Tuesday, April 14, 2009

04/14/08 Lesson Learned

I got out of two trades today which I realized went against my rules, both of them unfortunately had to come at a loss. I first entered BAC as a short but what I was doing was exactly trying to pick the top so I got out in the morning at a small loss, I also posted a chart of MDOR (which I have taken off now) which looked very attractive from a technical stand point but I don't trade penny stocks because they are very sporatic and are too hard to predict. I entered MDOR at .85 and ended up selling it at .75 and took a pretty nice loss. One of the hardest things that I still have difficulty with is sticking to my rules. I didn't follow them today and as result paid the price. If I had stuck to my rules and didn't make those trades my account would be down 0.8% instead of 3.7, sticking to your rules makes a big difference.

It was a good thing I was hedged today because a bad day could have turned terrible. In unpredictable markets(which is almost always the case) it is important to be hedged, I am generally long right now and on days the market goes up I don't see massive gains which sucks but on days like today I also don't see massive loses. I find it very important to stay with in my risk tolerance, once I go outside of that I start becoming a bad trader. One of the reasons I have left the yen behind is that the moves were simply too big for someone with my account size.

Tomorrow "should" be an up day, as you can see from the chart we are at the bottom of the channel if this holds I will still be looking for that 870-880 range but if it breaks and we go down on strong volume I will be looking to go short specifically if we break the most recent low of 800.

Potential long candidate: WNR

Potential short candidate: TRLG

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