Framing your day in a positive way.

I have always been a huge fan of NLP ( neuro linguistic programming). I am no pro at it nor do I practice it as much as I should, I am however a firm believer of the power of the spoken/written word on your overall psychology and your life. How does that affect trading? Well in this short post I am going to talk about something I heard on a trading podcast just the other day. I am not quite sure on which podcast I heard it on, it was either on Michael Covels 6 hour show with Charles Faukman or on an episode of chat with traders. When we as traders have a losing day or even a losing trade we tend to criticize ourselves. We tend to say "Jonathan you should not have done that, how could you be so dumb to take that trade or exit to soon" or whatever the issue was that caused an issue. We as humans tend to focus on the negative and berate ourselves hoping for some magical reason we will not commit that same mistake again. How is that working out for you?? Well, instead of focusing on the negative why not focus on what you did right in the trade and what you could have done INSTEAD of the action you took. This way you are no longer thinking in a negative frame of mind but you are instead taking a more positive outlook on the trade. According to the person being interviewed this was what changed his trading. He was now better able to make changes , once he stopped attacking himself and started realizing what he could have done BETTER. Give it a shot and see if it works for you too. I know I will!

WLL losing trade today. Lets look at this trade which ended in a small loss. I am going to try my best to not criticize my trading at all here...Let's see if this is even possible lol. On the daily chart we had seen a strong break of the base it was trading at and a push down to the ma20. I had a support line drawn at around 10.50 zone. My idea was that if we didnt touch that area of 10.50 there was still a short to be taken. As you can see on the intraday chart what happened was quite different. The stock pushed down strong ( i couldve had more patience and waited it out instead of getting in so soon ) below the ma20 , it then quickly reversed and shot up and didnt look back at all. lets look at the two charts.

So what did I do well in this trade. Well first off I had a plan. I wrote out my plan and even though i could've stuck to it better I am happy I had a relatively good idea of what could have happened. Second and most important I got out quick. So once it broke over the initial push down I jumped out for a small loss. So not the end of the world. 

What could I have done better? First off the set up although it could have gone lower wasnt the idea set up for a short as it was right at the ma20a strong support area. Even if it did go lower my idea was for a g/r type set up and not a gap down and go. Remember the support level was not far. IN other words even if the stock had kept going lower it didn't have much room to go. A reversal trade outlook would've been smarter. And the final thing I wish I had done better was to not pull the trigger and jump in the trade. Wait for the set up , be patient as I described in my blog just yesterday. If I had at least waited for the pullback I would've noticed that it was stronger than a typical pullback and that may have given me the clue to prepare for a long and not a short. 

Well that wasnt so tough now was it. Try it out for yourself and lets see how that makes a difference in your frame of mind and your trading!