trade is 'ONE GOOD TRADE' at a time.
4. No revenge trade (taking aggressive trades trying to makeup losses for the day). Period.
5. I have made daily targets which I would be looking to achieve, given that I see any profitable setups.
6. Need to reduce excessive trading. My best weeks have been where I have taken less trades.

As my twitter handle is : dchsn6  . Above were 6 points of my gameplan.

'ONE TRADE AT a TIME, ONE DAY at a time' . 'Success comes to people who work hard for it' - These would be my two quotes which I will instill in me.
Nothing but having a good trade is what I am gonna concentrate this week. I gotta cut out all the noise, cause ALL I CARE ABOUT IS WINNING.

This is what I listen to when I have a successful trade.

Fabolous - You Be Killin Em

http://www.youtube.com/watch?v=3sg_rP4y7r0