Here’s Your Daily Mental Checklist
December SP 500 futures closed out the week with a gain of +8.50 points, while
the Dow futures tacked on +32 points.Â On a weekly basis, the ES is forming a
bull flag, but the bearish Butterfly remains intact unless the contract breaks
the 11/19 weekly high.Â Looking at the daily chart, the ES posted a gravestone
and market structure high, and continues to form a bear flag.Â Â The YM posted a
daily market structure high and bearish engulfing line, and continues to form a
bear flag.Â For you daily 3-Line Break followers, the YM is still short with a
Break Price of 10,587, while the ES is still long with a Break Price of
1173.75.Â In the small caps, the ER2 posted a new all-time high again, before
finishing the week with a gravestone and market structure high.
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
really new can be said about the U.S. Dollar except “Look out below!” (with
submarine diving sounds in the background). The Semiconductor Index (SOX) posted
an inside week and continues to form a bear flag that stalled at the 38% Fib
retracement of its yearly slide.Â The 10-yr note (ZN) tried to break its daily
bear flag before bouncing off of its 100-day MA support.
Daily Mental Checklist
Since the great majority of my trades are
intraday, I wipe the mental slate clean each morning to ensure that I maintain a
uniformity of attitude throughout the next session. My goal is a consistent
minimization of the unexpected by adopting an open attitude towards any and all
possible outcomes. My greatest vulnerability as a trader is the sudden
deterioration of a sound and patient mindset that can occur at any moment
throughout the trading day, so here is a helpful checklist that I’ve used to
remind myself each morning of the elements most important for my performance.
1. Attitude: Are you optimistically patient? Can you picture yourself not
trading at all today if no opportunities arise?
2. Preparation: System implementation and account management. Have you noted any
possible set-ups forthcoming for optimal entry and the actions entailed?Â Have
you noted your max drawdown limit for the day and the willingness to honor it?
3. Balance of Concentration: Trading is as much anticipation of changes in your
mentality as it is the market. Don’t let yourself get completely absorbed by the
“flickering ticks” and stay equally grounded on both sides of the monitor.
4. Self-Control: Concentrate on staying collected under fire, no matter how wild
the market can get or how quickly losses may come in succession – keep the ship
5. Visualization: Visualize each of the following:
– Seeing a system signal, and entering the trade without further thought
– A stop-loss triggered almost instantly, and just as quickly forgotten.
– Waiting for the market to come to you before entering.
– Shutting down without hesitation when maximum daily limits are reached.
In each of these there’s a keyword or image that literally rings a bell in my
mind that helps to crystallize the intent behind that particular checkpoint and
provides a mental shortcut. I think this helps in eventually making the
run-through of the entire checklist an automatic process, a routine that
hopefully embeds certain actions and attitudes within that same part of the
brain that operates other habitual motor processes such as typing or driving.
Please feel free to email me with any questions
you might have, and have a great trading week!