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Why I Only Trail Stops to Breakeven

August 30, 2012

By the time we opened the market was making new lows. I sold a pullback to the EMA, was filled at my profit target, and then shorted again on the next pullback to the resistance line. The risk/reward was a little dubious on this position, but it worked out. The third short was also off the same resistance line.

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Daytrading Strategy 30th August

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Once the bar highs fell below my entry I brought my stop-loss to breakeven – with two profitable trades in the bank, my main priority was to protect these gains. I could also have tightened my profit target, but I didn’t. Over the long run I know that it’s better to leave my target down at the lows where the potential reward for my risk is greatest (in this case a full 4.50 points). Remember: the maximum risk that you assume during the trade is the risk that counts. Trailing my stop to breakeven is irrelevant – I could have been stopped out for a full 1.50 point loss immediately after entry, and this is the amount that I must weigh against the potential reward.

+2.75

+2.25

+0.00 (scratched at breakeven)

(+5.00)

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A Good Trader Knows How to Sit Tight

August 29, 2012

Knowing when to sit on the sidelines and not to trade is a large part of the challenge that new traders face.

The market seems to be incapable of producing the kind of sustained trending movements that I need to turn a profit at the minute, so I am now in a more defensive mode, and my main priority is to protect the gains I have accumulated. Put simply, this means that I need to see a move with some real conviction before I place an order.

One stopped out trade for today. Tomorrow will be the same drill – unless the market really moves in a stable and obvious trend I won’t be interested. I’m not just looking for a new swing high/low to define a trend, but also new highs/lows on the day.

(-1.50)

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Recognising the Type of Day Ahead

August 28, 2012

After an early loss and real whipsaw price behavior, I lost any conviction in the market’s ability to trend, and stopped entering orders. The entire range for the day was in place within the first hour of trading, and after that we went nowhere. I have spoken elsewhere about the dangers of range-bound days where there is more volatility – as soon as I recognise this sort of day I know that the best thing to do is to stop trading.

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Daytrading Chart 28th August

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(-1.50)

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Trends that Go Nowhere

August 27, 2012

There was virtually no positive excursion after any of my entries today, which meant there was no opportunity for me to bring my stop-loss to breakeven. Three losing trades in total.

(-4.50)

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Finishing the Week on a High

August 24, 2012

After a virtually breakeven week, I finally caught a decent profit today. I very much prefer to try and draw consistent profits from the market, ending as many days as profitable with modest profits. Sometimes the market doesn’t oblige though. Even so, while ever I manage risk effectively and follow my plan it is very unlikely that I will be unable to ‘tread water’ through periods in which opportunities are thin on the ground.

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Daytrading Chart 24th August

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+0.00

+4.25

+2.50 (exited at close of market)

(6.75)

Over the course of the week I netted 8.5 points, which averages to $85 per contract per day – not great, but always more welcome than a loss. If you have a $5K account then you can trade a single contract with a 1.5 point stop without risking more than 2% of your account on any one trade. If you return an average of just $60 per day after commissions then you’ll have doubled your account in 17 weeks. And it’s all scaleable.

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More Difficult Conditions

August 23, 2012

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Daytrading Screenshot 23rd August

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-1.50

+2.25

-1.50

 (-0.75)

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The Stuff of Trading Nightmares

August 22, 2012

Today was not a fun session to be day-trading. I avoided any early losses and started the day with a profitable short for 2.25 points. Next came a loss. I scratched the third trade, having brought my stop to breakeven. All the trend-lines on the chart tell you everything you need to know.

+2.25

-1.50

+0.00 (stop trailed to breakeven)

(+0.75)

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