30 March 2009

I took a small loss.  

This project has begun with a string of losses, which is discouraging, particularly as there was an expensive mistake which turned a good winner into a loser. However, risk management has not been too bad, so I’m still well in the game.

Having traded this way for a week, I can say that there are things I’m enjoying, and things that aren’t so good…

The number one thing I enjoy is trading the thirty minute window. It’s more pleasant than hanging around through an entire session, and it enables me to really concentrate a limited trading period. When I first started traded grains, I used to stick to the first 30 minutes, but then I allowed that period to expand because you can find a few more trades if you do. Now, I’m remembering why trading the first half hour was so good!

The other thing I’m enjoying is trading the one minute bars. This is a new departure for me, as previously I’ve stuck with 2 minute bars. However, 1 minute bars are a good complement to trading the 30 minute time frame. The greater number of bars means one of my trading patterns is more likely to form during the trading period, and the shorter time frame means that stops are tighter – making it easier to find trades within the chosen risk parameters. I’ve been able to slightly simplify my normal entry rules, and have found good parameters for fixing target and stop loss levels.

Things I dislike about the style I’m using are the measures taken to try to reduce the size of losses. During the early part of a trade, I’ve been moving stops in close and, if stopped out, I’ve been taking additional trades when further setups form. The rationale has been to protect the tiny capital base at all costs.

Unfortunately, this doesn’t suit my personality. In my normal (revenue) trading approach I enter a trade, automate my exits with oca orders, and leave the trade to work out. What I’m doing now feels quite different – and I hate it! It encourages me to watch the market, to take setups which might not be strictly according to my rules, and to over-trade. We can’t have that – so from now on it’s back to one trade per day, and no adjustment of stops.

That means the losses may be larger, but I’ll rely on the fact I’m using a 3% risk factor (rather than the 5% used in my previous attempt) to keep me safe. 






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