Nugget II--Marginging
Much clamor and concern for my margining habits and my risk appetite, so I will have to get back to the nugget I started on "Understanding a Trend". For now it's time to pull back the mystery on the concern of Tucker possibly being effected by Swan's meds.
This part of the picture would make a lot more sense after I finish the segment on the Trend. So, we'll jump in the middle of it. I'll discuss exactly how I can let trades go back on me 70% (The highest amount this year, btw.), not bad an eyelash, and come out 28% gain on the total equity. BTW, what I'm about ready to discuss in this part of the segment, I give strict adherance to 100% of the time.
The object in entering a trade is to find a place where either the ultimate pullback within a trend has happened, or find the ultimate peak or dip in a trend and find the reversal. It also helps in being aware of the TF the trader is considering, along with what is happened on higher TF's, and even some of the lower ones. In the first nugget I discussed how that cable had gone sideways on the daily, but was trending on the lower TF's. So, everytime I enter a trade, the timing is perfect, and the trade goes exactly as intended--NOT. It is those times that having a plan B in place has helped immensely.
My S&R's not only give excellent points for reversals or corrections, but they also measure a trend's decomposition, along with the length of the trend within that TF (Go to my other site for more info on my S&R's.) If I see where a possible reversal is at an S or R, I enter, but then if I get a continuation, then it will head to the next one. By now, I am down several pips. If I see the continuation is going to happen, I might wait for a pullabck to that particular reference point, and then exit, for the most part with a small loss. If in the event I am off by a whole leg, then I will wait for the next one to complete its run, add another position, and double my pleasure. Usually ,when I am off by one whole leg, the reversal happens with some explosiveness happiness that adds pips like crazy .(Did you see what happened to the GBP/CHF yesterday? That was my short. I was down by about 30 pips, and then Tucker and I go out for some chase-around-the-property fun. Then I had some friends over for some Hillbilly Golf, and then I came back in, which was 2 hours later, and the trade hit my TP for over 100 pips and over 10% gain on my account.)
Back to the scenario. Every once in awhile, I am off by 2 whole legs, which is the rarest of ordeals. That is when I add in a 3rd position. At that point, my wife gets jealous because I become married to the trade. By that point, it is a very extreme situation. This is where the backup plans comes to play.
Once the trade is buried by 2 legs, it almost has to move in my direction, because my methodology says so. The candles are flying too high above or sinking too far below the cloud. There's a mystic magnetism in the cloud that says, "You are returning to me." (I'll cover more of that later, too.) Still, there is no comfort zone until the Move happens. One of two things happens. I create a comfort zone, or I wait patiently.
You might say, "Create a comfort zone!? Are you stupit!?" And of course, Swan thinks me and Tucker are defintely on meds by now. Seriously, this is a business, and it has to be treated that way. (If you are struggling with your trading or are a newbie, paste and copy that last statement somewhere please.) How many times have we been told or read to never invest our last dime in the markets? I have self-proclaimed ice in my veins. If it wasn't for my backup plan, that ice would melt. In case of emergency, I always (Read and digest that last word please.), always (Repeating, just for good measure.) have an equi-amount of liquid assets as in my trading account. I can use it and in less than 5 minutes that recent deposit is reflected in my account. By putting equi-cash in my trading account, I have, in effect bought 1,000 pips. At that point I can sleep easy, knowing I have revived my comfort zone. Once the trade recovers. I take out the amount I paid for the "comfort zone", take my wife out to eat for doing such a splendid job, and life, once again is grand.
When was the last time I had to do that? Last year. There are also many ways to confidently measure when a pair has reached extremes. I will cover them in later nuggets.
