Some Valuable Lessons Learned Today

1. Don't violate your trading rules
My trading rule is to buy (or short) based on the crossover of the 4-EMA and 8-EMA. If either the 4 or the 8 (or both) cross through the 21-EMA this makes the signal even stronger. When this occurs I will usually put on a position. Being mindful of the time of day, trading volumes, recent price moves and recent & long term support/resistance trendlines or channels. Today I completely violated this rule by not following my signal. Why did I do this? See below.

2. Avoid complacency
In the past 2 days the market has stalled and become range-bound for extended periods of time making it a dull and boring market. During this time crossover trading signals are muted and its not easy to make money. In fact I attempted to trade and I lost small sums each time and became frustrated. So I stopped paying attention. Big mistake!

Before I knew it at 1:15pm, the market moved quickly through a crossover point to sell the QID short. Before I had a chance to react it quickly resumed a new trading range causing me to hesitate in making the trade (I try to avoid chasing moves because sometimes they reverse and can really burn you). At 1:30pm QID moved quickly and then bounced and fell into yet another short-lived trading range. I never made the trade EVEN THOUGH MY TRADING SIGNAL WAS STILL POSITIVE (the moving averages were parallel and not crossing back against me). I was in shock and angry at myself for missing the first crossover so I started "questioning" the market when it was hitting the new lower prices then becoming range bound. Instead I should have followed my system (see #1) above. I guess my fear of a reversal kept me out of the trade. But...had I stuck to my thesis (see below) I would have entered the trade.

3. Stick with your thesis
My thesis today was that even though the Nasdaq had opened lower in the morning it would bounce back in the afternoon, especially with expectations of a strong earnings report from Google acting as a catalyst. Besides, it did this "bounce thing" yesterday. And sure enough it did it again this afternoon. If I had stuck with my day's trading thesis and "seen it through" I would have been right and made some money.

SUMMARY:
Today was a perfect example of what happens when trading in terms of dealing with your psychology and trading methods. I must become much better at trusting my trading system, being always alert and watchful of the market ESPECIALLY when its not doing anything...and lastly, trust my instincts and "trading thesis" for the day until the market's action rejects (or accepts) it.