Sports fans always want the score. The score tells fans which team is the winner and which team is the loser. The score settles the contest and provides a clear sense of finality. For ES emini futures day traders, the closing bell determines if you were the winner or loser for that particular day and just like the score in a sports contest, the closing bell gives the day trader finality. In any sporting event there will be examination and evaluation after a contest has been determined and added to the record. Botched plays and successful strategies will be scrutinized and analyzed through the processes of examination and evaluation to improve results next time. So it should be for the futures day trader or any trader employing short-term trading tactics to take profits from the markets. Through examination and evaluation of daily trading results we can uncover deficiencies in our trading skills, money management model and general approach to trading the markets which in turn will lead to improvement if examination and evaluation are done correctly.
Mirror, Mirror On The Wall…
The fact that 90 percent of all people attempting to day trade the markets will fail has been discussed ad nauseam, you know why? It’s true! Most will fail for one glaring reason and it has nothing to do with their trading platform, broker or surprisingly enough, the financial markets. No, none of these are the reasons for failure. The reason is as simple as looking in the mirror. If you are failing as a ES emini futures trader, the reflection in the mirror is the source of your failures. This does not mean however, that a successful trader is not somewhere to be found in the mirror. On the contrary, a successful trader can emerge from within if they are honest and accept things as they truly are and use the processes of self-examination and self-evaluation honestly.
Are You Hearing Voices?
All struggling emini day traders hear voices in their head. With that statement I don’t mean its time to call the guys in white uniforms to cart off all struggling ES futures traders and place them in straight jackets to begin a regiment of shock therapy and Thorazine injections. The voices in their head we are speaking of are the emotional ups and downs of inexperienced traders which manifest in the forms of fear, greed, self-doubt, indecision and the worry of impending trading account destruction. All inexperienced traders hear their inner voice warning them of looming disaster and the voice becomes louder and more frequent with each losing trade. Through examination and evaluation the voices will eventually silenced as new emini traders learn to become more disciplined, grow in confidence and commit to learning how to improve their trading.
You Will Fail and Success Will Be The Result
How can failure equate to success? Every trader has failures. Even the best traders on the planet have failures when trading ES futures with the difference between a successful trader and an unsuccessful trader being how they manage their failures and overcome them. Bad and broken trades are part of trading – it is simply a part of the equation and unavoidable. Professional traders know they will have losing trades but have the tools in place to minimize the effects of losing trades. They adhere to the rules of their trading system and obey their stops every time one is reached without exception. Stubbornness and an unyielding will in an effort to always be right have no place in trading for short- term profits. Take the loss and get out of the market when your system tells you its time or the loss can and will turn into a larger loss that will be difficult to overcome. Make sure all losses are small. Strive to end the day with a profit everyday, no matter how small. If you are trading multiple contracts, scale out on winning trades and lock in profits by closing one position and let the remaining contract(s) add to your profit. Let winning trades run.
Set goals which are achievable in the beginning and within reason to match your skill level and confidence. Shoot for 1 point a day and stop trading for the day once you gain it and mark it down as a success. Bask in the glow of your success that day, enjoy the feeling of following your trading plan and let your confidence grow as you learn to capture one point each day. Of course there will be days the market will not present opportunity and losing days will happen. On these days you will follow the rules of your trading plan as you do on winning days and adhere to your stop and close the trade quickly once your stop is reached, no exceptions. If the market offers another opportunity, try again but never force a trade to make up for a prior loss. This will only lead to larger losses and is the sign of an inexperienced and undisciplined trader.
Examine and Evaluate
Examine your trading results after the closing bell each day. Determine why you made each trade and note the time of day. Was the market trending? Was the trade a bounce play off strong support? A reversal? Did you short the market in over-bought conditions in anticipation of a pullback? Was the trade taken during the morning, mid-day or afternoon session? How many contracts were traded? Did you obey your stop-loss? Examine all aspects of the trade and make notes. Over time you can evaluate the data and determine where mistakes are being made and take corrective action as patterns emerge. As your skill and confidence grows through the process of examination and evaluation, you will find the score each day more times than not, in finality, to be in your favor.
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