Navigating Turbulence: Lessons from Tuesday's Horrible Trading Session

Tuesday's trading session proved to be a challenging journey marked by early losses and subsequent attempts to recover in the volatile market environment. In this blog post, we'll delve into the day's market movements and explore the valuable lessons learned from the ups and downs of trading.

Early Optimism and First Trade: The day began with price above its moving averages, seemingly heading towards its daily highs at 4803. Encouraged by positive indicators, I took my first trade at 4800, going long. PPM 1 was showing promise with a positive slope, PPM 2 projecting a bounce off its positive slope, and PPM 3 floating above its derivatives with a positive slope. Despite this optimistic setup, the trade turned against me as price quickly dipped below its moving averages, triggering a stop loss for an early loss.

Shifting Strategies and Short Attempts: With price drifting below its moving averages and all three PPMs in a negative slope, I shifted my strategy, looking to short any upward pops near the 10ma on the 5 min chart. However, my attempts were met with further losses as price held its S2 on the daily chart and spiked higher, triggering stop losses. I also revenge traded and tried to get short again since the PPMs were still slightly projecting a negative slope. My stop loss was filled again as price continued higher.

Changing Tides and Fourth Trade: As a Fed president spoke around 11 am, the market experienced a significant spike and subsequent drop to the moving averages. Recognizing an opportunity as PPMs 2 and 3 bounced off their positive slopes, I entered my fourth trade 4803, anticipating a move towards R1 on the daily. Unfortunately, the trade hit my tight stop loss as price dipped below 4798, resulting in another loss. Price hit my stop and then went back to test the high of the day at 4814. I should have gave that trade some more room when setting my stop. I wanted to have a tight stop loss because I did not want the volatility to get away from me and shoot price lower for a worse loss then expected.

Afternoon Rollercoaster and Fifth Trade: As the day progressed, price bounced around presenting opportunities for traders. I entered my fifth trade at 4791 during the last hour of trading looking to ride the wave higher. However, my tight stop loss was triggered as price dipped to the 21ma, causing another loss. The market eventually stabilized around 4798 by the day's close.

Reflections and Lessons Learned:

Reflecting on the day's trading, it's evident that setting stop losses too tight can result in being stopped out prematurely. Additionally, entering trades before the PPMs reach trend mode can lead to challenges during choppy market conditions. The importance of patience and waiting for clear signals in the form of +/- .25 PPM values for trend mode became apparent. Tuesday's experience serves as a reminder of the need to stay disciplined, remain patient, and adapt to the ever-changing dynamics of the market. Each trade, whether a win or a loss, contributes to the ongoing learning process in the world of trading.