Time of Day & Overtrading: How to Stop from 11-3?

Discussion in 'Risk Management' started by KCalhoun, Jun 5, 2009.

  1. KCalhoun


    Hi -

    Grr. I turned a winning morning into a losing day overall, net down -$56 so not too bad, but still.

    I kept track of my percentages, it was a down/choppy Friday yet I overtraded it, stocks like HEB were great in the morning, not so much in the afternoon:

    34 winning trades; 14 losing trades WIN PERCENT: 71% (loss percent 19%)

    13 winning trades; 61 losing trades WIN PERCENT: 18% (loss percent 82%)

    Anyone have any tips on how to remind yourself to avoid trading 11am-3pm (unless the market's rallying or bouncing off a sharp selloff or a specific stock that has a compelling pattern etc)?

    For example I was overtrading DRYS STP on minor upside moves, taking a lot of stops.

    I have found over 10+ years of daytrading that most of my green is pre-11am trading, most of my red is 11-3 (and I usually put on swing trades into the close, and/or adjust open positions by scaling up/down into the close, depending on whether or not it's taking out new highs)....

    Yet I still do it. Any ideas on how to get oneself to avoid the market when it's rangebound/choppy, vs overtrading? I still struggle with this, because I love trading, but I have to discipline myself to avoid low percentage times of day.


  2. pspr


    Here are three possible ways I've tried.

    1. Put an alarm on your computer like "Atomic Alarm Clock" and set it to pop up a message at 11AM.

    2. Change your chart timeframe to a much longer time frame at 11 AM. You won't be able to see short term setups on a longer timeframe chart.

    3. Put a chart of the 50 bar ATR over your price chart and only trade when the ATR is rising.
  3. 1) your breakup of the trading day into time segments seems a little arbitrary.

    what if you made only one trade per day, with an entry always at 2pm, with a max holding period of 2 days? i think it helps to backtest this kind of stuff

    if you use ninjatrader, check this out:


    you don't necessarily need ninja to do this.

    just test various parameters and their combinations, e.g. time of entry, number of trades per day, max holding period etc, in a backtest

    2) psychology. you may want to check this out:


    good advice from a sports psychologist on how to stay centered in a sentiment driven market.
  4. It's all about experience. As you go, you learn how to better spot opportunities and that will also coincide with certain times of the day. Right now you are new and so that huge hole (11-3) seems like a dead zone to you. If you keep at it, you'll learn to trade those times when opportunities arise and sit back when they dont.

    I trade ES and have a few hard rules. No trades until 9:40 and no trades the last 15 mins of the day. Other than that, the whole day is fair game. If the setups come, I take them. If not, I don't.

    You just need more experience and your eyes and brain will learn how to filter through the noise better. Do not eliminate that huge chunk of the day arbitrarily right now. Keep watching and learning.
  5. If this is the KCalhoun I think it is, I am surprised by this post. But here is an idea. Find a really big thick rubber band and put it around your wrist. Each time you take a crappy trade when the market is range bound, pull that sucker as far back as you can and let it go. It will hurt. But it will change your bad habit unless you like pain. Better yet, get a hammer instead of a rubber band and whack your arm with it. That ought to do it. :p
  6. KCalhoun


    lol I like the rubber band idea... :) It's just that these markets have been so good for trading the last few months I'm having a hard time resisting trading throughout the day... I'll check out the alarm too, that may help. Even with a decade+ of experience, it's still hard to resist the markets all day, particularly with so many volatile stocks in motion....

    my #1 challenge still remains I'm not comfortable trading 2k+ type lots, although for many years (2002-06) it was easy for me to skip after-11am markets, this past 6-8 months it's been much more of a challenge, since there's so many strong breakouts in many stocks, such a big (welcome!) change from earlier years' markets.

    Kind of like seeing a feast before you all of a sudden, but you can't dine certain times or else it'll bite back. Since October the markets remind somewhat of the '99 days, which is super... I just have to hold myself back from trading throughout the session. I still make mistakes, though I keep after it, to always tighten everything up. It's a great time to be trading; moderation and focus is the key.

    thx for the ideas, much appreciated...

  7. akdrmeb


    i think your problem is overtrading. not trading the wrong hours....

    you placed like 80 something daytrades in 1 day. it is impossible to manage that many trades.

    why make your broker rich?

    focus on good trades.

    during the doldrums is actually a great time to trade. have you ever seen the way indexes respect their pivot points during the lunch hour? this is a "free lunch" indeed.
  8. Handle123


    I been day trading nearly 20 years, I have found the last hour to show the least amount of hourly average. Because of my money management rules, and my goal in say ES of four points, when made, I cut back size 80% up to last hour of the day. And again the last hour, I cut size again 80%, this way, even if I take nothing but losing trades, no way I can hurt what I made before this time.

    But in the beginning, I literally had to remove myself from my home and go for an hour walk.

  9. solfest


    Traders must also be risk managers. The two jobs don't always agree on what to do. I think the risk manager has to have the ability to control the trader.

    For most it is the other way around.

  10. Kcalhoun,

    Not to sound negative here, but we get these types of posts all the time. You know your own problem but even after 10 years, you refuse to change your known bad behaviors. There is a simple answer and it is called DISCPLINE. The definition of insanity is doing the same thing over and over and expecting a different result. You know you don’t make money during certain times but you keep trying to and lose hard earned money fighting with yourself. If you can’t stay away during certain times, drastically reduce your size as suggested until you learn how to trade it consistently profitably.

    Trading is about maximizing opportunities while minimizing risks. Be aggressive when you have the best of it. Protect yourself when you don’t and avoid situations where you know the odds are against you, i.e. the lunch doldrums or whatever those situations are for you.

    The good news is you actually keep track of your trading tendencies so you at least have an idea about what is really making or costing you money. That puts you ahead of many. But knowing the cause and not fixing it is inexcusable and says you don’t take your trading seriously. Trading history is littered with those who were disciplined almost all the time but would still give in to “flyers” or temptations for the thrill of it to their detriment. Don’t follow in their footsteps.

    Best of luck

    #10     Jun 7, 2009