The TICK indicator is just too good at everything.
How did this help me make money today?
First, and least importantly, I felt encouraged that the positions I had were still showing resiliency, and that if this was the approximate low, I could have a strong day P&L wise.**
Second, and more importantly, I had my eye on two potential longs, and was able to pull the trigger.
I am UP in both new positions by 65 – 75 bps and this is ONLY BECAUSE of my effort to get better execution, nothing else, because my trading plan in the most literal sense always calls for setups to be bought on the close.
There is a warning: Occasionally, you buy a stock a, say, 3pm, only to see it reverse, negating the trigger that prompted you to buy in the first place. This is unfortunate, but in my experience it’s best to sell right away.
THE SETUP FAILED. More on this later
The trades are typically losers, but the good news is twofold:
- The positive $ benefits of this execution technique far outweigh the negatives
- …yesterday’s post on how this technique saves me (you) THOUSANDS per year?
- You typically are only selling at a fraction of your risk amount. You risk 1%, but end up losing 10 bps. In other words, you would have to do this “early dismissal” quite a number of times for it to really impact your performance
**You really shouldn’t be judging ANYTHING based on your P&L on a tick by tick level, unless you are a very active day trader. How well you execute your strategy is what matters. If after 50 or 100 perfect executions you have a bad P&L, critically review the foundational elements of your strategy.
You know how after EVER GAME pro athletes watch hours of tapes replaying the game so they can learn from their mistakes (double for when they lose)? Exactly.
They are positively reinforcing what they do well, and removing bad habits from their decision making.
Only with the same critical focus can you do the same.
What are your trading strengths and weaknesses?