Monday, February 11, 2008

Fighting Frustration

My day was spent trading stocks in the coal sector, and in the insurance sector.

I traded the coal sector because, once again, those stocks are on fire.



I traded the insurance sector because AIG pretty much "shit the shower."



In the end, I lost money. However, I did learn another important lesson. One that's much more important for me than for you. A lesson that is really untranslatable. Pretty much, I "felt" myself go "on tilt" in the afternoon. I started throwing market orders in and pretty much was trading desperate to try to make back the $300 I was down. As it turned out, I nearly doubled that loss in the last 30 minutes.

I'm starting to get a real feel for when I'm in a bad frame of mind to trade.

In fact, I wrote the VO post so shortly after the close because I was in a rush that I can tell that I was in a bad state of mind. If I'm not in control of my emotions, I just can't trade right. Anyway, I was angry at myself towards the end of the day because I had given back early gains (AGAIN) and went negative.

You can't trade angry and expect to make good trades, plain and simple.

Interestingly enough, in the morning, when I was making money and trading in control, I was using mostly limit orders. Towards the afternoon, I was using "angry market orders." Tomorrow I am going to make it my goal to use only limit orders to enter positions.

Anyway, my best stock of the day was ACE, although I gave back half of my gains in the stock in the late afternoon.



I short early on and made a half point when the stock was dropping in sympathy with AIG. I short again when it was about to break $56 and covered near the lows. This was totally a sell momentum play off the AIG. No pretty patterns unfortunately. Just quick, ugly trades that worked.

But guess what? My worst stock of the day, was another insurer, MET. The trade in these stocks was early. After that, they all just chopped around in a tight range for the remainder of the day. Often, I'll get mentally sucked into a sector if they move early (especially if I largely missed the move) and overtrade the stocks later in the day. This is what happened with me and MET. Pretty much, I was trading a trendless stock in the afternoon and I took a small loss.

I allowed myself to get discouraged today because I started thinking about the money I've given back in the last week. I've had a -$800, a -$600 and now a -$500 day in the last 4 days. Very depressing. However, I can't allow myself to get negative as that will get me nowhere. So tomorrow, I'll just get up, do my research and try to be more disciplined during the day and trade smarter. No market orders to enter positions, especially if I'm down on the day.

Anyway, here's the stats:

P&L, -$543
Best, ACE, $224
Worst, MET, -$161

33,000 shares traded.
20 stocks traded, 8 winners, 12 losers.

6 comments:

EquineTrader said...

Controlling your emotions is more important than any technical indicators, news or anyhting else basically... agreed!

Dinosaur Trader said...

ET,

Absolutely. When I go negative (P&L-wise) often, my first reaction is to want to make it back immediately. Just get green. However, the market doesn't give a shit about me and my P&L. So, if I try to force it, I'll generally just lose more.

-DT

Pete said...

dt i do the same in the early morning movers- esp if i missed the morning move and they pullback and chop i keep pressing waiting for that afternoon 2nd leg. my simple rule that keeps me out of trouble i can only trade it if on slope. no slope=no trade

Dinosaur Trader said...

Pete,

By "slope" you mean a trend?

-DT

Pete said...

yeah- run over rise. slap a moving avg- if its sideways no trade. or just price. esp if sideways and nrb's everywhere those are the stocks i piss away morning gains.

OBAT said...

Most of my losing days are like that too. I have been trying to observe my mood and confidence level. If I don't have a feel I would cut my size down to a minimum and cut the number of trades I do. So far it has kept me from having large losing days.