Obey your rules

Today was very rough trading day for me. I was trying to carry over some momentum from yesterday. Every morning when I come in, I have a sheet that I try to follow that helps me prepare for the day. I identify key levels, old hi's and lows, pivots, resistance and support. In addition, I like to read as much as possible, and look at overnight news events. Once I have done all my preparation , I feel I can keep an open mind and wait for trades with good risk reward.

I was patiently waiting for the opening of the SP market, when some news wires announced that GM bond holders had agreed to swap their debt for equity, in hopes of avoiding bankruptcy. I bought eurostoxx and sp futures, without looking where I bought or identifying where I would be wrong. I just sat there, like a deer in headlights, and watching as the market moved against me. When the pain was too much, I puked my positions. I clearly did not understand the headline, and I was hoping on this trade. In addition, I bought too big of size, and with too much size invested in the trade, I reacted emotionally by thinking about the money. If I had kept to my trading size, I feel I could have exited the trade quicker once I realized my logic was wrong. Just to reiterate, I traded with too much size and without a clear plan for the trade. I put myself behind the 8 ball way too early in the day.

I told myself this was a set back I could overcome, and I could still make it a successful day by coming back and focusing and finding good trades. I was patient after that GM trade, and waited for my spots. I was trading on edge, and knew my spots would have to be perfect. I put on my first trade, and the market didn't move much, so I scratched it. I realized I sold near the low of a consolidation, but my ancillary markets told me it was the right time to sell. Once I exited the trade, the market sold off. I waited again, bought oil, and instantly realized I was wrong, so I quickly scratched. I tried fading the big down move in the eurostoxx, and realized that I didn't have any good reason to trade there, so I scratched very quickly, and thankfully watched the market fall immediately after. Finally, I saw some decent order flow in the ES, and managed to get a 2 handle pop on small size to give me some confidence.

I was jumping markets, and after looking at my trades, I was trading on emotion, and not with clear thought. I went from equities, to oil, to eurostoxx, to ES. I was just looking for a quick scalp. Once I was aware of that, I waited until Natural Gas stats came out @ 9:30 central. Natural Gas inventories were down, and Natural Gas rallied off the release. I was bullish energy after this release, and looked for places to get long. Oil moved back into the consolidation 8:30 - 9:00, and once in this range, I felt strongly the market would make a run at new highs. I waited for the consolidation to set up, but mistakenly bought near the high of the range, and not near the bottom, and was stopped out very quickly, only to watch my idea play out. The market popped 30 cents as soon as I got out. In this trade, I was impatient and my entry was horribly planned. If I had waited and bought near the low, with a much better defined risk reward, I may have been able to capitalize on the trade.

I made several trades in oil before and after the release. Upon reviewing them, I would enter at decent spots, but I was so afraid of losing money, that I would scratch them and watch the market move the way I had predicted. This happened 5 times, and it started to wear on me mentally. I finally said to myself, I need to give it a little more room to breathe, and see how it plays out. With that logic, I lost my edge. I wasn't doing what I had planned, and this made my trading sloppy. I kept trading on emotion, and became more and more agitated with every scratch and quick loser. I started making very quick decisions and lost all my discipline. I would find good ideas, but execute them so poorly that I wasn't able to capitalize, and then watch my idea would work. The writing was on the wall.

My best trading days are when I am trading patiently, waiting for setups, and executing with reason, and good risk reward. However, by mid day, I was trading without any reason, with poor execution, and changing my thoughts very quickly. I was forcing my trading, looking to make a quick buck, and I was trading the money, not the idea. In a span of 3 minutes, I was short oil, then reversed, only to get out of my long where I had initially sold it, so I sold again (another reverse) only to watch the market pop 50 cents in my face. I sat there and just watched to market move against me, until the pain became too much to take. I lost more than I allowed myself, two times more. If trading successfully is all about capital preservation, then I did the opposite, I just gave money. I took myself out of the day, and gave back too much of profits from the day before. I had no thought process and lost all discipline. Whats the point of making rules for the day if I cant even follow them?!?!? Its like an alcoholic who says he will go to the party and not drink, only to have one drink and then lose total control and get completely hammered, and wake up feeling like shit . . . My goal is to follow my own rules and obey them, when I do, I can make great trades, great money, and go on great streaks of success. What is missing?