Today is Monday. We were supposed to look for a proper setup on NQ and had an early mistake due to bad discipline. The market opening with a very large bullish harami on the 1m. The top extended through the 7, making it a non-7J, and the candle was much larger than the candle before it, so the harami was essentially negligible anyway.
After realizing the mistake, another trade was taken in reverse, as if the market would immediately reward a short when there had been no signal to go short. There’s nothing to this; it was simply an urge to correct what was a terrible opening mistake. Thankfully, I exited the second trade very shortly after, not allowing myself to trade again the rest of the day. This is a concept that must be understood and accepted, so let’s explain it briefly here.
Reversing a trade reflexively is not always a bad idea, but it is usually a bad idea. The problem with this decision is that it typically only happens during bad decisions. Either there’s a horrible trade taken, and we reverse to correct it, or there’s a good trade taken, and we reverse it anticipating something that likely won’t happen, which is in essence a horrible trade. The only time it makes sense is to reverse off of a significant level, after being in a bad trade leading up to that level. It is possible we were in a good trade, but there is just no reason to act so swiftly in 99% of these situations.
In efforts to proceed responsibly, trading for NQ has been halted after just the first three minutes of the market open. The morning will go toward continued research in the FX algorithm unit, and managing the roth account.
Trading NQ resumes tomorrow with roughly 50 points buffer remaining on the account.
Takeaways:
- Nothing new. Relax on the market open, and sit out until the standard setup is available. There’s no reason to ever chase an opening move, especially when there is no clear direction like today.
- More self-monitoring seems to be needed. It’s apparent that I was quite tired this morning, not sleeping as well as usual. When tired, extra care needs to be applied. Perhaps I should be keeping Rithmic closed until I am fully fresh and if not, simply don’t trade or trade MNQ at the very worst.
- There are tons of books I need to start reading immediately. I will get through them inevitably so I might as well get started with it now since this is to be an actual fund one day.