Satuki @ Home

For day traders like you and me, nothing is more important than our first trade everyday.  It is so crucial that it can be used as an indicator how well we do in the remainder of the day.  If it is a flat trade or a small loser then it might not have any impact on our psychology.  If it is a big loser, then most would try to fight it all day long and hope for a flat day in the end.  This is especially true for the majority of day traders out there. The reason I say “the majority” is because only less than 15% of day traders can make money consistently.  I am a bit lax on that number because I do not want to scare you away. Some people say it is less than 10%.

Why do many people still like trading?   It is because of the euphoria a winning bet can bring them. It is like drugs.  When people are high, they tend to forget how painful the side effects are.  I think I have digressed a bit from the subject. 

So let’s get back to why the opening trade is important. Simply put it this way, a big first loser will exert a huge impact on your subsequent performance.  You will have to first recover the loss before you can even think about ending the day profitably. With this on your mind, you make irrational bets/forced trades all day long that make the hole even bigger, thus form a vicious circle.  I experienced all these cycles and still clearly remember the agonizing pains of losing 3-4k a day back in my old dark learning days. Good thing is that there were only a few days like that.

For an experienced trader, this might or might not happen after a few small losers in a row.  For them, it is impossible to have a huge loser due to their rock solid discipline.  But a few small losers in a row add up quickly.  No matter how experienced a trader is, this would still have some impact on her/him. A good one will bear the pain and fight through it.  A bad one will still cave in. After all, they are humans too.

If the opening trade is a decent winner, experienced traders will most likely have a decent day unless they become greedy.  With a big winner in your pocket, you will leave the psychology baggage in the dust and play the market like a game.  With nothing on your chest, every bet you place seems to be in your favor. You look at the market and think that nothing will ever stop you. You feel like the Lion King. Everything looks so small in front of you and soon you feel you can conquer the whole market and dominate the world. You burst into laughs when there is no one around and you frown on anyone who dares to belittle your little day trading business until the market slaps you in the face and wake you up. But at least you will end that day profitably.

I try to be very careful with my opening trade too. Here comes my shameless self-promotion, which is my lucky first trade this morning and the remaining day was extremely easy for me because of that winner.  Here is the short trade RINO.

 
Click on the image to have a better view

So be very picky about your opening trade and try to find an impeccable setup for this guy.  Pamper him like your first lover……….. well at least for one day.