You develop an idea before the open. No, you develop an awesome trading idea before the open.
You wait for the entry and take it. You get stopped out. And then the stock does EXACTLY what you thought it would.
So this is the part where some would tell you to be calm and “trade in the zone”. Who are those people? Have they traded before?
When I first started as a trader in the late 1990’s, I was on the demo for two weeks. I remember watching traders going crazy after losses. They cussed, and banged and worse broke their keyboards. I watched in disbelief saying to my trainer, “That is so unprofessional.” And then I started trading with real money and live. Hah!
Now I am not advocating banging and cussing and breaking keyboards. But let’s get real. It is frustrating to develop an awesome idea (how often does that happen?), enter an awesome idea at a good price (how much less often does that happen?), get stopped out of an awesome idea (ok this happens quite a bit), and then watch the stock do EXACTLY what you thought it would do (this definitely happens more than any of us would like).
I have been coaching traders of all levels through this very issue. I work with seven-figure traders at our firm on this issue. I coach seven-figure traders outside of our firm on this issue. I work with new traders on this issue. I work with Consistently Profitable Traders on this issue. I work with developing traders on this issue.
There is a solution to help with this very real trading frustration. There is a solution for most traders of all levels that I see dealing with this trading frustration. There is something that I notice lacking from traders across the board that would help minimize this frustration. And it not “trade in the zone”.
This solution is not going to prevent you from all stop outs on your awesome, well-executed trading ideas. It will help you trade them better. It will help make significant PnL progress for how you trade these awesome ideas.
Here is what I see from my seat.
Traders fail to consider enough possible patterns for how their awesome trading idea might trade. If they considered enough possible patterns before the open, then they would be able to re-enter after being stopped out for another quality trade. You would catch that awesome trading idea on a reentry that you had considered before the open.
How good would that feel? How good would it feel that you were paid for your awesome trading idea?
Let me offer a real world example from a developing trader that I think is going to be an outstanding trader. Below is a snippet from this trader’s Daily Report Card on an awesome idea in AAPL, executed, stopped out on, and then AAPL did EXACTLY what this trader predicted, without a position.
market and large cap day again so just focused on Move2Move trades (for AAPL), missed the opening drive when the first push to 200 failed and it quickly sold off 1pt, saw it but was too hesitant so can do better with just sizing in smaller and being faster there. was mostly focused on the shorts since the overall trend is down and this broke below 198 key level.
main loss came from mid day. was still trading the short idea and stock had bounced back to vwap, so was looking for a fade back to lows. the idea was right but it was mid day and I was trying to size up to capture the move bc I had a lot of conviction in the trade. made the mistake of making my risk too tight and my timeframe too short, which caused me to get stopped out by 5c and missing the move…. needed to give it a lot more time and perhaps just stay in a smaller core instead of trying to force sizing.
What if Trader had prepared before the open to short AAPL into VWAP with a stop above AND also prepared for other potential scenarios? What if trader ALSO prepared before the open for AAPL to leak thru VWAP (very possible), fail, hold below VWAP for a reentry short?
Trader wold have taken the first short into VWAP and taken a small loss. No worries.
But then Trader would have taken the re-entry short and made an awesome trade. Chop!
The solution is to consider more options before the open for how your awesome trading idea might trade. Do this and you will be in more of those awesome ideas that you deserve to be paid for. And who gets frustrated after making a hugely profitable trade?
*no relevant positions