http://i62.photobucket.com/albums/h101/asunblock/MIDCAPSHORTTIMING.jpg
http://i62.photobucket.com/albums/h101/asunblock/RUSSELLSHORTTIMING.jpg
I was writing to a fellow trader the other day about waiting for trades to present themselves, rather than force things. Sometimes "ok" looking setups happen, and you can go either way...sometimes you make money, but mostly you lose. And then those "perfect" trades appear and you think to yourself, "Why don't I just wait for these kinds of trades instead of chopping myself up?!". Well, practive what you preach, my friends.
At around 10:45 am today, the russell and midcap both looked like good sales as they broke their intraday 15 minute uptrends. Everything about the trades looked great, except the following: ENTRY, STOCHASTIC and TIME OF DAY! Time of day...well, I don't know...sometimes I think it matters, but when you are trading purely technical, I can allow exceptions. Stochastic on the other hand....they are what they are. If you look at them and follow them, they do so. Don't cheat. And Entry...if you don't have a good entry into a trade, then you might aswell just give your money away. Have direct deposit into a charity or something, b/c you are not going to make money over the long run...or short run for that matter.
Needless to say, I was short, market went down, and I still lost money. My entries sucked...I chased the market, and I had no idea where to place stops. To make matters worse, (and this I bet happens to all of you) my targets were hit perfectly. Had I just waited for a better set-up...I might not have made the optimum, but I would have made the most while risking the least.
If you care, the two charts I posted are of the MidCap and Russell2K futures on 15 min charts. Imagine losing money on shorts!!!!
me
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Anyone who has traded for any amount have time has experienced the "I was short/long on an up/down day and still managed to lose money" trading day. I have to admit, it is one of the most frustrating ways to lose money for me. However, like every trade there is probably something to be learned from it. You mentioned that there were three problems with the setup for you so I assume this will reinforce the importance of waiting for a good setup for you. So, lesson learned and time to move on and get em' tomorrow.
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