Tuesday, July 24, 2012

The hard road to consistency II - The off day

"A Samarian warrior does not fear death, nor does he rush out to meet it"

                                                            --Conan the Barbarian

Trading requires you be at your very best. You need to be alert and focused. You need to be rested and undistracted. You need to have eaten and your body should be healthy. Do not party unless the market is closed the next day. Despite diligence to your alertness and despite years of good trading, you will most certainly have an occasional off day when you are just not in the game.

Many traders who have an early brush with consistency accumulate enough points to think they have made it and start increasing their trading size. This is dangerous because a single off day can wipe you out. The most dangerous thing about nacent consistency is that you won't believe you can be wrong repeatedly on the same day and will have the confidence to think that you can win back everything you lost.

This is why I have a strict two failed trade limit. You may take a PM trade if you lose two trades in the AM but only if a great trade sets up  (for a maximum total of three losses a day).

The following signs should alert you that today is an off day:

  1. You already have a reason to believe you may not be at your best (did not sleep/eat)
  2. You lapsed into poor habits you thought were broken long ago
  3. You are repeatedly reading the market worse than usual
  4. You already hit your max losses

The moment you realize you are off, you need to stop trading. Even many years later, you will certainly encounter a day where you simply are not in tune with the market. Stop before you damage yourself more. Release yourself from the pressure to make money and focus on studying your newfound situation. This day is a poor trading opportunity but a great educational opportunity. Study your behavior and study the market's behavior. 


  1. Hi cadaver,I want to learn more about Price Action trading. Other than your blog and Al Brooks' books ... Is there any website or books about Price Action or related to it that you think it good to read ?

    Sorry for my English.

    1. As far as I know Al Brooks book is the best source and my blog is supplementary. Everywhere else I have not encountered quality instruction yet.

  2. hi cadaver, may I ask if you usually use mkt order or limit order? I thought sometimes there are slippage and therefore have an impact on the 5 or 6 ticks stops. what is your view for that?

    1. I always try to enter on a stop order when the price ticks beyond a signal bar. For ES, slippage is rare, except on news. If there is slippage, I generally keep my stop at 5t and let it take me out. If I ever enter late, then I need to pretend I entered correctly and place my stop 5t from where the correct entry would be. I don't like to do this since it reduces my odds.