DAMNED IF YOU DO DAMNED IF YOU DON'T
I start off today furious because my whole post that I had composed got deleted by Blogger and I have to do it all over again. Blogger is very frustrating at times, although it is free so it is hard to complain too much.
Here I have two trades this week that are examples of why sometimes it is so difficult to do everything right in this damn business. I was in the Hogs market on the short side, I had told everyone in here that I felt this market was setup for a decline. Since I foresaw a large move down, I wanted to try and trail a stop down with this sucker. I did notice last night after the market closed, that there were some short term divergences setting up that were bullish against the low of a week ago. In the meats specifically, I have seen these little divergences spark big rallies out of the blue. I contemplated exiting right there. However, since from a larger perspective I thought we were heading down, I decided to put my stop above Thursday's high when it's low was taken out last night. My logic was that we should not go back up there today if we were really going to break. When we reversed back up I got stopped out. In this case had I followed my gut to exit based on the divergence, I would have made an additional $6000. Crap!
In this trade, I exited based on a short term exit strategy that has served me well that I explained yesterday, and of course we keep going. So I wait too long on the marginal trade to take profits, and take them too soon in the good one. Such is the life of a trader, it just seems at times you never get everything right. I tend to be very self critical like most traders probably are. This business just lends itself to that. However, you have to take positives out of things like this. I normally do not like to throw dollar amounts around and I only do it every so often. In this case it will help to make the point. Between these two trades that I seemingly mismanaged completely, I made right around $40,000. If you would have told me at the beginning of the week that I would make $40k this week, I would have been ok with that, so I need to be.
In order to really make big money trading, you need to catch big moves. You can only do that by giving trades some room to breath. When you do this at times you will get picked off at the wrong spots, give back more than you want in profits, and also at times get them dead on correct. Overall, this is what you have to live with and know going in that is what is in store for you. For all I know next week Coffee tanks and Hogs fly, validating these exits. Maybe they will do the opposite. It does not matter, I got some money out of this so I have to move on now. I will study these over the weekend to see what I can learn from them, I always do that. There are always ways of improving and you need to continue to look for them.
This chart above of the Dollar Index, is a trade I had been contemplating doing today. When I looked at this more closely, I noticed that my exit target was awfully close to where I would enter this trade. It was closer than what my stop would be, so that ratio was less than 1 to 1. When I see that I pass on the trades, just poor money management doing trades like that. The Euro is of course the inverse of this on the long side. The seasonal pattern as you can see still favors down, so I was looking for a way to get short and be in sync with that.
I still continue to look for the indexes to fart around here for another week or so, then form a selling point that should be lower than the recent high from 8/17. If we get a good short term setup there it will be a sell with both hands.
I will post on Sunday what I am looking for next week in other markets. Sorry for the late post it is Bloggers fault. See I am learning something from Barry, always blame someone else. Another teachable moment from him.
Have a good weekend