Big loss

I have a question about selling losers when trading using big charts. Recently I got into a trade on LL as follows:

Monday 3/17 1pm I review Daily charts and identified a FP up on LL and decided if I find nice action entry I will get in following day
Tuesday 3/18 12:17pm bought May '14 105 Call stock at 105.35
Tuesday 1pm after the close, I looked at the chart and decided to stay in
Wednesday 3/19 1pm I reviewed charts and everything looked fine
Thursday 3/20 1pm, I reviewed charts and the stock had sold quite a bit but price was close to the OP of the FP signal's candle from 3/17 so I decided to stay in, at this point my trade was a loss
Friday 3/21 1pm, Looks like I should have sold at the open on Friday when I could have. Now I am shouldering a big loss through the weekend and doesnt feel good!

I posted this to see if anyone had thoughts about what I need to do differently or if this is just part of the game.

Ouch!

Out of all the folks here I am probably the one who is least qualified to answer anything on big charts since all my trades are off the 55 on down.

However when I looked at the 233 for LL I wouldn't have dared touch this stock for a long trade. There is simply too many gaps on the 233 to be sure of any lengthy direction IMHO. From the looks of the 3 charts, 233, daily and weekly they seem to be saying DOWN.

Hey man....

Technically it looks like a solid trade. It looks like you did everything right in terms of entry, so I would not beat yourself up over that aspect of it. However it looks like you missed you exit slightly on 3/20 on the 930 candle close. Trade was no longer working and you had exit criteria. That would have given you a loss of about $1.5 on the option. Still would have been a successful trade.

Also note: Not sure if you use the autowave.....no autowave down had yet formed on the D chart.
W: Chart has a gap down 12/1 which looks like the middle of the window repelled further upside movement around the end of Feb.

I appreciate everyone taking the time to look at the trade and provide me with their insights!

Sonicwave

Y do you look at charts @ 1pm if you entered a daily trade? Why the May option?


BCT



Edited 1 time(s). Last edit at 03/23/2014 01:11PM by BigChartTrader.

Bct,

1) I check charts for decisions after the close, thats what I meant by 1pm.

2) I bought May because I wanted time but didnt want to stay in the trade for longer than a few days and saw that time value decay on longer time options didnt help much.

1. Market closes at 4. In a daily trade there is no way to make a rational decision at 1pm. The data isn't complete.
2. In a daily trade I expect to be there for Weeks and in my personal trading would buy several months(5 at least) to allow the trade to walk a trend line

Bct

Bct, I'm on the left coast...1pm is our closing time we are 3 hours behind. Thanks I will keep that in mind.

1



Edited 1 time(s). Last edit at 03/23/2014 08:41PM by GWNO.

That makes more sense now

Man, that makes so much more sense to me now. I was wondering about the 1pm thing also.

It never occurred to me that he may be in another time zone. Lol!!! Pardon my ignorance :-)

Like others have said on here, I wouldn't sweat folks dogging your entry. When I posted a thread about losses, I got that kind of response, which isn't what I was looking for.

I don't know if you took GW classes or not. Most people here seem to have. I like to write down the notes to myself when I start to learn things, and I recently wrote this to myself:

Fighting Mike Tyson vs Barney Fife

When GW spoke about this, I always assume that he was talking about your ability to read a chart. My brain understood it as “you must be really good at chart reading to fight Mike Tyson”. I understand now that this was completely incorrect. Mike Tyson doesn’t live in the charts. Mike Tyson lives in the psychology of the trade. If you enter a trade a 10:30AM and you check on that trade at 2:30PM to find that it is down 50%, you have taken a Mike Tyson size blow to the face. It really has an impact on how you think regarding what to do next. If you check on that trade and find it down 5%, you have still taken a blow to the face, but it is MUCH easier to manage that blow. Thus, buying more time is not about getting the entry perfect.

Buying more time is about giving yourself every small advantage you can in terms of thinking clearly. Take a breath, review the position. Is the chart still intact? If so, go have a snack. If not, close the trade. It’s so much easier to execute this type of thinking if your head is clear. If you have taken a Mike Tyson size blow to the face, you will lean HEAVILY towards closing the trade. The fear is taking root, and you simply cannot see any reason why you would ever want to stay in this trade. Even if the chart remains intact, you will still have a very hard time seeing it clearly. Inevitably, this leads to you closing the trade down 50%, and you find that your position is up 50% the next day “if you just would have stayed in.” This, ultimately, leads to confusion in your ability, which breeds self doubt… Notice that nothing I am saying here has anything to do with whether or not you read the chart “right”.

Buying time makes the process of choosing what to do next a lot easier.

---

I read a book once that says that some things cannot be taught, no matter what. Basically, if you tell a kid that the stove is hot, the kid will still try to touch the stove. Once he does that, he'll know the stove is hot. But not until he has "proven" it to himself. I feel this to be the case with a TON of the things that GW taught. And whenever I find one, I try to write a note to myself like this one.

All this to say... Try buying even more time. These days, I don't buy less than 120 days of expiration. That has been serving me pretty well.

Yesterday, I popped a trade on FB for real money. It was a very easy and classic trade. This was my first trade since transitioning to TOS. As soon as my candles dropped below the previous day's low, I was in the trade. The only chart that did not give me the confirmation I needed was my 55, but ADX was up. This is one of those indicators that provides me with extreme confidence when going in a small chart trade. If it is not up, still could be a good trade because I am only looking for the ADX to be up on my smaller charts.

This is a little key for those who are trade small charts..... If you have HRFP's on smaller charts, conditions are not overbought or over sold, and that 55 ADX is up, you can basically throw the other indicators away for that trade because it is a trade for profit.

Man, those lines that draw from the previous day has made trading so much more easy. Thanks again Robert. As I get back into trading real money from a new platform, I am only placing trades that present homeruns. If my confidence is "sky high" before placing a trade, I will sit and not trade. I have not changed my position size, so I have to be careful with every, single trade.

Newer traders, you must be driven to another level, but at the same time, you have to be patient and trust your research and approach. This is a very tough mindset combination to develop. I think one of the best rules I developed for myself was, after I am out of a trade for real money, I close up shop for the day (good or bad trade). No one wants to deal with that loss for the remainder of the day.

Last thing is, you must be driven by something that simply will not let you quit. Honestly, I was driven by money. I was tired of being broke and watching my family struggle. I went to college on an athletic scholarship. I have an internal drive that is on another level. I hate losing, and I never, ever quit-NO EXCEPTIONS! Find what will drive you to be successful at this. When you get on this side, just know, Gary was correct. It becomes easy. It is well worth the work. A few of my favorite reads are, The Market Makers Edge, The Power of Focus, Trading in the Zone, and, The Millionaire Mind. The MME is one of the trading books that is very easy to comprehend. The P of F is the best mindset book I have read. I would love to know about other good books that are recommended to read.

Trade well.....follow your rules.....