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Here is a lesson to remind everyone to
trade their system.
Today I went long the SPY at $130 at about
10 minutes after market open. The next bar
blew through my stop and continued to do so
until I was $3000 down in about 15 minutes.
I could have exited around even, but I
just wasn't mentally prepared to exit so
quick, especially because I had been on
a streak, the sure sign of brewing trouble.
I rationalized why I should do nothing.
Since now I was trading no system, I tried
to figure out what my exit would be.
My system had three winning trades (all shorts),
none of which I was in. I wiggled all day long trying to
figure out if the market would come back like it
did yesterday. My wife reminded me to arrange my
Bull & Bear bookends in the "Bull" position.
How could I have forgotten? The Gods appeased,
the market recovered. (She's chinese, what can
I say?).
I was finally able to sweeze out at $130.125
at about 10 minutes to close, up mere $250
for my suffering. I lucked out. I could have
really got wacked.
Take your loss and move on. In 1992 I lost $80,000
on 4 trades that I could not let go. The same
thing happened after a streak of 29 in a row,
where I thought I could not lose. The 29 winners
made about $30,000 not much to make up for the
$80,000 lost.
Don't be a dufus, take your losses and move on.
You'll do better than depending on your bookends
to save you!
Good trading,
David
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