Friday, August 5, 2016

Trailing problems Part 2 - Day Trading: August 05, Intraday


Was short almost all through the day. Made 4 losses, when I could have restricted myself to 2 losses - or even 1 loss and 1 win, if the trailing was better. Since Wednesday, I switched to a mechanical trading strategy. The reason for going mechanical is to keep my sanity instead of worrying about stops all the time, but right now the mechanical trailing is what's driving me crazy.

On Wednesday - another 100% loser day - I never got a chance to trail. Yesterday, mechanical trailing caused me to exit early from trade 2, and caused me to take 2 more avoidable shorts. Today, read the story below....

Nifty M3 Price Action Chart

Initial Spike and Ledge

Gap up opening - note that the low of today's open was exactly the high of yesterday's open. Then, it consolidated, and there was nothing to do - patience, patience... Placed short trigger below Breakout of consolidation. As the price moved, I began thinking of a Breakout Pullback Long above the Breakout Bar, but Price zoomed up suddenly before I could complete the thought and the moment was gone (I guess, I am a slow thinker).

First Trade

Then, inexplicably, for all my talk of patience, I entered Short below the Inside Bar that followed the long green bar on the M1 chart. Initial Stop was 8687.9, but my mechanical Trailing Stop rule brought it down to 8686.85. Guess what? Price formed a cigarette, then made a high of 8687.7 (at least on my chart), and stopped me out. Bonus, I got to blame my mechanical Trailing Stop rule.

Cigarette, Ash and Smoke

The next 3 trades were all shorts as the Price came back to the cigarette zone after taking my Stops. In Trade 3, the cigarette ash fell, and there were 20 points to be locked - again the mechanical Trailing Stop rule prevented me from doing it. The last trade should have been avoided (in hindsight). All the while, the price was grazing the cigarette high so many times, that I would have gone long expect for the fact that 8700 was close by. The cigarette high was also 8650 Spot, that had moved 10 points lower since the start of the cigarette.

When finally the cigarette smoke went up, I still tried to short.

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