Daily Score: -.02

Batting Average: 64.71%
Full Stop %: 11.80%
EpT: 0.94

I’m calling it quits early today to get a jump on the holiday weekend. I had a very interesting morning though.

Given that my Daily Score was negative, I was very fortunate to have the profitable day that I did for it could very easily have turned out differently. The reason why my batting average is a little lower today is because out of the 17 trades I made today, 14 of them were Trend plays which historically have a lower win rate but higher Reward/Risk ratio.

I very nearly got burned by what I call the Fade-Death-Spiral. It happens when I am fading a stock that is going against me and I average down anticipating the turn any minute now. Anyone who’s every tried fading has been caught in it at one time or another and it can be quite painful.

My plan does allow for me to fade moves given that I have exceptional reasons for making them. Usually I make fades either after a security is already extended and then has an explosive Wide Range Bar(WRB) into an area of support/resistance on climactic volume. That’s not what I had today.

Today I had the other kind of fade, which is the fizzle kind. This morning brought a sizable decline on big volume. After which the markets started to correct. This correction coincided with markedly decreased volume so I faded at what in hindsight was not a valid area of resistance. Prices went up again wit even lower volume; then I made my biggest mistake of the day and faded for no reason. In hindsight the only reason why I think I pulled the trigger was to average down my position, but price was in between 2 pivots and there was no sign of reversal to warrant my 2nd fade entry.

Prices increased some more. Now down a good amount I came to my senses, sat on my hands and waited until prices made it to the next valid resitance range. Prices stalled, and I entered Fade #3 (which should have been fade # 1 if I was trading according to my plan). Prices muddled a little higher, hit the high range of the resistance area and then sported a divergence so I fired my last bullet and placed my stop a few ticks above the entire area.

Finally the correction began and I was able to come away with a 2 tick gain on the whole lot. But if I had stuck to my plan and only taken the last 2 legitimate fades I would have turned an already good day into a spectacular day!

The moral of the story; Stick to your plan, and be very very careful when fading a market for it can erase a week’s pay if you jump the gun.