Do The Work; Pull Trigger With Confidence

Broz on Bonds, Commentary, The Opening Print

“From the beginning, I grappled with indecision and procrastination, missing the trade, then getting stopped out. The last short was 41.75 and it got stopped out at 42.25 then the market goes down. When I follow what you say and the charts I’m better. I don’t know how to stop doing the same mistakes over and over. I am trying different things to get me into the day but still procrastination is an issue.”

jack broz feb 20 2014I recently started working with the trader who made those comments. In the couple of weeks she’s been with me she’s actually been pretty good at finding entries. But she is also a roller coaster emotionally. For example, she had a real nice day on Friday 2/7 but couldn’t pull the trigger on Monday 2/10. She had a nice day yesterday (Tuesday) but a “terrible” day today.

So what gives? Her first “must do” is to forget the bad experiences she had while trying to trade with the faulty methodology and education she received from a previous trading company.

She MUST move on from that – and that may take some real soul-searching and effort on her part. A neuromuscular therapist who takes on a “life-coach” role with many of her clients said to me recently, “Some people feel they don’t deserve to succeed.”

Now, her actual solution may be much easier. Note she says: When I follow what you say and the charts i’m better. First of all, that reminds me of an answer an old bond trader gave to one of my clients; the client had told him that he trades bonds very well but struggles with equities – and asked the bond trader’s advice. His answer? “Stop trading equities.”

Here it’s “work closer with Jack.” I’ve always felt that, in most cases, if 2, 3, or 4 things point you to a given trade – the trade is likely to be a good one. So – to help her get into the day – this trader should only act on trades that are revealed by her work and confirmed by mine. The added confidence in the entry – and the thought that the trade should be good – will help her pull the trigger.

On her E-Mini S&P [CME:ESH14] trade today, she took a great entry but broke a rule I discussed in a recent article: she didn’t make the market do something different to get her out. With a short entry of 41.75 the absolute minimum for the stop must be above either of the green rectangles.

I can’t create a scenario that would justify a 42.25 stop. Is that all she can afford to lose? Then stop trading ES. Did she get bored with the trade? Then scratch it. In the article I also discussed buying highs/selling lows; why didn’t she get back in when the market broke below 40.25? It was doing something different….

You must remove emotion from your trading. Find a process that generates the opportunity you desire and trade it.

For Wednesday night/Thursday’s trade: the 10Yrs [CBT:ZNH14] have a pivotal area of 125.255 to 125.19; the key will be to see WHO controls that area. If the bears take out support at 125.16 they can go after 125.03. Should the bulls control the pivotal area they need to put pressure on 126.16- which will give them some follow-thru to 126.21.

In SPs my pivot is 1824.25; if we get strength we need to look for a move to 1859.50 – where we can reverse. Should we get weakness, the bulls will get a bit nervous with a failure of 1816.25 – but the price the bears need is 1787.50.

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