Wednesday, February 10, 2010

Posts moved from WordPress. Now I update current days and maybe some prior also. Today is Feb. 10 2010, I was stopped out, here's why.

I saw the slowdown of the downward momentum and all those candle's with lower shadows. Then I noticed NYSE TICK was up at prior highs and starting to push them, just as TRIN started to turn for the first time today. I found a small 2m bar that had a good small stop that I needed since my wire to my account didn't come in today. So right off the bat, I was doing something wrong.

My mistake here is that my plan calls for trading the 5m chart. So the stop should really be under the prior 5m bar, not the prior 2m bar. The market and my account and need for a small stop are totally separate things and not related to each other. Where I need the stop and where the stop according to my plan, are thoughts that should never exist together. The only stop is where it should technically be. So guess what happened to my keen analysis of the market action and slick entry? I got stopped out and the analysis proved to be correct because price followed thru to the upside for 16 points. I could have had at least 2, 4, maybe 6 of them before the first pause and base.

Other problem was that I didn't have to take this trade if the 5m stop was too much. See how there is consolidation after the up move and then a breakout of consolidation and a perfect retest of that area. In that dip there is a great trade where TRIN drops some more and NYSE TICK comes down to a support area for a charge back up, all this was perfect alignment for a trade that I could no longer afford. Huge lesson in all of this that I need to internalize now or I won't be trading for much longer.

Here's the ugly details.

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