THE GOOD, THE OK, AND THE UGLY
I did get stopped out on the Natural Gas trade yesterday, when that huge turn around happened intraday. I did say in the post that in today's world a good gain like that can disappear in a flash and that was prophetic unfortunately. However, it is just another trade that I would take again, it just was a loss. In a "fair and balanced" approach, I will also show two other trades I made yesterday that had better outcomes.
The first of those is the above trade in Corn. You can see on the chart where I entered and exited. I love trades like this because it was never out of the money even for a single tick. There are a couple of questions that I am sure would be asked if we were in an auditorium. First, why did you exit so quickly? The answer to that is simple. This trade was based on a short term pattern, and the edge was only for one day. It may very well waterfall and become a huge trade I could have held. However, the reason why I did not hold it is also the answer to what would most likely be another question that might be asked. Why did I short a market this strong?
The answer to the second question is also an answer to why I did not hold this trade. The pattern for the trade does work in both up and down trends. When determining when to hold something that is a very short term pattern or not, I take some other things into account. One of those is the strength of the underlying trend. I have mechanical ways of doing this, and in this case the numbers were just too strong to try and hold this for more.
Since I have decided to get back into things, bring my website back up, and offer trading services again, there will be more specific details available through those services. I have to hold some things back from the blog and I am sure readers can understand that. I already give up quite a bit here as it is. The PFG situation has just made me realize I have to diversify myself somewhat again, so that is what I am doing. I am sure the subs of the Bond service would tell everyone they are getting their money's worth and more there so far. To close the book on this trade in Corn, it made $450 a contract and was more or less a day trade, and that is pretty darn good in a market like this one.
The next trade I also did yesterday, which I call OK, was Feeder Cattle.
You can see on this chart where I entered this trade on the long side. In this case I have decided to try and hold this one because it appears to me the trend is turning back up. I could have easily taken a quick good sized win on this, but the big money trading is not made day trading, it is catching larger moves. That could mean just a 3 day move, since the markets are so volatile. You can see right on this chart the big move down, which is a good example of the types of things you have to catch. In that instance you had several days where the prior days high never even went. You could have just trailed the stop down until one did get taken out, and gotten a very good gain out of that move, about half of it.
This leads me to a question from yesterday's post about the Natural Gas trade, which was the ugly.
This one looked like a beauty for a couple of hours, then completely reversed. You can see where I entered and where I got stopped out. Yes price has come back down, and you could say "well you had your stop too close." Perhaps, but my patterns are designed to move right away, so when they don't I do not give them a lot of room. It is all about risk control to me. I could wind up shorting this again next week, the setup is still there.
Today you have seen 3 trades that are all different. One was a disaster, one was just great, and one remains to be determined but had a good first day. This to me is typical of this business. Sometimes you just get kicked around a little bit but you hang in there because the good streaks, like what the Bond System is having, will come along. That is when you make your money.
We are getting a pullback in stocks here, which at the moment to me is still a buy. If we were to mess around down here for a few days, then go up and test the high and start coming back down, that could be a sell signal. It is too soon to tell on that front for me.