I had a lot of ‘rules’ in my head today regarding my trading which I wanted to adhere to. They were:

1. Only trade when there is a signal, wait for confirmation before entry
2. Try and hold out for greater profits, move stop loss to next level each time the market moved my direction
3. Try and be objective, resist the urge to take small profit if the market is still behaving or going my way
4. Watch for the longer term trends to gauge the directional trade bias and use the shorter timeframes to enter only

It can be hard keeping to the rules at times, I find that if the market volatility hots up, my anxiety increases which can force my hand to move the mouse and start clicking buttons… each time this happened, I took a deep breathe and tried to remain as objective as possible.

Ok, my first trade was a short at 132775. This was 1 price below 132800 which I saw as a short term level. The 5 min stochastics had formed a peak and there was a bearish candle. I was aware of the 5 day MA line at 132650 however and the market did bounce off this. I held my nerve and tightened my stop to 132950. I was thinking that the market would move further south with the topping of the stochastics… and indeed I was correct. I closed out at 132500 for +11. The market go down a little further from here before it reversed and went upwards..

My second trade was another short as the market fell through another short term level. I shorted at 132350 and took it down to 132150 for +9. The 5 min stochastics were oversold at this stage and I could see the market going up before going down again (as the 15 min stochastics were still showing us a sell).

I took +20 today which I am pleased with particularly because I managed to show good discipline!

When I got back home, the market was slowly dying a death.. the market was heading lower and lower. The stochastics charts were flatlined at the lower end and not moving much at all in both the 5 and 15 minute charts.

I went short and tried to hold it as long as I could from 132275.. it managed to get as low as 132050 before it headed higher and hit my stop for -3 (it would have been lower but I learnt my lesson from yesterday and that’s to move the stop down as the price moves beyond each level you have). At the back of my mind, I remembered what happened yesterday when I took profit early to find the the market went way beyond where I had closed it causing me to leave vast amounts of profit behind. I was anticipating lower prices, a break below 132000 and beyond…

However, the market bounced up hit my stop and then it looked as though it was going to go up. This dead donkey was already in oversold territory, was this the move up? I went long thinking so at 132350. This went two prices my direction, got close to the 5 day MA and tanked… arrgh, this was my original short trade!!! I lost out for -8 here.

Now, there was a base at 132050 and I had a short entry at 131975. My original target was 131600 but I figured that if the market falls through here, we may see more than just a few prices…. I took out the 131600 target as the market fell and activated my short at 131975. The market fell like a stone and hit 131575 and bounce back up.

Now, at this stage I was thinking to myself as the price action was moving up.. I had an opportunity to limit my previous losses of the last two trades by closing out… each nanosecond the market edged up, what a dilemma and finally at 131750 I closed it for +9. The market did indeed go higher from here.. to 132025 and as I am writing, falling again towards the days lows.

The moral of the story is that you don’t know if the market will move beyond your limit order once you’ve entered. Yesterday, we saw that the market moved in excess of 20 prices beyond my target. I tried to adapt my strategy today to ride for more profit but it didn’t work today. If I had stuck to my limit orders I would have been about 20 prices up today. You just don’t know what the market will do but the market always seems to be one step ahead of me.. it knows if I have limit orders.. if so, it will go beyond my limit and make me feel lousy. If I haven’t set my target limits, it reaches the area where I would have had a limit order and then reverses and makes me feel lousy again!

Anyway, I am happy with -2… it’s not a big loss! Next week as the clocks change, I’ll go back to getting an extra hours trading

The subject of this trading is a very well known trading adage and for those who trade, I’m sure you’ve seen it many times before. However, how many people can actually do this?

We are programmed to lose by nature with the stock market.. peoples’ emotions mean that they tend to hold onto their losers in the hope that they can recover any losses but the winning trades are those that we cut short once their in profit (simply as it feels nice to be in profit). In the short term, you will lose this way.

One thing I have noticed is that whilst I’m particulary good at cutting out my losers… I’m horrible and holding onto my winners. I keep on closing my winning trades early only to find that the market has moved my direction for a lot more potential profit.

My first trade this evening was not a bad entry. I got in at 134075 with an aim to ride the market to 134475. Momentum in the 5 min charts was strong and the stochastics were moving up nicely. The 15 mins had not moved up as yet but it was looking to turn. Anyway, thinking of running my profitable trades, I held the trade diligently.. it went up to 134325 and then tanked, taking out my stop for -5!! Grrr! My trading mentor actually called me at this stage and said that as soon as the market had penetrated the previous high and gone through it, I should have moved my stop under it…. this is a lesson here to be lodged into my memory (so I’ll underline it!)

My second trade, I shorted below an intraday neckline at 133550 with a target of 133275. The stochastics were in line in all timeframes. It hit target for +11 but then went further and went as low as 132750… this was a potential +29 price trade!! I was so determined not to take another loss that I had lost some profits!!

I ended up with +7 for the day…  not good enough really!

As I write, the market has bounced off 132650… another 4 prices!