Wednesday, March 17, 2010

A Technicality Costs Money

Today was a pretty slow day with chop and congestion taking over the 6A, C, S, and J for the majority of the morning. That left me with an opportunity in the 6E around 10:00AM. This trade was a reversal trade, something i've been working on and will talk about more later. But its basically as simple as it looks - its a LH/HL failure in a trend, or a reversion to mean. The LH/HL pattern is something that I look for in all of my trades and something i'll speak more on in depth in the coming days.

The trade is designed to take the first burst through a stop level and capture the initial push caused by the flood of orders entering the market and nothing more. I'm not looking for 30 pip winners off of these trades. When I am able to go at the markets with 2 contracts (which will be awhile considering my dismal live performance) I will take one of normally and allow the other to trail stops naturally to allow for potential big winners. But until then, its more of a scalp for 7ish ticks or so.

So what was my mistake today? Well it was caused by slippage (something I should get used to with the levels in use on these setups where a lot of quick churn is going to happen). I got slipped a tick on entry short. I have separate levels for getting to break-even and getting to +1 tick. The move worked in favor to my break-even level so I moved my stop to break-even right? Wrong. Due to the slippage my break-even stop was where my +1 stop should've been, and it came back up, high ticked me out at par, and went right on to my target. With slippage accounted for, i'm down 75 bucks from what I deserve.

In the future I will move to my normal break-even and +1 levels independent of my actual fill. Lesson learned.

Trade Results:
1 Trade, 1 Par
Gross P/L: $0.00/per

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