Tuesday, July 6, 2010

Duck duck goose

Last night I went through a lot of stuff at my desk, threw away several old sheets of data and notes. It was interesting to compare my notes from 2008 with the current market climate. I had a lot of good trading days but the recurrent theme was playing a bounce to the upside from oversold conditions, or this can't get any worse. Of course the market plunged a dull knife into those plans too many times to count.

Things are a little different now, very little interest in really playing bounces and I have no overnight exposure.

But, the Es future contract offers interesting chances. I took such chances "overnight" and had to duck a few times before my thesis proved right. So again I was too early and either had to sit through some pain or change my mind along the way.

DUCK- The E mini future contract traded July 5th when the rest of the market was closed. It closed on the low near 1011 and opened at 1800 hours last night around that point. I bought in around 1012 on the thesis that it would have been a bit oversold due for a bounce, that too many people were just scared on the 5th. This single contract trade worked fast for about 100 but I was WANTING it to be a $500 trade,and I felt safe that the 1011 lows would hold as a good stop. It turned on me and I had to take a painful large stop, $200. Meanwhile, a couple rules of trading were broken as I enjoyed nighttime beverages on a lovely night.

DUCK- I still believed in my thesis and bought again. Then Asia opened down fairly big, like around >1% and I got arse kicked again for about another $200.

GOOSE- I still believed we would bounce, bought again 1005.25, spent too much time watching the screen instead of relaxing, and have been restless overnight. I saw it once overnight around 2400 hours near a breakeven point of 1012. Woke again to see it with about an $800 profit, took it to the bank.

Fairy tell lesson: volatile overnight trades best left until Asia opens. I'd be roughly at the same profit if I'd held my original trade but it just hurts the account too much. I'f I'd been better disciplined to have only taken the last entry (ie wait for Asia to open to get a final over reaction) I'd have double the profit. Also noted was that as of 0411 only 230K contracts traded so tough to do this with a lot of size. I'm up 25% in this account since it opened early June.

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