2-17-12, Rules and Emotions

Rules and emotions are often in conflict. Emotions can be rationalized and become resoning. It's hard to identify rationings under emotion. When should one to use discretion or market experience to make changes?

Two examples from today?
1. Rule bending, got it wrong. I looked at my ZYG set up before market open this AM and it didn't come to my entry point. As I saw the price bar already pushed through the upper trend line. V commented on gold's bullish movement. I moved my entry point from BB/D to BB/4hs line. I also adjusted my stop point up to maintain the same R/R ratio. My assumption was that the price may not come back to BB/D line since it already touched it over night. However, gold price kept falling in the AM session. It went through more than half way of my stop point. It finanlly was contained at day/night Fib 62 line. Based on my Top Down approach, gold is still in a slightly down channel but range bounded. It should proceeded with caution or avoided completely. I tend to get influrenced by other people's opinions and comments.

2. Rule bending, got it right, almost. I looked at ZW's overnight movement this morning and noticed it was a big green bar close to my short entry point. I tried to rise my entry to a previous day high and closer to PP for my back resistance. It was prior to the pit open and my order was not accepted. I canceled the order in fear of a strong up thrust. Once the market openned it hit exact point of my intended entry and started dropping. It had about 4 handles ($200) and held at a HVN area before lunch.
If I had a contigent plan I would have made some money. However, my over thesis was correct. ZW's price started to advance after lunch. It pushed through higher than my intended entry. I tried to get on a long the night before as I saw a multi day Fib 62 held and bounced. It didn't give me a pull back I wanted.

Conclusion, stick to my setups and do not bending my rules. This is the best way to be consistant. There will be some missed opportunities and losses. But it's the best way to deal with emotions and unplanned actions. The key is to manage risk and have a good R/R ratio for every entry.