February has been a short month, a month where I’ve started taking more cash trades than I did in January.
I was active for 15 over 20 trading days.
Similar to my report card in January, I took a total of 21 trades. Only this time, nine of my trades were traded with real money and I bagged a tiny profit of $130.
This is nothing to be proud of, what I want to do here is to share my thoughts as a beginner day trader and what I went through in February and some days in early March.
Day Trading has started to become boring for me
I trade every single day. Well, almost.
As the saying goes “to be good at something, you have to practice everyday”. That was exactly what I have been doing for two whole months.
I started feeling as though trading is a process that can be learnt like any other jobs. While I took more trades with real money, I was trading equities and the trade plans I have in place were manageable – more accurately, my stop loss plans were affordable.
It was this monotonous, everyday doing the same thing feeling that I told myself I’m learning the ropes well. This is what most trading gurus preach about – trading should be boring, leave your emotions out. I am getting there. Which also explains the lack of stories to share in February.
Trading Options is a whole other story
Then came the days where I was riding the emotional rollercoasters.
Towards the end of February, I started trading more options (both paper and cash) as I got more confident with learning to watch the charts. I was generally feeling nonchalant when paper trades didn’t work out. But the nerves kick in every time I enter into a live option trade.
To make matters worse, the value of my trades can be up 15% this minute and turn into a negative 12% the next couple of minutes and back up 17% the following minute. The cycles of peak and trough lasted at least three times before I could handle no more and exited the trade when I saw that my losses were slightly mitigated.
See below illustrations of my moomoo character through the peaks and troughs. Note the time stamps at the bottom left of each screen capture.
Exiting at a loss is me cutting out the emotional pain
The same thing happened over the next few days.
I tend to exit at a loss even though I can see that the candle was holding its levels well. These trades tend to increase in value after my exits. From these experiences, I can tell that I was cutting my emotional pain short instead of cutting my losses short.
The mental fight between choosing monetary loss or emotional pain
The same thing happened again on 4th March.
Instead of cutting my losses short, this time however, I held onto my trade.
Learning how to read the charts is important. Being able to control your actions against what your emotions want you to do is way more important.
Below I share my trading journal entry on this particular trade.
You will find that not only did I enter into the trade late after knowing it was a good set-up, I was at a 50% loss at some point. I struggled with my emotions to cut those losses. But because I can tell that the trade was not going bad, it was a matter of being patient, which I amazingly managed to maintain, in this crazy market situation.
Knowledge and practice helps you gain control over emotion creep
Having been through this exceptionally volatile week (to be fair trading is always volatile, this week was just 100x more volatile than usual due to the Russia-Ukraine invasion), I have come to acknowledge that I have improved on judging a candle by its look.
Cringing phrases aside, I take comfort knowing that my daily trading practices, studying theories and technical analysis is starting to pay off.
Learning how to trade is not easy. Even when armed with all the knowledge in hand, it can only help validate that much information for making a split-second decision. Your control over your actions against uninvited emotions is what makes the cut above the rest.