I'm going to try and keep today's Journal post short and sweet as I've got lots of things on my plate today. Lunch with friends, appointments, some afternoon hockey, bottling my recent homebrewed beer creation... just regular stuff. I might even try to get a YouTube video out there. Since putting these recent Journal posts together a few have got in touch to give me a hard time about that which seems fair enough. It's definitely been a while since the last update!
Overall we're still in the midst of slow summer markets but the trading isn't really that bad at all. Sure, I'm having to wait a bit longer sometimes for setups or to let trades play out but there's nothing wrong with exercising some extra patience once in a while. Patience is kind of like a muscle in that way - the more you use it the easier it becomes the next time.
After a while most experienced traders have no issue just waiting things out and sitting on their hands if they need to. After all, they know that sometimes the best position for maintaining profitability is having no position at all.
Wait and Be Ready to Strike
I tried a quick short early on that I knew was lower percentage to break so I kept my risk tight but after that the market simply refused to move. For many newer traders this can be frustrating. After all, if you want to be a trader then you need to trade, right?
So instead of waiting things out they search for opportunities that don't exist and certainly don't fit their plan. They force poor trades simply so they can feel involved rather than trading their edge. Clearly this is not likely to be a winning strategy.
I often see these slower, tighter periods differently. I see opportunity. Admittedly it might not be right away but this sort of market behaviour often leads to unusually large moves once price finally does break. The tighter things get and the longer they consolidate the more potential energy essentially gets built up for an eventual move.
It's like a spring getting coiled up tighter and tighter so as long as you wait and don't try to jump the gun there's often going to be good setups to come. Like anything in the markets you can never be completely certain but it occurs often enough to not see any reason to try and force anything just to find a bit of action.
Just Hanging Around
Similarly, sometimes you just have to sit in a trade and wait it out. It would be nice if every setup taken resolved itself quickly but some positions take their time to fully develop, even for day traders.
After getting into a solid momentum and pattern based short price certainly didn't seem to be in a hurry to see things through. I had a strong feeling (aka trader intuition) that price could make a very fast run to the downside if it managed to break a bit lower but it was a considerable struggle to make that move.
There really wasn't much option but to see things through with a hefty dose of patience and discipline. When price didn't push through in 10 minutes or 20 minutes had anything really changed? Was my position somehow invalidated?
No, so it didn't make sense to move a stop to break-even or panic. If it needed to come back to my entry to find more sellers then so be it. It in fact did just that, came into a bit of drawdown again, then made another move.
My management was a bit outside the norm on this one as I did take 1/4 of the position off the table just in case the second test didn't want to follow through given how slow things were but I still held on with the rest.
I guess I didn't completely trust my gut instinct to follow my usual all-in, all-out approach to trade management but I at least had to give it the benefit of the doubt for the most part, right? I'm sure it will forgive me after a sunny patio lunch and a beer or two.