Dax Day-Trading. Its not ok to miss trades

I saw somewhere this week a trader stating that its ok to miss opportunities and not to feel bad about it because there are always lots more just around corner. This has always sounded wrong to me because it´s not ok to think like that if you want to be at the top of your game.

You hear this type of stuff all too often in the Trading / FinTwit ´o´ sphere and in one sense I can´t disagree because its obviously a truism - there are always more opportunities just around the next bend in the chart. This is the essence of trading.

But what has always struck me about such statements is that it gives the impression that its fine to let yourself off the hook for missing trades, often really good trade opportunities (sitters) when instead you should be banging them home into the bottom corner of your P&L.

This game is hard enough without missing trades especially the open goals that present themselves on a regular basis regardless of what or how you are trading.

More than that it suggests that a certain degree of slackness or laziness is acceptable when in reality, the exact opposite is what is required. Giving yourself a free pass to get back into your ´safe space´ is the wrong way to approach this business. That's the way amateurs think not the way the best traders think.

Look at it this way - do you think Sir Alex Ferguson would have said to David Beckham who had just missed an open net - "never mind Dave lad, there's always the next match". Would he fuck - he would have given him the hair dryer treatment and told him to up his game otherwise he´d be dropped!

In every sense Ferguson´s approach is the better way to improve your game. Don´t let yourself off the hook just because there will be more goal opportunities down the line. Give yourself a sharp talking to and better still, make a plan so that you won´t miss the next open net!

Ok, I´m exaggerating a little to make a point and for newer traders cutting yourself a bit of slack from time to time while you learn the ropes is just about acceptable. But if you´ve been in this business long enough to know what you are doing - that's another matter. You need to be asking yourself some tough questions. Why am I missing or why did I miss that one - it was so obvious in hindsight.

Ah - "hindsight" I hear you say, surely everything is obvious and easy after the fact. Again there's truth in that but equally you are letting yourself off the hook. Your job is about planning, foresight, anticipation and execution not about hindsight. Its just another way to cut yourself some slack.

Believe me if you really want to make it in trading you have to forget all the excuses for missing or not taking the best odds trades and figure out why you´re missing them. Only in this context is hindsight useful. Use it to review your trades and prepare yourself for the next ones that come along.

I should add for transparency that of course I miss trades as we all do. But it really annoys me when I do, particularly the higher odds trades, because I expect better of myself. And that's the point. Sure you will miss some (and not all of them will be winners) but its not being ok with this that determines your future in the business. It´s the difference between wanting to be a professional at the top of your game and a lower league also ran.

When you miss trades i.e. make mistakes, it´s not ok in my book to go easy on yourself. While there may well be plenty more trades, why would you not want to be taking the majority of the better ones when they arise? Don´t ever think its ok to cut yourself some slack. Feel bad about it and then think why you missed them and fix it.

I think you get the point I´m making so lets look at a way hindsight is useful in making sure you don´t miss out on the next "open goals" that set up.

I suppose I should say a bit about what I consider to be open goal trades. It sounds a bit counter intuitive to talk of "open goal" trades and easy trades when we all know nothing is certain in trading. But I´m not talking about certainties I´m talking about the best odds trades which have a high probability of resulting in a positive return.

As a Dax day trader I can only talk about my product at the level of detail required. But whichever instrument you trade and whether you are swing or day trading, in truth you´ll know yourself the trades that offer the best odds. Its those trades that occur on a regular basis, are clear in foresight at the best levels (locations) and set up time and time again on your chosen instrument.

For the Dax and for the way I trade these trades tend to be 1st test fades of strong S & R, gap close trades, pullbacks and failed breaks. From this perspective lets look at last weeks chart and it should be obvious where the better trades set up.

The first thing that you must be proficient at is preparing and marking up your chart(s) before the session you are aiming to trade (planning). There is a lot to this so I´m not going to cover everything suffice to say you need to start at the Higher Time Frames and work down to make sure your S & R levels are clear and noted.Of course if you are using a different method than standard charting such as volume or market profile etc. then this will be a different approach. But the point is the same - be ready and prepared.

Secondly you must have a feel / understanding for the sentiment or context that you are trading at any given time. For this you need to be up to speed with the macro drivers of price at a fundamental level and the key elements of the macro climate that are "in play" at the time.

Again there is a great deal to be said about understanding the macro environment / context which I cover in my trading manual (together with chart mark up / planning etc.).

Moreover, as a slight aside, I think its important to note that in today's markets, I believe pure technical analysis has a hard time making the cut. You have to blend your read of what's happening from a bigger picture perspective to the ´technical´ structure of the chart.

In this sense you have to be a discretionary trader who uses the bigger picture environment for bias (for want of a better word), and technical price action for tactics and execution.

The below chart is my Dax M30 chart marked up prior to the start of RTH trading on Monday 13th July. In the chart you can see that there were at least 4 good trades that set up in the RTH session from pre set and marked up S & R from previous price action. There were 2 from good R & S on Monday, 1 from strong "psych" R on Wednesday (the 13k level), and 1 from pre set S that had been ´worked´ all week on Thursday. Its these types of trades that I class as "sitters" in particular the long on Monday and the short on Wednesday.

Moving down to the M15 chart we can also add another 3 ´better odds´ trades: the long from overnight low / prev day futures close on Tuesday; the long from the futures gap close at the RTH open on Wednesday and the long from the overnight high on Wednesday.

Thats 7 "good odds" trades last week which were easily capable of being pre planned and had enough potential to generate at least 500 points depending on how you prefer to manage your trades.

It´s these types of trades that I hate to miss and its not ok if I do. They were trades from good price action / ´technical´ S & R levels which were either pre set at the start of the week or added to the chart as the week progressed and were in line with my daily view of the context as it evolved.

If you don´t take these types of trade set ups you´re left with lower odds trades, "diddling in the middle" and or short term scalps (if you are a day trader) which, while being perfectly acceptable, make your life a bit harder than it needs to be. You need to know your instrument, know which trades offer the best odds and be ready and prepared to execute as they set up.

So, next time you hear someone say its ok to miss trades as there are always more, remember, while that may well be true, you are aiming to be a top flight trader not a minor league journeyman and that type of mindset won´t get you there.

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