Today’s main lesson is simple: struggling day traders need to stop chasing price and start paying attention to how the market behaves around important levels.
Before the market opened, I marked my support and resistance levels and created my trade plans. I do this because I do not want to make emotional decisions while the market is moving quickly.
My rule is straightforward: I trade the plan I created before the open. I do not randomly change my bias, chase a move, or enter simply because a stock is moving fast.
On SPY, price pushed higher into an important area that included a gap fill and the 20-period simple moving average. That created the short setup I was waiting for.
I did not chase the move higher. I waited for price to reach the level and watched how it reacted. After entering, I added only when the trade continued to make sense. When price pulled back, I locked in part of the position and stayed patient.
Many traders make the mistake of assuming that every small pullback will immediately become a major move. Often, price needs to return to a lower support level before new buyers become interested. When price is extended, experienced traders are usually not eager to buy at the highest point.
That is why patience matters. You do not need to force an entry at the top. Wait for price to return to a level where the risk is easier to define and the setup makes more sense.
The SPY short eventually moved toward the morning lows, my main target. I paid myself in stages as the move continued lower. The trade produced a profit of $14,471, but the profit came from following the process.
QQQ provided another important lesson. I was watching it for a long setup, but I did not take that trade because SPY had already triggered and required my attention. Missing one trade is not a problem. There is always another opportunity.
Later, I watched QQQ near the 9 EMA for a possible short. The most important part of that trade was identifying what I call the high water mark—the important high created during the upward move.
Once that level was established, I watched to see whether QQQ could break above it and close with strength. It briefly moved higher, but it could not hold above the level. That was a sign of weakness.
This is where many inexperienced traders panic. They see price move slightly above a previous high and assume a squeeze is coming. But the break itself is not always the important part. The candle close often tells you more.
If price breaks above resistance but cannot close strongly above it, buyers may not have enough strength to continue the move. Candle by candle, QQQ showed that weakness. It tested the high water mark repeatedly but could not establish acceptance above it.
When the rejection became clear, the downside move became easier to hold. I did not need to panic because one candle moved higher. I watched the structure develop and waited for confirmation. The trade produced a profit of $1,723 from a single entry.
The lesson is this: do not react to every wick. Watch how price closes around important levels.
Ask yourself:
Can price hold above the level?
Is it creating higher highs?
Is it repeatedly failing in the same area?
Is the move extended?
Is the trade still following your plan?
Those questions will help you make better decisions than emotion ever will.
I also want to address the ego that keeps many traders stuck. Some traders believe they need to prove they can become successful completely on their own. But there is a difference between independence and refusing to learn from someone with experience.
Professional athletes have coaches. Trading should be treated like a professional career as well. If you have been trading for months or years and still do not have consistent results, you need to be honest about your process.
Continuing to repeat the same mistakes will not make you independent. It will only make those mistakes more expensive.
There is nothing wrong with asking for help. The real mistake is allowing pride to prevent you from improving.
Today’s recap was not about finding a magical indicator or predicting every move. It was about reading price action patiently.
Create your plan before the market opens. Wait for price to reach your levels. Do not chase extended moves. Watch candle closes instead of reacting to every wick. Identify important highs and lows, manage your risk, and let the market confirm your idea.
Your job is not to predict everything. Your job is to recognize the information, manage your risk, and remain patient enough to act when the setup is actually there.
Thanks Pat!