How To Make Sure Your Trade Doesn’t Turn Around And Bite You
The other day while I
was reviewing the trades I had done that morning with everyone in the
Trading Room. I received a text message from one of the
subscribers that went something like this:
“You did three trades, and
were three for three and made X amount of dollars. How can I be down after
commissions when I followed you the whole time? You make it seem so natural.”
Naturally, my response was, “Did you take each of
the trades I did and enter and exit at the same time?”
“No, not exactly. One trade I
tried to anticipate and get in early, that cost me.”
The point is that the very appearance of my
trading seeming natural and effortless is not due to some secret, but, as I have
always said, a function of screen time, and repetition. Trust me, my early
trading was anything but smooth and effortless. Sticking to my game plan, good
streak or bad streak was always my priority, it was/is that approach that allows
me to do what I do today. So while some readers may be able to relate to this
person’s experience, you have to keep in mind that trading is a marathon; not a
sprint. Success, as in any professional endeavor, will only come to those who
do everything right. Success always eludes dabblers and drifters.
The next observation may seem odd, but yesterday
was pretty quiet across the board. Stocks and FX. There were some good trades
on the opening — great trades in fact in the gold sector –Â but after
that, the tumbleweed went blowing by. I was actually relieved in some way, the
beginning part of the week had me in front of the my monitors for quite some
time as both stocks and FX were pretty active. Tuesday night in fact resulted
in a 4-hour sprint in FX until midnight trading the GBP,
EUR and CHF,
with my good friend
Todd Gordon. So despite the red eyes, over-caffeinated veins, it was well
worth the efforts as volatility was off the charts.
^next^
I did one trade yesterday morning that I thought
would be useful to review. The trade was a short in
Newmont (NEM) right off the opening. It met all the HVT parameters:
1. 1-minute trend down
2. 5-minute stochastics confirming trend and
momentum
3. Lead indicator also confirming short entry.
The trade started off and ended perfectly.Â
However, I want to illustrate how important it is to always let your lead
indicator be your guide to entry and exit. The stock by itself cannot be traded
unless the lead indicator confirms it, regardless of how ‘nice’ the chart
pattern looks. Nine times out of ten, if you ignore the lead indicator and
trade the stock on its own, the trade will always bite you in the rear.Â
So while my trade in NEM
yesterday was the exception, I have conditioned myself to follow my lead
indicator religiously, and most importantly with no regrets.Â
NEM went lower after I got out, the chart did
still look fantastic, but with the spike up in the lead indicator, I had no
choice to base my decision on what was available to me at that time. Period.
As indicated a couple of weeks back, my
column will begin to have a dual approach most days. The column will continue
to cover HVT but will also begin to include
analysis and trades from the FX arena. It
is really quite amazing how many people are starting to latch on to the FX
idea. At first there was some hesitation due to lack of familiarity; now that
some of that mystique has been lifted, the interest is growing exponentially.Â
If you would like to have your email address added to my
FX Mailing List for actual trade
recommendations ahead of my FX Service
through TM in mid-February, simply send me
your name and email address to:Â
aspendave@yahoo.com
As always, feel free to send me your comments and
questions.