Tuesday, November 20, 2007

Monday Night Trading

I lost money today, but not too badly which was partly the result of a little skill and a lot of luck. Again I got too caught up in thinking about what the model said rather than what the streaming charts were telling me. The NDX model was stopped out again. So it isn't exactly much use at the moment. I went long per the model after the market had declined before the official open - a gap down was likely and this happened. Then shortly after the market (US) opened there was a good opportunity to close my trade profitably. But I stupidly hung on for more gain and ended with a loss instead. Letting your winners run is one of the most common pieces of advice given to traders but it can be very dangerous. I managed to close the trade with only a small total loss by doubling down (a big no-no in the standard advice for traders). Then as I was feeling good at not suffering a huge loss I entered another trade assuming the market was going to continue rising. The market immediately started falling towards the close instead. I closed that trade for a larger but still reasonable loss after the market close and Hewlett Packard's earnings announcement. I did some other every quick trades that won a few bucks here and there. But that second trade was a totally arrogant trade - again believing that the market would rise as the model dictated irrespective of the evidence. I'll slowly hammer this behavior out of my mind - at least until the model begins performing better again. Anyway, I lost half the profits I made since the big loss a few days ago. Am still down badly for the month, but feel I am learning something despite all these errors, or rather because of them.

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