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Review week ended 15-Feb-2007: A short trading week

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I don’t see any nice setup in this Thursday morning, I decide to call it a day early.

This is a short week for me. I will be traveling to Malaysia on Friday , so no trading. Here is the weekly review. This is options expiry week, and I can’t really find too many good setups. In total, 2 trades were made, one Long trade, one Short trade, and both were winners. This week I continue applying CBL trailing stops technique , so far so good (I used this method when I was trading SIMSCI futures). As this method trails the stop by tracking the most recent high/low, I might end up giving back too much profit when there is a big candle. I will continue studying different trailing stop techniques.

hat-money.jpgSummary:

  • Total P/L(after commission): +4.16 R
  • Trades taken: 2
  • Winners: 2 (100%)
  • Losers: none
  • Expectancy: +2.08
  • Biggest winner (after commission): +2.15 R

Quote from Linda Bradford Raschke

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Linda Bradford Raschke mentioned some wisdoms of short term trading in The New Market Wizards: Conversations with America’s Top Traders.

I put a great deal of effort into getting the best entry price possible. I feel this is probably one of my strongest skills. In day trading, a good entry price is critical because it buys you time to see how the market will react. If you buy because you think the market should bounce, but it only goes sideways, you’d better get out. Part of the trading process is a matter of testing the water. If your entry timing is good enough, you won’t lose much even when you’re wrong.

Dummy day trading #57 14-Feb-2007: NQ Long trade closed

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“What do you want?” I am asking myself after closing the position. In fact, I had two entries to go Long NQ futures. I gave up the first one which appeared around 10am. Reason being I had a bearish view of NQ given longer time frame looked rather bearish. So I decided to wait for bollinger band expansion in 15 minute chart before deciding to go Long.

Finally, long position of NQ was established 10:05am when NQ broke out from flag, which was also the first pull back of new uptrend cycle. However, this entry was kinda toppish. And CBL trailing stop was triggered.

One trade closed with +2.01 R gain. It should be a multiple R trade, but “What do you want?” Be bold, or want more confirmation? Confirmation costs some money though.

14 Feb 2007
14 Feb 2007

Another quote from Paul Tudor Jones

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Here is another piece of trading rule from Paul Tudor Jones, quoted from Market Wizards: Interviews with Top Traders.

The most important rule of trading is to play great defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible drawdown. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out.

Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.

Jesse Livermore, one of the greatest speculators of all time, reportedly said that, in the long run, you can’t ever win trading markets. That was a devastating quote fro someone like me, just getting into the business. The idea that you can’t beat the markets is a frightening prospect. That is why my guiding philosophy is playing great defense. If you make a good trade, don’t think it is because you have some uncanny foresight. Always maintain your sense of confidence, but keep it in check.