Not following rules is a real burden on a trader when it comes to avoiding not losing capital needlessly. My losing trades today consisted of 2 trades on Gold and a trade on Natural Gas. Let us go through each in the order they were taken.
A breakout entry what was on my mind when I took this trade but there were 2 fundamental rules that I have in place that were broken when I took this trade:
I am not allowed to take any breakout trade, when on the time frame being reviewed, a key resistance is close, which includes the 200 period moving average. Following the trade open you can see that the price was immediately rejected off the 200 moving average.
As noted in previous blog posts I was to commit to not entering any trades during the times of the day that there was close to no volume. This trade was taken early in the morning, hours before the normal trading volumes start being shown.
When I seen this breakout happening, if I am honest with myself I had automatically started fearing FOMO that there was a big move starting to happen and I should enter so as to not lose the opportunity. Use my checklist is the lesson to myself, I created it for a reason!
The next 2 trades were both on Gold. The first trade is shown below:
Before I took the bullish elephant candle off the 200 period moving average there was significant volume coming through and the entry candle I took (on closing) had wiped out the shooting star candle 2 candles back suggesting that the selling pressure had finished.
The price action from here continued north for a while and was about 2R in profit at some point. This trade did end up getting stopped out for a very small loss ie my stop loss was actually moved but I will explain this as part of explaining the next losing trade, again a trade on gold and believe it or not, another bull off 200 moving average trade.
Why did I take another bull off the 200 period moving average when I already had such a trade open? The simple answer is that it met the criteria. The facts were as follows:
Gold is in a strong uptrend therefore looking for long entries when they arise and match my criteria
If this trade was to prove successful then the position size was huge relative to the small risk being taken as would have 15 contracts in play
On entry of the second trade I was able to move the original stop loss on trade 1 to not far off break even so in effect it was a great risk reward play
Unfortunately, the second trade didn't work out and was rejected once price had reached the previous high from the last move up and both trades ended up being stopped out. I am not uncomfortable with these 2 trades and would take them again in same circumstances in the future. Losses are all part of the game.
The trading results for the day were as follows:
Trade Clearly!
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