This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
Crappy day for me. I took two trades, one a loser and another that broke even. I shouldn’t have traded today because I broke my undercapitalization rule–I only had 1/3 the equity I needed to support my commissions–1000x the cost of a one-way trade ($3.50 for Zecco after the 40 free ones). I should have waited one more day until my free trades reset from Zecco. I broke a lot of rules, actually. My focus was distracted by trading a Muddy setup and an X setup, which I referred to yesterday. That’s actually two daytrade styles, rather than a swing and a daytrade. Too much for me. I was also playing against the odds with my commission drag, and I felt the need to trade today, instead of saying “I don’t have to take a trade today”. Dumb! I rationalized that the Risk/Reward was still high on these trades, even with commissions included, but I need to stick to the 1000x capital rule in future, as it still affects the trade, where the breakeven is, etc.
Here’s the trades:
Northwest Airlines Corporation (OTC: NWACQ)
Bought based on big volume and 10/60 ema crossover.
One thing I did right is resist the urge to hold on overnight and hope for the loss to come back. Good for me–I only lost 1R, which was 1.5% of my equity plus some slippage–my planned entry was $1.56. A side note–the commission was 0.33R all by itself. What was I thinking? Also, with Muddy-style trades, you have a lower win rate but a much higher return on the big winners. I can’t just pick and choose single trades, but need to dive in and really trade the style if I’m going to do it, which I can’t at this point in my trading and life. :( Maybe someday, Muddy!
Trade Summary:
NWACQ Long 78 Shares
Entry: $1.58, Stop: $1.40, Target: $3.00
R: $21.04, Exit: $1.40
P/L: -1.00R, or ($21.04)
Joy Global Inc. (NASDAQ: JOYG)
Trader-X daytrade that broke even (almost). I chased the entry bacause I missed it–Strike 1. I had to be away from my desk, so I placed a stop at breakeven and left–Strike 2. My breakeven was much lower than my entry because of my commissions–Foul Ball, but pretty much a strikeout.
And a zoomed-in version:
I cranked up my trade risk $ amount since I am rarely “wrong” when I pick a good X-style trade. I don’t usually make the fib extension, but I usually at least breakeven or make a small profit, which is exactly what happened. Trader-X is going to be my exclusive daytrade style going forward, since it’s about taking fewer setups that are higher quality, which is what my capitalization demands. Also on this chart is the beta debut of my “Trader-X” Paintbar–the blue and the white arrows. I’ve been writing more soliloquies than Shakespeare lately, so if you want to know about that one, you’ll have to post a comment. :)
Trade Summary:
JOYG Short 50 Shares
Entry: $44.48, Stop: $45.13, Target: $42.00
R: $39.50, Exit: $44.36
P/L: -0.03R, or ($1.00)
The only reason I’m still in the game is that I learned to control the trading impulse. I only wanted to take one trade today, and I didn’t get filled. c’est la vie
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