Get your own Free Home PageI learned few important lessons today (970505).
On April 25th, friday , afternoon (EDT), when dow was down 50, i tried to bottom pick and bought one NYFE contract at 403.00, with stop loss at 400.50. Near the close, NYFE dipped below 401, but still above the stop loss. That day being friday , all the indices closing near their low of the day, I decided to sell my contract at 400.90, loss of about $1100 inc commissions. (Lesson 1 : no point in picking bottom of the market. its a futile exercise).
The entire week my "OS" was looking back at my loss, and somehow not able to put on any trade, even though I saw so many opportunities.
Today, finally I decided to trade the NYFE again around 10 AM EDT. The market was looking somewhat weak, even though dow made an intraday all time high. I shorted one NYFE contract at 425.30, with a stop loss at 427.00.
The stop loss got hit and the indices and NYFE futures contract kept on moving up. (Lesson 2 : no point in picking tops of the market. Very futile exercise).
Then, I decided not to repeat the previous mistakes of wallowing in my past losses and only to see things go past by. (Lesson 3 : look forward).
I decidely to go long on NYFE at 428.40 (then, high of the day). After that, I just sat back and let it go ! It dipped for sometime below my entry point but well above my stop loss of 427.00
Then it slowly inched up. I had to fight all temptations to take small profits. I remembered, if you don't stick with your winners, how will u pay for the losers. (Lesson 4 : let your profits run)
I slowly moved my stop, first to 430.50, then to 432, then to 434. Finally, sold just before the close of the day at 435.10, netting approx $3300 for the trade, making up for prior losses and then some more !
I think these last three trades will make me a much better and wiser trader.
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