Getting used to pain as you position to win

Here are some screenshots from today’s trade. It was a trend day with all four indices breaking out of balance moving to new short term highs.

Trend days can be very frustrating if you are positioned against them. If you can be patient, there is usually a great counter-trend trade available late in the day as day traders have to balance their inventory and begin to take profit, but waiting for the break can be painful. You can see from the pictures below that I was loaded for bear (pun intended).

Pain in the Russell

Pain in the Nasdaq

Pain in the S&P

Pain in the DOW

Balance at the close

After hours pullback

Notice the balance at the close and the balance in after hours. I had a position in crude that helped finance the positions in the financials. Even still, longs early in the day helped offset the pain later in the day.

Here’s a key takeaway when you are facing a trend day like this. You have to be willing to add to your position. Maybe not on the same day, but later. I still have bullets to use. Some of the position may come in over night, but if it doesn’t and we trade higher in the overnight session, it’s ok because I have a plan and I’ve kept the powder dry.

We constantly encounter traders who put on a trade who either get too large and don’t have dry powder to use later, or they get so uncomfortable with the pain of a trade going against them that when the time comes to add to the trade, average down and bring in the profits, they panic. Here’s the thing….in this game there is pain. If you don’t feel it, you will not be able to succeed.

Treat this like any other business. Have a contingency. Know your plan. Pre-think your actions (even those required when the worst happens). If you can visualize it before, you’ll be in a much better position to act when the time requires it.

If you’ve ever found yourself hyperventilating when a trade has gone against you, give us a call…..we’ve been there and we’ve seen the other side……you can get there too.

Filed Under: Trade Management, Trading Execution, Trading Psychology

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