DayTraders' afterMarket 21 December 2020, page-12

Hey everyone, just thought I would jump in since some of you gave me some very helpful advice end of last week which I absolutely took over the weekend and I came up with some really good modifications to my trading plan by working on my process over the weekend. I decided I stuck to only Friday off, because I had some realisations over the weekend which I wanted to test out today - albeit with smaller position sizing to find my feet a little.

First, after reviewing my trades for the past 6 months I came to find some common trends in my trading activity. What I did first of all was started a spreadsheet, put the tickers in and documented entry, thoughts/trade thesis/ emotions and execution what went well what didn't + style of trade. I actually found from doing this that I have a high success rate in scalping, which is pretty normal due to the risk reward ratio and a higher profitability in that style of trading during the day when I am also not running swings on the daily time frame. I simply need to focus 100% on my scalps and they really do add up. With scalping its really only the morning and then afternoon there are more closing swings which I tend to trade well too. I absolutely avoid the market between 11.30 at the latest and 1.30 because I want to be flat so not holding, recharge and then come fresh to the afternoon session to suss out what might be moving in the final hour. I also decided that every day I need to spend 30m-1h reviewing my trades I do with a fine tooth comb and feed backing to myself both constructive improvements and also what I did well! very important to provide yourself balanced feedback so that performance is sustainable. I am the first to admit I am a harsh critic of myself but it's very hard to be harsh when you provide yourself with the facts every single day.

So I realised a lot of my errors were mostly due to trying to trade different styles all at the same time - thereby confusing my edges. Ie, entering like a scalper and holding like a swinger (absolute disaster in terms of trade management) so when I trade I have to be very clear with myself on the type of trade I'm in and stick to that. They say for most traders you actually just need to keep it simple. Make your money and stick to a niche that you can excel in and practice day in day out, and scale up the more you do it. Anyway so part of the reason I also decided to stick to the scalping is because I started going through my books on trading performance psychology and also Brett Steenbargers blogs(look him up great and practical advice) about how to troubleshoot my performance after a large loss. One reason traders get stuck is because they are not trading in a way that complements their skills and abilities and often loss or pain is a powerful motivator to bring us to learn a lesson about our trading. So I decided instead of feeling sorry for myself about my drawdown it was time to get messy with the facts and become curious about what makes me tick (no pun intended) as a trader. I did some strengths testing and found I am a quick thinker, I have a strong appetite for risk, I'm creative and quite entrepreneurial hence why I run my trading as a business. I'm not particularly as patient and because my brain processes really fast I often get new trade ideas while I'm holding a longer trade. This just means that I am suited well for scalping because I can be in and out and see another trade on the chart and depth as soon as I'm out within a space of ten minutes. Before I would hold through the volatility which was driving me mad because all I wanted to do was to trade fast. Now in the asx you need liquidity so I have started to trade higher cap stocks to do so also because the pennies can be hard to scalp. Although I scalped LCY about 5 times today with one longer scalp too and it worked well.

Now another reason of why traders can get in a funk is because after a large loss traders may subconsciously treat future trades like losing trades - its often analogised to someone returning from war, you see the frustrating or painful past situation in the present. The present trades will often accompany a lot of fear which will then cause the trader to underperform and make errors because great trading comes from a place of calm and focus. To fix this the trader needs to sit and recall 'losses' like vividly imagine it while listening to meditative music or breathing meditating etc. The intention here is to create a stimulus like a loss in the mind but train the self to physiologically feel calm and focused - essentially you are anchoring calm to situations even where there is a loss so that you can cut when you need to and have 0 emotional connection to the situation. So I started practicing this and I also started anchoring trades where I make good decisions to the same state and I'm telling you it works really well. But it's all practice that is how the brain works, the idea is to form new neural pathways and remove the association of loss with emotional pain because loss in trading is a neutral cost of doing business. Its not failure its feedback! So this is something I am practicing and aiming to master because I know a lot of my trading mistakes are due to me getting emotional when trading at times.

Okay this was kind of long but basically I did very well scalping and I troubleshooted some of my performance issues. So I will report back in future as my process evolves. The other thing I really like about scalping is its also very fun and intellectually stimulating AND since I decided to scalp I actually didn't care how much $ I made on the trade. The whole intention was to get out flat if I could in a trade breaking down and where I say momentum moving up selling for 1 or more ticks. You'd be surprised how effective taking 1-2% trades really is and how satisfying it is to catch a trade and take your profit in less that 10 minutes. Couple of those and its decent money it really adds up.