three biggest losses to the stop limit of $400, I would have been down only two dollars today. However, I did escape with gains from a couple trades which I had let go over the stop. So, this is a bit of a distortion too.I was mesmerized by the speed and unaccustomed to stops as large as was needed on this fast mover. I finally settled on $400 because I remember that amount being in the neighborhood of where FNG had his last fall during the big price movements. I really had no clue as to where to place them without that benchmark.
Second lesson of today was that I was focused on the unrealized gains column on my trading platform and not on the charts. I finally removed the gains and losses data and still found myself searching for it. It's gone for good from my paper-trade account now. I need to focus on price and volume, not gain/loss.
Third lesson was that I was suckered into trying to trade consolidation areas and not waiting for familiar set-ups.
Finally, I did not follow the plan I have been trying to create... I got a good entry long: $47.78 at
2:15 after the 2:10 candle closed above the 7 EMA and price started to rise above both EMA's. But, I got distracted and impatient after about 5 minutes and bolted with a $50 gain. That was a bad move because it was a nice entry into a 30 minute trend of continuous green candles which could have yielded up to $1.97 per share in gains ($1,970 on the 1000 shares). During this run, price did not close below the 7 EMA and only once in the next candle after entry did it drop below my entry price (by only 2 cents). So, the trade was never in jeopardy of stopping out. I just didn't follow my plan. The speed of the movement got into my head.
As a result of bailing on this solid trade, I was trading too much... multi-trading when I should have been managing one trending trade. My losses during this trend timeframe: $-1,521.
So, hypothetically: The true cost of discarding this one trade: Missed gains of up to $1,970 added to the losses of $1,521... the net swing in my returns today was up to $3,491.
Other observations:
I know I mentioned it before, but Speed Kills.
Secondly, I am still in the initial stages of formulating a trading plan; only since last week-end, really. I'm toying with using the 7 & 17 EMA's in it but it needs a lot of thought. For instance, had I stayed in that trend mentioned above, using an exit signal of the "First Close Below 7 EMA" would have been at $48.74, during the large drop at 3:20pm. Ouch! That late an exit would have taken away a huge chunk of the potential gains (although it would have given a prfitable trade). Clearly, other signals have to be considered. Using the High-Volume spike I have relied on in the past as a signal, it would have led to an exit during the 2:35 pm candle. Definitely more profitable than the previously mentioned 7 EMA Cross signal. Although profitable, the High-Volume signal seems premature. I just don't know yet. Eventually, I hope to be able to read momentum and base decisions on it primarily, discarding pre-determined entry/exit points. I really am impatient with myself and need to allot the time to learn this.
This is still really new but has been a necessity for a long time. I never have had a plan, a framework, for trading and certainly never had any semblance of an exit strategy. Mostly, I have operated based on one primary signal; the high-volume reversal of direction.
All of this is a work in progress but I am excited by the possibilities. I just wish I had more time for the research...
