Followers

Wednesday, August 15, 2007

Trading Results for Wednesday

"IN A LOSING GAME SUCH AS TRADING, WE SHALL START AGAINST THE MAJORITY AND ASSUME - WE ARE WRONG UNTIL PROVEN CORRECT! (We do not assume we are correct until proven wrong.) POSITIONS ESTABLISHED MUST BE REDUCED AND REMOVED UNTIL OR UNLESS THE MARKET PROVES THE POSITION CORRECT!"
- Phantom of the Pits

Read Full Post.....
Today, I initially made 1.5 pts, but lost 1 of those points trying to chase the selloff in the afternoon. So, on a day when ES put in two +15pt run-ups, another 10pt run-up, followed by a 36pt selloff, I made 0.5 stinking, lousy points.

Anyways, I think one of the things that I have been doing wrong was making the mistake of assuming that my position was correct.
As per my plan going into today, I skipped the first two signals that I got. I kept thinking short @1450. But then I saw that ES looked like it was trying to form an uptrend. So I went long. Even though the plan that I wrote up yesterday night suggested that I should be looking for shorts, I went long. But that was okay, since the market environment can change on a dime, and you must adapt with the changing market conditions.
What was not ok was how I mis-managed the trade. By the time ES hit 1444, I naively assumed that my position was correct (it looked correct, but was not ***proven*** correct). By the time it hit 1446, I was blinded by the emotions of my position, and failed to see that ES had put in a double top that was beginning to gather strength. Had I been more objective, I should have reversed the trade @1445 because of the potential double top formation at that time, and at least play for the 23.6% Fibonacci retracement. I finally gave up on my position @1442.50, and was too frustrated to look for a shorting opp.
That shorting opp. would come very soon. I think the box play pattern made a rare appearance in ES today - a double top vs. a triple bottom. At around 245pm, ES broke below the triple bottom @1430.50. It would go on to drop 21points, something that even I thought was impossible. However, disbelief provides the strongest fuel for a mo-mo run (up or down).

Anyways, I know what I did wrong today (I did not remove my position until I was proven incorrect), so I will correct that mistake and regroup and prepare for tomorrow.

No comments: