Early action today was in a bull breakout mode. I took the YM contract as the TF leadership was already getting away. But trading a laggard does not usually yield good results. YM failed to follow on the early breakouts.
Then at initial resistance, I made the mistake of thinking that the lagging YM should help turn the NQ and TF contracts when they hit initial resistance. That didn't work either. So I compounded my mistake in taking the laggard long instead of using the leader, and fading leadership as if the laggard would hold it back. Although this strategy can, and often does work the the leadership roles are reversed (YM leading and TF lagging), it seldom pays to fade the Russell Index leadership.
When I have three losing trade calls in a roll, I put myself in the penalty box. I don't stop making trade calls, but my trade plan requires I make profits on two of the next three calls. Today, both those paper trade calls were good winners, allowing me to take the sixth and last trade call with real money again. But since I used the simulator for the paper trades, my account actually suffered a loss today, even though
my trade calls in total were profitable.
Why do I do this? Several reasons. It takes me out of the tendency traders lean towards of trying too hard to get their money back after losses. When three losses become five in a row, mostly likely I have lost more than my daily profit quota. It also forces me to focus very carefully on only my next signals, not 'which way I think the market is supposed to go', and thus helps separate my trading from any trend prejudice I may be suffering from at that time. Nothing is worse for results than 'trying to get even'. Valhalla Futures believes there is simply no way to survive and prosper trading futures without a precise trade plan, incorporating rules and setups. And behavior governors are part of that plan. Also included in a those governors are a limit to how many trades can be taken, and how much gross loss is tolerated before trading with real money must be halted.
20120802
Long 2 YM 12840, 12840, -7, -7
Short 2 NQ 2615.0, 2617.0, -5.0, -2.0
Short 2 TF 767.1, 767.1, -1.2, -1.2
Short 2 TF 768.2, 768.2, +0.5, +1.2
Long 2 NQ 2625.5, 2625.5, +2.0, +10.0
Long 2 TF 768.9, 768.9, +0.4, +1.4
Total YM -14
Total NQ +5.0
Total TF +1.3
