I am very pissed at myself for my poor execution today. Click in the picture to fully understand why.

My execution today was horrible.  Not because I made bad trades; because I made a horrible decision overnight and let it fester all day.

The Setup

Last night, I ditched my stops on my short /ES and /NQ trades. Normally, I don’t ever trade futures without stops.  I’ve just been getting frustrated with the overnight action that appears to gun down stops.

Lets just say that I won’t do that again.  I may loosen them up, or set them with triggers and other monkey business, but mark my words.  I won’t go to sleep without a stop ever again.

The Morning

So I woke up this morning, got ready for work and headed down to my trading setup.  What I saw really pissed me off.  The /ES futures had rocketed up all the way to the 765 level.  At this point, I’m now upside down about 16 /ES points, for no good reason.  Had I not moved my stops, I’d have realized a 6 point /ES loss, then gotten back in at 765 short.

I walked out of the house telling my wife that I’d done something stupid, and rather than having to ride it back down – I should have been locking in profits.

During the day

Well, here you go:

• Short @ 764 ~ 7:30am
• Cover / Go Long @ 759 ~ 9:30am
• Sell / Go Short @ 770 ~ 12:30am
• Stay short w/ Stop at 758
• Total points: 5+11+12 (locked in profit) = 28 /ES points…

Rather than locking that in, I had a little emotional / mental whining session and stayed short all day.  Net, I’m still down a a few /ES points.

How to play it going forward

While it is painful to realize a nasty loss, sometimes that is what is required.  I still feel strongly that we are going down from here.  I still remain short this evening.  My stops are in place, and they are ready to get me out should the goofy after hours market makers decide to run the tape.  I’ll get back in tomorrow.

Going forward, as soon as the conditions change I’m going to roll the position.  Today, I held on because I “didn’t want to recognize the loss.”  That is completely foolish.  Lets just take the 28 Points that I would have banked today, subtract my losses of 16 points and I’d have walked out with a net gain of 12.  Go figure.

Granted, not every day will be a big moving day like this.  As soon as my indicators rolled over to get long, I should have done it.

Let this be a lesson to you - Don’t remove your stops...

Here is a picture of one of the charts I actually look at during the course of a day.  I woke up this morning to find out that the /ES has taken a nice hike upwards into the 765 zone, and I remained short through the entire hike.

Now, don’t get me wrong here.  I’m still in the /ES short play, and I’ll remain in this play for a while.  However, I removed my stops at 655 last night, because I was afraid of getting “stopped out” by the little bots that seem to sweep the /ES overnight.

That was just foolish.

It was foolish because the charts clearly show that the 664 range would be another point of consolidation if we break out.  The highs from this past week were right around the 655 range and that was a nice easy stop.  Rather than having another 9 points or so to knock down gains on the /ES, I’ll instead be recovering from the overnight swing throughout the day.

Overall, it isn’t a big deal.  I was just an example of poor position management.  I foolishly pulled my stops, and now rather than enjoy a profitable short position during the trading day today, I’ll watch the losses shrink.

Of course, this all depends on your time frame as well.  There are plenty of folks out there with very, very wide stops.  A particular blogger comes to mind who holds positiions into losses that I simply will not tolerate.  My futures trades are pretty much short term swing plays.  A day or two at the most, infact most are closed in a matter of hours lately.  As a result, my stop mangement must be appropraite for my style.