Trade Trend Tracking

Last night I came up with an idea about my real trading to date. It has not really been profitable. Although profits would be really nice that has not been my primary objective as of yet. I decided that there must be some correlation between the type of intra day action that occurs on real trading days and my performance on those days.

I keep running profitable fake trading days, although I have had some days even then that have been barely break even. The better performance is really attributable to the fact that I am more willing to "take a trade" virtually than for real. Obviously a factor. The other factor is that I often have a good fake day, figure that my plan is working (and it is) then I jump in for real the next day only to see mediocre results or a small loss. This is not a problem of the plan but a problem of general implementation.

My idea was to do a rough log of the type of day activity and relate that to my real trading performance. The result was interesting.

Rough was the key here. A spreadsheet with a marks to indicate range, 200sma crossover, trend, whether the day was an up or down day, up and down, down and up or just flat. Then I marked if my trading was up or down. No numbers, no formulae, no fancy stuff...a bunch of Xs and a few /, \, ^, v, and some ~s to indicate the various states of activity. I was going for a quick visual impression here so simpler was better.

Mostly what I thought I would see, I saw. But something else jumped out at me as well. My down days were tied to tighter range of price intraday, that was the expected. The unexpected was that my better days were never on trending days. They were on days that the market dropped and returned or just dropped overall, but not on the larger ranging days.

So, my bias toward the short is definitely a factor. Most of my trading is in the morning so the days when the price drops then rebounds, I would be there only for the drop. The days that are down over all likely started the day with a drop too.

It was not just that my better days were this way, but the reverse is true also. My down days were always on up trending days or days when the price moved up in the beginning and down in the afternoon so I would miss the drop.

This tells me a lot about my weakness in trading, besides just not pulling the trigger when I know I ought to. My overall long game needs some serious attention. I think that, ultimately, I am trading with an overall pessimistic outlook and that is affecting my ability to make the trades that I know will produce profits...I need to give myself a new head game.

I let today start without really thinking about any trades off the start, it was going to open down and I expect the price to close the gap or return to some fraction of yesterday's close...at least to where ever the price and 200 may cross and perhaps once it does there will be another jump later in trading...a chance to get my long game hat one.

Jeff.