Emini Day Trading Lessons: +2.5 Points – Gauging Performance Through Process
I'll admit it - I'm not entirely pleased with my trading performance today. At this stage in my career it's never really about the short-term results. Instead, I try to focus on my process. That means that I gauge my performance based on taking good trades that fit my plan, keeping risk low and controlled, and managing my trades well through objective decisions based on the market information I have at the time.
If I can do all this while keeping my emotions in check so they don't influence my decision-making in a negative way then I consider it a good trading performance overall. It doesn't matter if I made ten points or lost a couple if I traded my plan the right way. A day like this where I made a handful of points could have easily been one where I lost a couple of points instead but that wouldn't matter to me as long as I stuck to my rules. If I do then I know the edge will play out.
Found a Little Bit Lacking
Unfortunately, today I have to give myself a less than stellar grade. Let's call it a C-.
It wasn't because I didn't take good trades. In fact, I was happy with all of them. What I didn't like was the way I managed some of my trades once I was in them. I didn't stick to my original plan and convictions while allowing the trades to play themselves out.
Going into the first trade I knew we had a good shot of reaching some overnight lows around 2827. I wanted to see a quick reaction here and when I didn't get it I began to second-guess the market. Price coming near a full loss on the position almost immediately didn't make it any easier.
Usually I can have the patience required for these. Especially when a good trend is present I don't mind waiting for numerous pullbacks will allow plenty of time to pass to allow the setup to play out. This one was less convincing in terms of the market direction but there really wasn't a compelling reason to get out where I did. I probably should have just accepted the possibility of the full loss and rode it out but instead I got in my own way.
Sometimes a trade like this might not work out but I have to ask myself if it's really the best decision to try to save a couple of ticks when there was 2 to 4 points of potential profit to be made here. If I think in terms of a large sample with 50 similar trades and market conditions, would this management choice to exit with a smaller loss be the right choice often enough to improve my overall edge? Asking questions like this and considering the long-term probabilities and trading expectancy of different market contexts is a key part of my process.
I also left some points on the table with the third trade (first long). This was a more advanced breakout play that I entered after some consolidation but I had the thought that price may eventually run into the pre-market highs around 2838-39 after the major failure to push lower (with trapped traders as a result). Once again the lack of decisive market action made me less confident in the move and I decided to take my 2 points instead of the 4 or 5 points I was initially looking for. I felt the chances were good that the market would let me back in again on a later pullback but as you can see the market continued its slow and steady grind without me.
Always Under Evaluation
Looking back at the session once it's complete gives you a chance to really reflect on your trading decisions. Did I stick to my plan and take the good setups that presented themselves? Did I manage my risk well and within the rules? Did I manage my trades in a way that reflected the market action? Did I keep my emotions in control and my decision-making objective?
These are very important questions to ask every day to ensure your trading is on the right track and your process is sound. More importantly, asking these questions and continually evaluating your own trading performance and process are how you continue to GROW. If you don't take the time to really dig deeply into your process then it's unlikely you will continue to improve your skills and results over time, even with plenty of hours in front of the screens.
I will be spending some time today and over the course of the week thinking about some of the conditions for these setups and even evaluating them against prior similar positions. I will look at cases where I stuck to my plan and followed through versus the times where I cut things short. I'm quite confident that I'll find if I kept to my regular trade management guidelines then I could have done a much better job exploiting my edge.
This is an important part of what trading is all about. It's not simply a matter of learning a few indicators and basic technical patterns then trading them like a robot. You need to be prepared to work hard, to evaluate your performance regularly, and to make the necessary tweaks to your process to ensure consistent success.
Most people don't really want to do that and would rather quickly move on to the next trade or even the next system. They don't want to do the difficult work of thoroughly evaluating their performance or to look at where their mental approach to the markets might be letting them down over time. Then again, most people don't achieve consistent profitability as traders. Maybe it's a good idea to do things a bit differently?
- 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
