Did not take a trade today. I must admit I was cautious after taking a 2R loss in the previous session, and the jobs report on Friday at 8.30 a.m. was weighing on my mind.
This is absolutely the wrong approach. This is a psychological flaw that needs to be corrected.
Every trade is a unique event. The last trade or the one prior has no relation to the trade on hand. It is a brand new set of circumstances that has no association to the past, other than in the trader’s mind, which is fearful of taking another loss.
Like I’ve said many times on this blog, when you see your edge/setup appear you have to take it. This is the only opportunity for the trader to make money, any trade that is outside of the trader’s setup is random and not part of the plan.
As long time readers of this blog would’ve noticed even traders with decades of experience suffer from psychological pitfalls. That is the reason you have to be mentally prepared to trade every morning. Lack of sleep, problems at home, a lazy beginning to the work day can affect your thinking and performance.
In looking at the ES chart for today, you can see my edge/setup: the Cusp Trade, appear perfectly at 9.55am - blue arrow. This is where I HAD TO TAKE THE TRADE WITHOUT HESITATION OR DOUBT. This was my moment to make money today, because I know this edge/setup works more than it doesn’t. But the fear of a third straight loss and wanting to wait for the big vol of the jobs report tomorrow made me pass it up. This was absolutely the wrong thing to do. I’ll try and not repeat that.
I hope you the reader learn or your beliefs are reinforced by the recap I provide everyday.
Trading is theoretically simple: have an edge, rules, always enter when the edge appears, exit with a R1 loss or maximum profit the market provides. Machine like. But the human mind is fallible. Our thoughts hijack our actions. That’s why you trust your system and not yourself.