Thursday, January 04, 2007

More Daytrading of the Russell 2K Futures

I am making my mandatory journal entry of my trading mistake. This one was in daytrading the Russell 2000 Futures (ER2).

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The first mistake I made was moving my stop loss lower on one of the morning trades in ER2. The reason that I did that was because I thought that there was a pretty good chance that the original stop was going to get hit. Of course, this begs the question, if you believe that the odds are greater than 50% that your stop will get hit, then why not sell before your stop gets hit, or even better, don't enter this low probability trade in the first place?? Because my first couple trades were small losses, and I wanted desparately to make back those losses. That was my second mistake.

One mistake led to the second mistake, and you can imagine how the story turned out for the rest of the morning. As luck would have it, the markets played nice to me in the afternoon, and I was able to recover all of my morning losses.

The probability of my stop getting hit will be something I will incorporate into my trading, especially for futures trading. As time permits, I will make a post about this in the context of risk.

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