Day Trading is not necessarily More Trading

This fill report for Friday speaks for itself!


Wheat is up at unusually high levels at the moment, and one consequence of that is that it is challenging its daily limit moves much more often. In the previous two sessions it was the upside limit. On Friday, it was the lower limit. 

There was a downside breakout pattern which would normally have tempted me, but again I had to hold off because it was too close to the lower limit, limiting potential gain. Whenever I consider a trade, I know what my profit target is going to be. If that target is above the upper limit or below the lower limit (as it was today), then I generally decline the trade.

If wheat remains up at these heady levels, I wonder if the exchange will consider expanding the daily movement limit to fifty points, as it is for soybeans?

I waited for a while to see if the price would bounce enough to re-challenge the daily highs, but it didn’t do that until the last half hour of the session, by which time I was asleep! So it was anther no trade day for me.

Reviewing the first (three day) trading week of the year, I had just one opportunity to trade. Despite making a pig’s ear of the entry, it was a profitable trade and I’ve closed the week out in the black. I’ve had  money at risk in the market for six minutes (including the one minute mistaken trade). That’s a statistic I really like.

There is a perception that day traders are frequent traders, in and out of the market several times per session. Some are, but I’m not. In the past, over-trading has been a problem for me, so I have very strict rules about it. I limit myself strictly to one planned trade per day, and if one of my trading patterns doesn’t occur, I don’t trade at all.

This policy does some good things for me:

  • I don’t rack up excessive commission fees.
  • I don’t "revenge" trade, trying to get even for the day after a loser. (This almost always results in emotional trading on inferior setups.)
  • I don’t give my profits back after a win.
  • I’m careful about choosing the trade I make (because it’s the only chance I’m getting today!)
  • Since the majority of opportunities occur early in the session, I don’t have to watch the screen for hours. (Incidentally, that’s one reason I like the grain markets. The full session is "only" three and three quarter hours long! That’s a lot less time to cover than the equity index and foreign exchange contracts.)


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