October 1 2009 Overlay, Trades, and Commentary

It was a slow day for me even though there was a powerful grinding move down.

I was down slightly today. Less than 1 unit.

I caught a good portion of the move yesterday and just did not have a premise for continuing to press in an extended market today.

Last night I was thinking about how I have been so focused and clear about my trading. This is a dangerous event. I hope I did not call a top on my self for this week.

I knew when I got in that I did not like any AM setup. I even noted it on the prep. The trade I did take was a long on a 1/2 position. It was purely a risk/reward bet on a minor zone that I make often.

After 1042.00 broke, I did not have any premium short setups.

It was a situation where there was an extended market and no significant pullbacks. It is not in my nature to continue buying and selling extended markets nor will I constantly fade a strong move.

I mostly stood aside. This is fine because these types of days do not happen often. I prefer to make my profits in a more sideways environment. I can adjust to trending if I need to however.

Observation:

It is worth noting that when I got in this morning, I did not like the AM setup. I actually had decided that I would likely not trade.

When the market approached the 1042.00 area it looked stretched and gave me a weak setup. I executed a 1/2 position there.

The observation is that when I start trying to scale into trades or execute 1/2 positions, I think it is my gut telling me there is something wrong.

Your sub-conscience works much faster than your normal thought process. It is my belief that a good trader has developed skills that are extremely sharp but not always obvious.

The right thing to do is going to show itself through your habits throughout the day.

I am working on tapping into this more frequently.

A way to actually implement this would be that if I feel the need to scale in or take a 1/2 position, maybe I am picking up on something subtle and should stand aside.

The difficulty is separating these good and natural gut feelings from from the normal anxiety of trading.

The ruling item on my trading hierarchy is to not hesitate or play defense, even if it means getting stopped out.

This created a debate this morning. "Am I playing defense by listening to my gut and standing aside"? I do not know the answer so I default to take risk and do not stand aside.

It costs me more to miss winners than to take losses.

We will explore this more in the upcoming weeks.