Archive for July 16th, 2009

I decided to go short against the DAX. But here is my mistake. I did it not because any of my indicators sent me a short signal but because I felt it has already jump to much and correction should come.

So yesterday evening I opened a short position on the DAX at 4941 with stop loss at 5001. By 7:30am I was 35 points in profit so I moved my stop loss to 4940 and went to eat breakfast and drink coffee. By the time I was in front of the screen again I was out. The DAX jumped to 4961 triggered my stop loss and through me out. Then it went down again to 4920.

Here is my my second mistake. I was upset that maybe I am going to miss a big down trend only because I moved my stop loss. So just from pure emotions I placed an order to sell the DAX again this time at 4960 with stop loss at 5021. Needless to say that by 11:00am the order was executed when the DAX jumped to 5000. So now I was -40 points… but it went down again and by the time the Dow opened I was break even. Around 16:00 the DAX was still around 4960 and I felt confidence that it will go to my direction. It closed at 4957 so I even had little profit.

But then the Dow moved up strongly and took the DAX up to 5023. I was out by 20:30 and this time really upset. Then of course it went down and while I am writing these lines it is around 5000. And tomorrow it can still go down, but I am already out.

And here is my mistakes:
1) Because my decision to open the short position wasn’t based on indicators I was nervous
2) Because I was nervous I opened a position after the first one has been closed. This was a mistake.

Good thing that I did:
1) Moved the stop loss to a profit zone on the first trade. If you can do it, then your money is protected.
2) At 21:00 told to myself that it wasn’t my day and my timing was really bad. I learn from it and move on.

This is a lesson I’ve learned. When you open a position you do it for a reason. Hopefully you did some research and you have few good reason that support the case to go long or short.

But they are your decisions based on your logic! and when you discuss it with a friend or someone else they have their logic and some time hidden agenda that can influence you in a wrong way. Keep it private. Set an exit point before you even open a trade. You may adjust it during time but again base on your logic and not someone else…

I’ve done this mistake many time before and it cost me money. Big money. No I am silence like a fish…