Real Life Example Of Handling Trading After A Mishap

Welcome back! Let me start out tonight’s video with this question to you. How many of you have ever taken a trade, whether it’s a day trade or swing trade or long-term investment where the market moved a fair amount and you feel you missed something and did not want to miss another dollar of potential opportunity so you jumped in after a big move and got your wings clipped? As you think about that for a moment, I want to have a real-life example of how I dealt with something like this this morning. I was sharing with people that we were at rising support on the Nasdaq, we were at support on the Dow and the S&P. Three out of four of the stock index futures, we were at key support. That was a key piece of information to know.

So, what happened was this. Everything was humming along just fine since we kicked off the morning. We had all these beautiful signals. Lots of sell signals with my institutional indicators. You can also see some short-term buy signals so we can focus on whether we can break the resistance up above but we couldn’t. Instead, we went back down to the sell signals. If the buys don’t buy and we’re in a downtrend then we look for those fresh sell signals and that can be a very powerful signal, which it was. I wanted to short it and we had a situation where we had a sell signal that was forming from a W pattern and all it did was pop the market up a little bit and dropped it back down. The buy didn’t buy. All sorts of great things were firing off. So, I wanted to short this but the problem was that within 35/40 seconds of this bar into the future. We were going to lock in a buy signal on the five minute chart. So, like I try to do with all my trades, I like to explain what I’m looking for on the screen and was explaining that to people and the market turned around and started to nose dive. Of course, ultimately, it continued to drop. This caused me to actually back off. I learned years ago that chasing a trade compared to the multitude of times that’s going to work out that it can hurt. I wanted people to understand the risk I was taking. I was willing to have a pull-back into falling resistance. There was quite a bit of range. I wanted people to know I can take this trade and it can fall back into the speed lines before returning back down because of this five minute chart.

As I was explaining this to people, the market started to woosh down. That caused me to miss the trade. The normal human reaction is that’s not fair, the market owes me, I’m going to jump into this trade. I’ve learned over the years to do the exact opposite. What I do is I’m suspect on any trading decision I want to make thereafter. What this did was for the next several minutes, this took me a little bit of time to get back into trading. You can see we were continuing to fire off more beautiful signals to the downside. All sorts of great stuff was firing off and I wanted to take the right trade for the right reasons. What that did was slow down my progress this morning. You’ll recall that a few weeks ago I was doing 9, 10 trades in a morning session. I was bringing in thousands of dollars of gross profits but this got me to slow down at a point where I should have been pushing. Had I caught that trade, I would have had a nice profit on the morning. I backed off and took time to re-engage. I ultimately did get several trades done live on the screen done (single entry trades – some were better than others in terms of profitability). I missed that initial push and I really want to talk to you guys about that. We don’t see a terrible amount so I wanted to share that with the public. If it would have been a loss, I would have done the same thing. I would have double and triple checked it’s the right trade at the right time for the right reasons and not taken out of human emotion. The indicators are emotionless. It’s what we call “Rob in a Box”. I wanted to talk about the psychological side like Ray Burchett does and he just wrote a great article featured on this morning. It’s a real-world human emotion. I got back on by double and triple checking to make sure the signals were applicable at that time. Once I verified they were and everything was doing what it’s supposed to do, I got right back in there and did my thing.

Have a great night everyone! I’ll see you in tomorrow’s live trading room and in the nightly videos.

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