Read Time: 4 Minutes

Weekly Trading Stats:

Total Trades: 7

Winning Trades: 2

Losing Trades: 5

Win Rate: 28%

Weekly P&L: -$103.55

Weekly ROI: -1.97%

Beginning Balance: $5,250.63

Ending Balance: $5,147.08

Weekly Trading Recap:

This week was easily my most disappointing trading week since I started my trading journey. I repeatedly broke my trading rules, I was reckless with my risk management, and I showed zero self-discipline or patience. It was a complete breakdown of everything that I've been working on and the fact that I only lost $103.55 is an absolute miracle.

I don't know if my poor decision-making was the result of overconfidence after my big week last week or if something else was at play. Either way, I am determined to never let it happen again.

Takeaways & Learning Lessons This Week:

Breaking Trading Rules is a Slippery Slope
One of the reasons that I'm so disappointed in my performance this week is because I broke my #1 trading rule.... I pulled a stop loss.

And here's the worst part: I got bailed out by a massively lucky end-of-day candle. So instead of getting the punishment that I deserved and learning my lesson, I escaped with very little damage and went on to pull two other stop losses and break multiple other rules throughout the week. 

Lesson: When I pulled that first stop loss, I increased my potential risk from $66 to $240 on the trade. It was a calculated risk and I knew that a $240 loss was very possible. What I didn't realize was that breaking my #1 trading rule would lead to me breaking multiple other trading rules. So on paper, I only risked $240 by pulling that stop loss but in actuality, I was risking my entire account balance by opening the door to other rule breaks. That might seem overly dramatic but I saw firsthand how quickly a single rule break can spiral into a habit of rule breaks. Moving forward, I will be following my trading rules with extreme discipline. The best traders I know have a non-negotiable stance towards their trading rules and I intend to do the same. 

Forcing Trades is Also a Slippery Slope
Last week, I followed up my best trading day ever with a bad trading day. And this week, I followed up my best trading week ever with a bad trading week. I didn't think I would have problems trading after big green days/weeks but clearly, there is an issue going on. My gut tells me that it has more to do with over-excitement than overconfidence/cockiness. I think I got a taste of success and then I immediately wanted to repeat that success. This caused me to force trades rather than wait for trades to come to me. Then once those forced trades inevitably went against me, I started trying to "make up" the losses with more forced trades and poor risk management.

Lesson: Just like breaking one rule can spiral into many rule breaks, I think forcing one trade can easily lead to many force trades. To combat this, I need to make it a point to trade lightly after big green days or weeks. On those days, I need to be even more diligent than usual about staying patient and waiting for my A+ setups. In fact, I think I am going to add a temporary rule that reduces my max number of allowable trades from 5 to 3 on the day after a $250+ day or on the Monday after a week with double-digit account growth (by percentage). 

Indicators Should Be Used to Confirm Trade Opportunities NOT Identify Them
I've built up a collection of tools & tactics to help me identify winning $SPY trades. I chart the options contracts, I look for hints on the QQQ, AAPL, IWM, and UVXY charts, and I use VWAP and volume indicators. All of these things work well but only if $SPY price action is telling the same story. Whenever my win percentage starts to dip, I find that it's because I'm not prioritizing $SPY price action in my analysis. That was the case this week and I just need to keep reminding myself to trade the $SPY chart first and then use my other tools/tactics for added confluence.

Why I've Been Red for 13 Consecutive Thursdays

While writing last week's newsletter, I discovered that I've been red for 13 consecutive Thursdays. I haven't had a ton of time to analyze this discovery yet but I did notice that just about every one of those days had either downward price movement or heavy chop.

I have two takeaways from this: A) On Thursdays, I will start trading with a slightly bearish bias and an expectation for chop (which means I might be setting slightly tighter profit targets). B) I need to do a deeper analysis to see how my stats compare on days where SPY moves up vs. down. I have a feeling that my Thursday losing streak might have less to do with the day of the week and more to do with me not identifying bearish price action very well. 

Recap of This Week's Goals:

1. Use proper risk management on every trade. Aiming for $50-$70 of risk per trade.
   
   Result: Fail. Talked about it already but I had multiple risk management rule breaks this week.
   
   
2. Zero rule breaks, revenge trades, or overtrading.
   
   Result: Fail. I had multiple rule breaks and on two separate days, I overtraded and gave back profits after starting the day green.
   
   
3. Only enter trades when the SPY chart and the options chart are telling me the same thing. And when that happens, enter with confidence and without hesitation.
   
   Result: Fail. I was getting way too focused on the options charts and my watchlist charts. Need to remember to prioritize SPY price action.
   
   
4. 60% win rate on the week.
   
   Result: Fail. Didn't even get to half of that because of forced trades and overtrading.

Trading Goals for Next Week:

Well, this week's goals were a colossal failure. Let's see if we can get back on track next week. Here are my goals:

1. Use proper risk management on every trade. Aiming for $50-$70 of risk per trade. 
2. ZERO rule breaks.
3. Identify trade opportunities using the SPY chart. Then wait for the options chart and my watchlist charts to confirm the trade opportunity before entering.
4. Maximum of one losing trade per day after 11:45 am EST. 
5. Maximum of 4 trades per day.
6. 60% win rate on the week.
7. 10% ROI on the week. 
   
   

That's it for my weekly trading recap. It wasn't fun but we learn more from our failures than from our wins. Looking forward to learning from my mistakes and turning things around. 

- Eric