Accelerating The Downward Spiral

Gross: -$396.89
Net: -$490.22
Loss From Top: $531.82
Trades: 64
Shares Traded: 172600

Stocks Traded Today (net profit/loss):
Motorola Inc. (MOT): +$121.54
Helca Mining Company (HL): +$97.87
Hewlett-Packard Company (HPQ): +$88.10
Advanced Micro Devices Inc. (AMD): +$41.08
Pfizer Inc (PFE): +$5.78
Micron Technology (MU): -$11.65
EMC Corporation (EMC): -$11.69
New Century Financial Corporation (NEW): -$102.23
The Goodyear Tire & Rubber Company (GT): -$105.75
Corning Incorporated (GLW): -$171.98
Taiwan Semiconductor (TSM): -$193.51
Payless Shoesource Inc. (PSS): -$248.38

A typical month for me will consist of a few days in which I end the day in the red. I would have to say that most of those negative days always seem to occur in exactly the same way with the same sequence of events and under the same circumstances.

And today, that same sequence of events and the exact same circumstances led me to a rather bad day for me.

So when I got home today, I looked back at all those bad losing days I've had, trying to find the connection...trying to find out what they all had in common.

So why does this keep happening? Why can't I seem to learn my lesson? What can I do to avoid this kind of day?

First, let me review with you my day today...in fact, this review could probably be used for all those other bad days I've had in the past since most of them always seem to follow the same sequence of events.

When I got in this morning, I found it rather difficult to trade. The whole day seemed rather choppy and in the morning, I just didn't seem to time any of my trades right.

I put on a couple of losers to start off the day and realizing what kind of markets we were having today, I took a little break and tried to re-gain my focus. At that point, I was down quite a bit (about $400).

I scaled back on my position size and I sat, trying to be patient and wait for the good trades to show themselves.

I slowly got back in a groove and managed to string together a couple of winners. I was slowly chipping away at my loss and wouldn't you know it, I eventually found myself in positive territory.

But then I put on a small loser....no big deal - it wasn't too big and I could still bounce back from it.

Then another loser. Ok - still no problem, I was thinking that I could probably make it all back.

Then I get hit for big loser (see bad trades below).....

That's when my frustrations begin to mount....I had worked so hard to get back to being positive on the day and just like that I'm in the hole again...I was also starting to get upset because nothing seemed to have any follow through on it's moves and the markets just seemed to be meandering around and stocks just kept rolling back and forth....

I then start looking all over the place for the next trade....then...

Another loser.....OK - at that point I was thinking that this was beginning to suck and this was getting extremely frustrating....I found myself getting mad at the markets for not doing anything....

I then went on to put on riskier positions...which also ended up as losers....I found myself over-trading - jumping in and out and each loser just made me even more frustrated.

Time was ticking and I felt the need to make money.....fast! Every time I had a loser, I'd go into the next trade with a bigger position.

As 2000 share positions turned into losers...I got frustrated...I went into the next trade with 4000 shares....dammit...another loser....fine, I'd smack the next trade with 6000 shares.....what! Another loser! Now I went to try to make a quick buck by trading those slow moving stocks for 10,000 shares....dammit! A break even trade!

My frustrations basically led me to impatience, to over-trading, and to bigger share size. All of these things just didn't help me out at all and it just accelerated my downward spiral.

Finally, at around 3PM, I was just fed up with what I was doing and I was fed up with stocks just meandering around. My mind wasn't in the game and I really didn't feel like being there.

So I packed up and called it a day before I could do any further damage.

And so, there it is. This exact same day has been repeated many times before and yet somehow I seem to repeat it a few times during a typical month. It's these mental lapses that have really been holding me back from achieving great consistency.

And it always seems to be that same combination of choppy markets with a bad start in the morning, coupled with a bit of a comeback, only to lose everything again in frustration, as I curse the markets for chopping every which way.

It's not that I can't make money in a choppy market - in fact, my trading sometimes thrives in choppy markets and some of my best days have occurred when the markets are choppy.

But I think the real difference is my state of mind. When I lose money in the morning, my thinking somehow changes. The reasons for getting into a trade is somehow different and that drive to make money is more urgent. As the day wears on, I lose more and the urge to do something to make money becomes even greater.

Had I made money in the morning, perhaps things may have turned out differently. I would feel more patient to wait for trades and I would not be in a hurry to put on another trade.

I just have to remember to mind the markets and to not let frustrations get the better of me. I also sometimes need to suppress the need to make money...this kind of thinking usually forces me to over-trade by taking bad setups and by using the Level 2 to trade.

In that past when I've had this kind of a day, I usually review it and make it seem as though it were an isolated incident. I would correctly identify that my frustrations eventually led me down a path of destruction, but as the days go on, I forget the lessons I had learned and I find myself repeating it all over again.

Today is the first day I have tried to connect all of these losing days together and if I can keep a level head throughout the day, I'm sure that 2/3 of my losing days will either become winning days or I won't have lost as much.

So the next time I find myself in this exact same situation, I have to remember what has happened in the past in the hopes that I do not repeat it and so that I don't drown in my own sea of frustration.

Good Trades
None.

Bad Trades
12:56:57PM - Payless Shoesource (PSS) was moving up and making new intra-day highs and I went long 2000 shares when I thought the $34.50 level was going to break. It quickly went against me and I had to get out as follows: 10-cent loser (300 shares), 11-cent loser (200 shares), 13-cent loser (1500 shares) ($244 loser before fees ; Long 2000 shares @ $34.50 ; Out: 12:57:52PM)