Archive for July, 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…

Hi all,

I bought not so long ago the basic version of Sharescope. I was not impressed at all and I canceled it after 3 weeks. But time goes by and I really need a good software that will help me see at glance where specific share or index are.

I have to admit that IG Index pro tools are quite good but it is lack of personal setting and it based on IG’s spread rather real price. So yesterday I got a mail (yes by post!) from Sharescope offering 6 weeks free. And because I was already toyed with the idea to buy it again I signed again but this time using plus option.

It is good. But the interface is bad. I am still learning how to set it up and the interface is really confusing. But I manage to get the picture I need for the share I am interested in.

I have 2 different graph setting: One weekly and one daily and it is very easy to flip between them. So I guess I just need to get used to this interface…

Hello all,

It is summer, holidays and so on… so this blog took things light lately. I felt that before I trade I need to learn more. As I said before I read a great book by Dr. Alexander Elder – ‘Come into my trading room’

It is a great book with many tools and advices. It is really good for beginners as it will save you lots of mistakes. I am trading for a while now and I love it, but reading this book I recognised all the mistakes I did. I wasn’t alone…

In the past I read that stop loss can kill you. Dr. Elder says the opposite. Not using stop loss will kill you. And I think he is right. My point was that no mater which level you enter and no mater which side you choose (buy or sell) the market sooner or later will come back to you.

Dr. Elder says that maybe I am right, but by the time the market comes back you, you account has been wiped completely. It happened to me with RBS that wiped my account and I had to start again after a break thinking what went wrong. This is even more important when using spread betting because you leveraged product so you may loss more than you account.

The system that Dr. Elder offers make a lot of sense. In fact I’ve read it in other places as well. It is quite simple but will protect your account from disasters. Never trade more than 2% of your account and never be exposed more than 6% of your account.

And be strict with yourself. Never say this time is different so I will raise my stake. It is not easy but this will give you the edge.

Hi all ,

I was checking Astrazeneca maybe to open a short position on the stock. While I was checking (and decided not to) I found that Paddy power Trader offers 7 point spread for September while IG Index offers 21 points spread. This is 300% more!

It is not the first time that I found that IG Index is not competitive at all. My advice as always is to open several accounts and shop for the best spread.

Having said so I opened an account with ODL Market and got an iPod as gift. They do offer very good spread on indexes but not so good on shares.