Expensive lessons learned (I hope)
Hi everyone, not looked at comp till now.
Yes lurker I covered my short last week, I got a bloody nose to say the least being short of YM, ES and Z (Ftse).
Looks like we were just wrong. I got taken for 60 pips today - 2 trades, stopped out both times.
It isn't enough to kill me but was in too heavy and probably getting a little set in my short views.
My money management totally sucked and I had a larger stake on the second trade (I know I should trade less when losing).
Saying that I have taken a one contract short today with a stop above the highs.
the risk reward seems alright and at the time a pull back looked likely.
I think I'm going to cover at a small loss now as the signals that got me short are no longer looking that way. It did go my way a little but I didn't cover for a profit when I could have done.
My second losing trade today pulled back and gave me the opportunity to get out for 15 tics including spread - guess what opportunity I didn't take!
Everything is pointing to long trade, there isn't a time scale you can look at on the dow that points to a short now we're at all time highs.
After today, and the advice of some learned members here, I am convinced that there is no reason to be short during the blow off phase of a roaring bull market.
My advice for what it is worth would be to take a daily and hourly view and only look to trade in that direction.
What it does is removes one decision for you, instead of deciding on being long, short or out you might decide that if it is above daily 9ema you are only looking for longs or something.
I was talking to a friend on the golf course about trading, and I remember very distinctly talking about entries more than exits, and how I planned to take note of the primary trend and look for pullbacks into it. I had been reading a few books by Dr Elder Alexander, along with
The Disciplined Trader. I had realised the weakness in some of my strategy which got me burned last week. This is my single biggest daily loss and represents around 30% of total equity balance. Yes, you did read that right, and there isn't a decimal point missing.
I've blown a hole in my trading record with regard to risk and drawdowns. I now have less capital with which to recoup losses, and my psychology is a little wrecked.
I'm going to take a few days off, as I am quite busy with other fairly important and quite stressful stuff. When I come back, it will be with stricter rules and a temporary £1/point stake size limit. Hopefully I can improve the matter later in the week, although I have resigned myself to the fact that I will have 2 consecutive losing weeks. At least I have enough to trade another day.
Thanks to CounterViolent, BrutusDog, Firewalker, Dinos, and of course smccreedy for all your kind words and guidance. Other people have weighed in, so my apologies if you are not mentioned by name.
I have made some mistakes, but I think I understand the problem, and hopefully I will be able to get back on the horse soon.
Finally, I'm new to the Dow. Maybe I should go back to the FTSE in the mornings, and the Dow in the afternoons...
Back in a few days - happy trading!
