Today was an especially difficult day to trade. As a matter of fact, I traded for about 1 hour and stopped as the choppiness in the market made it very difficult to stay in a trade. Some of the candlestick formations stretched 3-7 points which is a higher risk tolerance than I can endure. Not that the direction identification was wrong, but surviving the turbulence to stay in the trend became very costly. The only option is expand your risk tolerance past 12tick stops, which for me is too much risk to take. So my trading was curbed today.
The announcements of Lehman Brothers has been scapegoat quoted by most analysts, and I feel like the revelations unnerved a good number of traders. On days like this I stop, as I feel as if I am “guessing” at the market direction. The market did settle down some later in the day, and resumed a more normal trading pattern.
The important lesson is knowing the market conditions that lend themselves to profitable trading and market patterns that are difficult to trade, at least trade systematically. Very early in my career I would hang in there and battle the market, usually losing money, and as I have gotten more experienced there are days that are simply hard to trade. Today was a day like that for me, as I was stopped out of my first three trades….and I stopped. and saved myself some money and frustration. -9 pts on 3 contracts. A very disappointing day.
