The full spreadsheet can be downloaded here, which you can use to monitor your own scalps and day-trades if you wish. Due to space restrictions here, i’m only going to post the errors portion of my spreadsheet from last Thursday.

Feel free to modify the spreadsheet anyway you see fit. But these are the current demons that I am fighting in my own trading. Many of these may or may not make sense until I update my “How I Pick Stocks” page further. But the 3 most numerable mistakes need no further explanation by any trader. Taken together, they accounted for over 90% of my trading losses for the day. They are:

CT = CounterTrend Scalp
Inadequate Breakout : Chasing a breakout without enough confirmation or without waiting for a pullback
Preconceived Notion: Leading to Attachment, Hope, & Ego

The first 2 are self-explanatory and I will document later the steps I am taking to deal with each and every one of these mistakes. The final error I only discovered within myself last week, but without much effort it is immediately apparent how detrimental an effect it has on my trading.

The reason why it has remained hidden for so long is because prima face it is easy to overlook as being beneficial with its negative effects going unnoticed. Our brains are hardwired to think, analyze, and predict…actions which on the surface seem like they would only aid in our ability to make money in from the markets. However, in trading on the smaller timeframes, these “assets” can quickly turn into roadblocks as our minds also have a tendency to hold onto their thoughts and predictions tightly leading to attachment.

Then, even in the face of changing circumstances and contradictory evidence we grasp on to our preconceived notions and hope that they will be proven correct lest our ego be bruised. When 2 signals confirm our preconceived notion and 1 red flag is raised, we become more likely to ignore the red flag, no matter how big, bright or high it is flying.

It is like our brain computers were turned on to analyze and predict the future and then turned off as soon as they reached an intermediate conclusion. This type of thinking and attachment bring emotions into our trading and it was the clues of these emotions of hope and bruised ego that led me to realization of this elephant in my trading room.

I am only human and am not able to erradicate all of these errors overnight or even to focus on more than 1 or 2 of them at a time in the required depth to reduce them. Thus, today I will be focusing on reducing my tendency to have preconceived notions when trading as well as my tendency to play breakouts too soon…both of which have deep emotional roots and will be diffcult to conquer overnight.

Hopefully my own journey can brighten the way for others as well, even if only a little bit.

Good luck today!

WilyTrader