A Week in Review: Thursday the 4th +1.75 Points
Today was a much trickier day to trade compared to the rest of the week so far although that didn't come as a huge surprise. Friday is the Non-Farm Employment report and it's not unusual for the Thursday before that release to be a bit lacklustre. Sometimes that's because the volumes are low and price only moves in narrow ranges but there can also be days like this where price covers a bit more ground but is very erratic in its movements.
As you'll see in the earlier day trading recaps from this week, today was a bit abnormal in terms of volume and the "whippy" nature of the price action:
A Week in Review: Tuesday the 2nd +7.25 Points
A Week in Review: Wednesday the 3rd +6.5 Points
For those traders that are more aggressive than me it may have been possible to take a bit more profit on a day like this but I was playing it conservatively knowing the typical pre-report behaviour. Some of those bigger swings may have looked tradeable and it's fair to say that there are some trading methods that would catch those, but they didn't fit my system and plan for the day.
This result brings up a couple interesting points. First, it's important to realize that trading well is all about CONSISTENCY over weeks and months and has little to do with performance on a single day. There's only three trades here which is a very small sample size and it could have easily been a small losing day rather than the small winning day that I had. Had it been a small losing day it wouldn't have been a disappointment to me assuming that I took trades that fit my rules and managed them without emotion.
Traders sometimes think that they need to hit it out of the park with big profits every day but the reality is that trying to do that is likely to only cause mistakes, emotional trading, and a lack of profitability. Having a longer term mindset and realizing that your edge is best played out over at least a week makes it much easier to keep focused and not become bothered when taking a loss or two.
Second, when a day like this comes up and our trading approach doesn't let us take full advantage of every move available it does NOT mean we start to change our approach. Every trading strategy will have its amazing days and its poor days even in the hands of a competent, highly adaptable trader. If we start to get frustrated by missing moves like the ones today (which were unusually explosive, consolidated at areas which made entry difficult, and didn't fit our usual approach) and try to curve fit our trading to this in the future then we are likely to only hurt our overall trading performance. Sometimes jumpy price action like this happens but it's a rare occurence to play out the way it did today, so trying to change our approach to take advantage of those rare conditions is going to be a losing approach.
Remain confident in your tested trading plan and your trading edge, take the trades that fit your rules without worrying about their outcome on a individual basis, and you'll be rewarded with consistency and profitability.
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
