Friday, May 15, 2009

Right Idea But No Reward

Hi guys,
I got a question the other day whether I ever have a losing trade. I have been guilty of mostly focusing on the times I was right. Like all of you, I have losing trades and losing days. I got to trading late today, after the major down move and walked away with two losing trades and a small and manageable loss.

I took a long trade at 878.50 and got stopped at 877. The market went one tick lower and moved up around 7 points. As irritating as that can be, I feel like I was reading the market correctly. I had clear reasons for taking the trade where I did. I had reasons why I placed my stop where I did. It just didn't work out for me.

Check out the chart for my reasons. One thing that you will notice is that I didn't wait for Footprint confirmation before entering. In retrospect, I believe I wasn't patient enough. I wanted a winner. So, even though I didn't see what I was looking for in the footprints, I went for it anyway.

In trading, we need to make decisions. Every day, analyze your trades. See, in retrospect, what you were seeing and the inferences you were making. Notice if you missed any information that might have clarified the picture. Evaluate you strengths and weaknesses and work on those weaknesses. In this way, you will grow every day as a trader and as a person.

Hope it helps,



  1. Nice post. That was a tough trade. I wasn't trading that late on opex Friday but looking back on how I might have traded it...even if I waited for it to stop or maybe bought 878.25 based on the huge resting demand I would have prolly been stopped out in the same spot when it took that next dip. If not there, I would have scratched at 12:20 as once I have 2 pts in my favor my stop goes in at breakeven. Either way, tough late day trade.

  2. Hi there Brian,
    This post was inspired by you. Glad you enjoyed it. Thanks so much for your continued contributions to this blog.


  3. Hi MG and All,
    I too took that trade, passive bids showed up in a BIG way at 1:45 CST and the the 2-sided trade that followed & couldn't push below the 77.75's.

    the critical part of managing a new postion is monitoring "large players" coming in & drive price off that level. or to say it another way my trade needs a following or I need other traders using size to pay higher prices....

    How is that expressed on the delta/bar charts?

    MG/traders what do yu look for? to see if old (short covering) and new business (new longs)are coming into the mkt to push/drives prices off a low?

    it would be great to hear from yu & all yur subscribers what they look at in this initial part of trade management.. JT

  4. Hey there TT,
    I have talked several times about how I use the two Volume Breakdowns (VB) at the bottom of the Range chart, the coloration of the delta on both the range and rev charts. and the actual numbers of the BidxAsk. I use this info to guide me on entering a trade. I also use this to guide me when in a trade.

    I want to see initiative buying enter off the low. So, I look for dark blues showing up. Since I have two VB's overlapping(one unfiltered and one filtered to trades greater than 199) I monitor if bigs are coming into the market. I have tried setting my charts up in several different ways to monitor this - but the setup I am using now is the most clear for me.

    I also watch the pullback column before entering and once I am in a trade. So basically, I look at the same things to enter as I look at when in the trade.

    I also try and monitor the delta numbers at the bottom of my Reversal chart to see if the shorts are wrung out of their positions.

    I hope this helps. If I am not being clear enough, just ask more questions.

    BTW everyone, I totally welcome your comments on what you look for. Feel free to post chart definitions here if you like.

    Its getting late here. See you all tomorrow,