A couple of years ago, I was fixing a broken cabinet for my mother, and as I was hammering some nails into the side of it, I began to get an intense pain in my thumb. I looked down, and realized that I was actually hitting my thumb with the hammer, instead of the nail. As I continued to hammer, my mind raced with thoughts of how to get this pain to stop. I theorized about all the things I could do…….take some aspirin, read a book to take my mind off of it, start a blog, all sorts of ideas. Then it hit me (no pun intended), “maybe if I stop hitting my thumb with the hammer, it will stop hurting!” And what do you know, it worked.
I think I have come to that conclusion with my trading. In reviewing my trading this week, I came up with some interesting facts. The first of which is that if I just stick to trading gappers with solid set ups, I will make money. Instead, I also tried to just throw in some “gut feel” trades. Sure I rationalized that I was going to use the same candle concepts to get in and out of them, but the fact is, they were not the same types of trades and I should have just avoided them. Let me illustrate what I am saying.
I took 11 trades this week, and ended up with a return of 0.49R and an expectancy of 0.16. Now if you take out the 7 trades which were just “well-I-don’t-see-any-setups-but-I-have-ADD-and-can’t-just-sit-still-and-thus-must-try-some-gut-type” trades, that leaves 4 trades based on my gap scan and candle setups. If I had just taken those 4 trades, my return would have been 3.5R and my expectancy would have been 1.30. Amazing, huh? And on just a 50% win ratio.
I get it now, no more “what the heck” trades, or “I’m bored” trades, or “I think I am Johnny Cool Guy Trader” trades. I am not here to be cool, I am here to earn a living, and the way to do that is to stick to the type of trades I understand and can make work, even if they are not “exciting”. Hey……….I’m just Bud Fox!
Everything I desire, freedom, financial stability, that hair transplant surgery, is all within my reach if I just stop “beating my thumb with the hammer.” It doesn’t seem like it can be that simple, but I suspect it is.
Great post. Sounds like me 10 years ago.
Have a good week.
Trade less and make more money. That was the turning point for me too.
Good trading!
Good observation! You are right, it is that simple. But now comes the hard part–sticking to it!
If you can conquer yourself you can conquer the markets.
I’m still hitting myself with the hammer…great post
[...] Many out there must be saying to themselves, “what is up with this ADD guy? It is the same thing every week. He forces trades, anticipates trades, or jumps in too early on trades. Doesn’t he get it? If he would just stop doing that and only take valid set ups, he would start making money. Doesn’t he read his own blog?” [...]