If you’re a day trader then you have undoubtedly had one of those days when you could have made huge profits. The kind of day when you’re in a trade that looks good but for some reason your confidence temporarily wanes and you exit the trade only to see it run away without you. Well, today was that day for me. Let me set up the scenario for you….

I was working late last night and came across a post on Tyro Trader’s site about Society and Trading, talking about how most traders face pressure from people around them to “get a real job” and how this outside negativity influences performance. It is often hard to remain confident and positive when the only feedback you receive is negative. I thought about this and how it affects me on a daily basis in many different forms. From Ragin’ Cajun’s persistent bullishness, to all the commentary on WallStreak, the opinions of others are ever-present. How you process these opinions and insights determines if they become a catalyst for improvement, or a detriment to your psyche.

Even this morning, I was talking with MarketMonk on WallStreak about the pre-market futures action. He had made a good trade in the YM on the pop after the release of the ADP numbers. I mentioned that we trade futures here, and how the market has been much more difficult read the last two weeks. I invited Monk to take a look at our futures posts here, and he explained that he tries not to read trading blogs because it affects his trading and he is better off trading what he sees. I agreed that outside influences are hard to ignore and that they can be harmful.

As you may know by reading the About page, there are two of us here at 10kthrownaway, my brother and myself. We work out of a very small office, shoulder to shoulder constantly sharing opinions on the market and individual trades that we are in. We have discussed in great depth the advantages and disadvantages of looking over each other’s shoulder whilst we are in trades. Because of our personality differences, we trade quite differently. We both knew that eventually one of us would be in a trade and the other would have an opinion that causes a lack of confidence in the trade, resulting in large losses or forfeited profits.

Fast forward to 9:43 A.M. FSLR, my favorite stock to day trade, is setting up for a nice long position. At this time I am already down slightly for the day after trading POT, RIMM, VMW, and STP. I have traded FSLR a dozen times in the last few weeks, but always with 100-200 shares. I have been working on my MoMo strategy trying to add to my winners, and use trailing stops as they move higher. I bought 100 shares as we got near a double bottom, and added again as we moved a little higher. Thinking that this was a worthy setup, I continued to add to the position up to 400 shares which averaged my entry much higher. I was now stuck with a $215.73 average price and FSLR starts to trade sideways. This where the confidence part comes in.

After being in the trade for 40min my wonderful brothers leans over looks at the chart and my position size and says, “You should probably cut 200 shares here”. After taking a minute to look at the setup and the futures I pulled the trigger selling half of my position at $215.75 or b/e. “That sucks”, you might say, but that isn’t the worst part. Remember that little rule I was working on about setting trailing stops, well I didn’t stick to my plan. FSLR breaks above the 20-SMA an starts moving good. Still dumbfounded that I got out of 200 shares only minutes before the move up, I began focusing on what I missed and not managing the trade. Big mistake! My brain went into Idiot Mode and told me to sell at the market. Before I know it I am out of the trade at $218.50, that’s right $218.50. “But the stock kept going all the way to $232″, you scream. Of course it does, that’s what happens when the volume goes from 10-20k to 200k in an instant.

So, somehow I managed to turn almost $6,000 in potential profits into a whopping $542. It doesn’t get any better than that. In retrospect, I’m not mad at myself, I’m not even mad at my brother for suggesting I cut my exposure. I’m actually happy to see that I am profitable for the day, and that I am getting a little better every day at seeing the setups and building my confidence for the days that I can catch this kind of move. Now more than ever, I see that I need to continue working on my position management skills, continue taking favorable setups and work on keeping my confidence high so I can eventually make good money doing what I love. The next time you’re in a trade and you feel your confidence start to fall, just think about the risk/reward on the trade and try to remember your trading rules and this post. Sticking to your rules will help you escape losses and book profits.

Here is the chart for you… Warning: Very painful to look at!