Yesterday the model said to go short NQ (NASDAQ) and long ES (S&P500). I started off the day, doing exactly that, though I entered the trade badly and ended up down on the NQ part of the trade relative to the ES part of the trade. Then, I closed the ES long for a small profit and based on "pivot points", I set a stop loss at 7010 - 50 points above my entry point. As you can see from the chart, the market briefly went through the stop but then turned and ended the day near where it started. So, I lost a lot more money than the model did. If I had set the stop at 1% (7030) or kept the hedge without stops, I would have ended the day with only a small loss. Really, it was fear of missing out on making a profit on the ES trade that screwed me up.
I also did a long CL (crude oil) trade yesterday and was stopped out too. Then the market also turned around and actually ended the day higher. The lesson I am learning from that one is to stick to the stock market for the moment so I can set wider stops and not worry about the potential loss from multiple positions going wrong.
The model is again short NQ and long ES for today. I was going to sit out for today, but writing this post has inspired me to put on that hedged trade. For the record, I sold NQ at 6969.75 and bought ES at 2729.50.
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