So like most traders I went home Monday night and did my homework.  I ripped through charts, watched some of the price action after the earnings in IBM and Texas Instruments(TXN), and how the markets were digesting this news.  I wrote down some preliminary plays for the next day and went to bed with a pretty bearish bias to the market.  I knew the Goldman Sachs(GS) earnings would be important but the way the market had been digesting earnings releases I was pretty confident the market was in line for a down day. 

Many traders I know went home today wondering “What Happened.”  Trading is what happened.  That is the frustrating thing about this business.  You may do all the work, have the best plan in the world, and still not have a great day.  But what you take out of todays trading is what is going to make you as a trader.  Did your opening plan not working out cause you to curse the market and lose focus?  Or did you plan for a bounce and get long a strong stock like Monsanto(MON)?  Did you keep shorting the market trying to force your opinion on the market, or did you stop yourself from trading because things didn’t make sense to you?  If you had a bad day did you manage your downside like a professional trader, or are you going to spend the next three days just making up your losses.  Did you just run home at 4pm or did you right every detail of today into your journal? 

Trading is not easy.  That is part of what draws us to this career.  I for one love the challenge that trading provides each and everyday.  But everyday isn’t going to be perfect.  You must adapt to what the market is providing and try to make sense of what is unfolding.  If what is unfolding matches your plan you can trade with conviction.  But you must plan for the unexpected.  Yes I got short Research in Motion(RIMM) and Suntrust(STI) this morning.  Yes I was expecting 2 points out of RIMM if the market traded in my favor.  Yes I lost my focus and gave back too much of my profits when the market bounced and traded above the level of resistance I identified in the SPY at 106.40.  What is important is that I took the trades I had planned for.  The way the market was setting up, the higher probability trades were shorts.  If I take the same trades 100 times out of 100 I will get paid. 

This market has been a challenge.  We have been in basically a 20 point range in the SPY for almost a year.  This makes it hard to trade with any conviction day in day out.  The important part is to manage yourself.  Trade setups that make sense to you.  Trade when you know you have an edge.  Trade to bring home a check don’t trade just to be involved.  This market pays off the traders who are persistent and disciplined, not just the traders who happened to sit down today.