Tuesday, April 04, 2006

Trader's Paralysis

I don’t have a problem taking a trade…usually.

But there is one setup, which triggers an inability to press the button, to take the trade. I can’t, I sit there, asking myself, Chris, what is holding you back, go on, do it. And when I finally Do it, I go long the high or short the low.

What triggers it:

Missing this move?
Globetrader_97

NO! I missed it, I wasn’t in, I don’t jump into a running trade.

Here is the real setup, which let me miss a lot of ticks in the Euro today:
Globetrader_98

I take the entry and get stopped out on a wiggle, only to see it bounce back up.

Kick in: You shall not chase rule
Reentry opportunity missed due to being stopped already 3 times. I think, this earlier resistance is now support, but “I know” it will not hold. Add to that scenario a slow tape and I don’t take the trade.

Why? Because it failed so often in the past.

This time it worked wonderfully. While I’m writing this the ER2 is another 3 points upgoing for a straight run from 662.50 to 669.00. I saw it and I missed all of it. Am I dumb not to chase? Maybe, but taking the short would be worse. So maybe it’s “just” fatigue setting in, my mind telling me to take a rest. The markets are there tomorrow as well.

I see a lot of rules Kick-In when deciding whether I take the trade or not. EG: I saw a great setup in the Euro here:
Globetrader_99

Usually I take the trade, no questions asked. But I asked myself before I pressed the trigger:
How far has the Euro run today? 130 ticks, that’s too far, this setup will most likely fail! It’s a red light!
And right I was:
Globetrader_01

1 comment:

Christophe said...

Hi Chris,

I get the same problem (as we probably all do).

Looking at all my loosers, they almost all come from the same context. Having found 100 of reasons not to take my pre-defined setup and be extra-cautious, I suddenly get transformed into Mr. Reckless trading willing to take "huge" risks and get intoall the tiny little wiggles/traps the market is setting up....

Is that fib clusters on your charts ?

Thanks,
Christophe