The 11 thousand dollar trade

Last week I wrote about trading on tilt, and then on Friday Pax and I did an emotional show about what led to the tilt and how to get past it. After the show I went into Pax’s trading room and heard him say the opening range was great, and I decided to trade. It turned out to be a trend day, which we all know are my favorites. Somehow I was able to go to a calm and patient place in my mind and hold the same trade all day, which resulted in an 11k day. I had about 30-40 SPY calls and about 20 IWM calls. As the trade started to work, I sold 5 of each and put a stop above the entry, which removed all the emotion from the trade and I was able to hold it and slowly scale out throughout the day. It was, by all of my standards, the perfect trading day.

That begs the question, why can’t I just do that every day? The logical answer is that it’s not a trend day everyday, but shouldn’t I have a system that works regardless of the day? Shouldn’t I have a fool-proof risk management plan that keeps me from going off the rails? The answer to both questions is obviously yes.

And if we’re honest about the 11k day, wasn’t my risk management off that day as well? I oversized on that trade. I honestly had about 70% of my account in that trade, which is obviously not safe.

I’ve gone back and forth and back and forth about that, because in some ways that IS the kind of trader I want to be… someone who is willing to go big on their perfect setups. I really do believe that’s how people grow their accounts, but on the other hand it’s dangerous. However, day trading is one of the riskiest financial things a person can do, so I’m already playing with fire.

This week off has afforded me a tremendous amount of time to think. I haven’t taken a day off of trading in at least a year, and I’ve just noticed how much happier I feel stepping away from the market. I clearly have a tremendous amount of thinking yet to do, because right now I’m feeling tremendously lost in the woods.

See you all next week.