Day trading is intense as we live in each individual trade.
I don’t “trust” alarms and prefer to watch and try to understand every tick and move in the market. I mainly trade using 2-minute or 5-minute charts, with 1-hour and Daily being used for higher time frames.
I set my levels daily according to my pre-market analysis and know when to act.
But as the market moves, it is easy to get carried away.
It is easy to “see things”, get impatient and trade “opportunities”.
This has always been a slippery slope for me. Mastering patience is a challenge for me for several different reasons.
Patience and day trading
These are the areas where I actively work with myself
Ad-hoc trading
I see at least one tradable opportunity every 15 minutes.
But it is not a trade if you read my trading plan.
Still, it’s a “setup”. It could be a large green bar taking out a small red or something similar. Typically, the setup would appear in the middle of a range or another position where I do not enter trades.
But here is the tricky part.
I see the setup, but I tend to remember—and invariably regret—only the setups that would have been good trades.
After all, if they fail, I am right; this is no big deal as it follows my trading plan.
So maybe I should take the next one. After all, I knew how to spot that last one.
I have this discussion with myself every day.
Even though I know I should NEVER take these trades.
I need to be patient and wait for my trades to present themselves.
I know from experience that if an ad-hoc trade works out in my favour, I start seeing even more “setups,” and invariably, I get lost.
There is a reason these setups are not in my trading plan.
End of story.
Why is this so difficult?
Waiting for setup to materialize
FOMO, or Fear-Of-Missing-Out, is another challenge I face daily.
And for me, it is tightly linked to patience.
I trade 2 or 5-minute charts using 1-hour and Daily as higher timeframes.
Even though 2 and 5 minutes is a relatively short period, it can feel long when you see your setup kick in, and there is lots of time left for the bar to close.
The fear is that the market will take off and completely skew any chance of an attractive Risk-Return ratio. I have lost trades this way.
However, the advantage of waiting for the bar to close is avoiding last-second bar reversals where you suddenly enter long on weakness or short on strength.
I have learnt that it is OK to enter a few seconds early on a solid bar in my desired direction, but not earlier.
This is a tough one, especially if I have waited hours for my first trade and then just sit there and watch it all slip away.
Again, based on my experience, I should ALWAYS wait for bar completion, except for solid XL bars, where I may enter a few seconds early.
Does the market want to be traded by Me today?
I have learned that not all days are meant for me to trade. I have learned this the hard way.
The trend is your friend is an expression you have heard more than once.
I prefer to trade with the trend, and I do so as a rule.
Sure I may fade the market if there are extreme movements into a solid area of support or resistance, but this would be the exception not the rule.
But some days, even my most solid setups reverse on me. If it happens three times in a row, I have learned to step away from the market for a while.
I call this market scenario “chop”. And I do not trade chop.
Chop is when the market moves erratically in ranges and does not respect levels or honour breakouts. You may see new highs or lows, but only for a new range to form. There is usually zero follow-thorough. This will typically continue throughout the session, with higher and lower ranges forming.
I trade poorly in chop. If my preferred market gives me chop, I pack up and find a trending market to trade.
The Patience to stay in the trade
You probably know exactly what I mean.
A good, solid entry followed by a move in the desired direction, and we are looking good. We are in profit when all of a sudden, the direction reverses.
The profit dwindles, and we are close to losing territory.
Close the trade early and take a partial profit? It is always tempting and I have done this more than once.
After all, a win is a win.
But, this is not a winning strategy for me.
If my entry was good, I will profit from sitting tight. My trading journal tells me that this is true.
Sure, some trades will stop me out for a loss, but over time, this is a recipe for disaster. Closing early results in small profits that will not cover my losses when trades move against me.
I have a 50-60% win rate. I must let my winners run to offset the losses I know will come.
For me, letting a trade reverse and taking a loss is the intelligent thing to do. Because some of the trades I close early will go on to make 5:1 and sometimes even more.
“Let your winners run” sounds easy enough.
But when you are in the trade, it can be anything but.
Summing it all up
I have no quick fix to this problem.
For me, my trading journal was vital.
My journal helped me identify the problem.
I realised some of the small profits I “saved” by closing early took me out of trades before massive trending moves in my desired direction.
And this was all I needed to know.
I knew I had to fix this problem.
I will tell you when this is no longer a daily challenge. But don’t hold your breath…
