Discipline: Not Just About Controlling Risk
Tue, Feb 1, 9:45 PM ET, by Jeff T. - Equities Trader, Hedge Fund Live
I haven’t blogged about my trading in some time but after Friday’s brutal performance and today’s poor execution I’m gonna take a few minutes to review what I did wrong and what I need to improve if I expect to be successful.
On Friday I had my worst day since I have been at the firm and I don’t want to say it was market related because that’s bullshit, I didn’t have a solid plan, I covered my futures too quickly and got beat up. We talk about discipline all the time and how it is the most important aspect of being a successful trader. When we mention discipline we usually only talk about it in terms of controlling losses/risk, I feel I’m pretty good at keeping it tight but I’m terrible at having the discipline to let my trades work for me.
Waiting for a Trade to Play Out
One example of my lack of discipline was today when trading CF, I haven’t traded the agriculture names in some time but I do know that AGU, MOS, POT, and CF usually trade together, IPI which is the last of the group can sometimes do it’s own thing. Anyway, POT, MOS, and AGU were all breaking out early in the session while CF was pulling in, I picked up on this right away and called the trade out. I was patient, I waited for CF to hold because I don’t want to catch a falling knife but once it stopped pulling in I bought some stock. CF started to tick higher fairly quickly and I put an offer out at the highs of the day. It was only a few minutes later when got shaken as the ISM number came out and sold the stock only up a few ticks. As you could expect CF quickly caught up with POT, AGU, and MOS leaving me in the dust about three dollars lower.
The point is the trade was a lay up, I knew it but didn’t let the trade play out and instead of making upwards to $400 on the trade I’m flat and pissed off as I continue to see it but not profit properly.
Moving forward I have to get back to the basics, plan a trade and then execute. Once i execute it’s about being patient, waiting for my offers to get lifted (if long), bids hit (if short), or my stop triggered if wrong.
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