Trading the Gaps
I wanted to highlight a few trades I made yesterday, in hopes that we can all (but most importantly me!) learn from them.
My biggest trading mistake is not to trade my plan (which is trading gaps and only gaps, and to stick to my money management rules), even though past performance and end of the day analysis makes it very clear that if I stick to my plan I will make money.
If I trade my plan, there's no way I'm in anything before 10:00 A.M., yet yesterday I bought UNP quite early. I had my reasons, but it wasn't a gap play. The trade should have been good for 1 point, but besides ignoring my gap plan, I ignored my money management rules as well, and ended up flat. Meantime, I was late figuring my gap triggers, and missed a couple of great signals. Messing around with UNP probably cost me around four points.
Later in the day, I felt that the market had "gotten away" from me...that the money was to made on the short side and I had missed it. So I went short NETA and PSIX, even though neither trade was on a short signal. Besides losing one point on NETA, I ignored the buy signals that both positions moved into. If I hadn't laid down the short positions, and instead had bought both when they triggered, I would have made two points on the trades.
I traded LCOS three times...up 2, up 1, down 1. All trades were shorts on the trigger and netted two points. Tried to buy LCOS at 114 (the buy trigger) near the close and wasn't filled. Would have been good for two points. Stopped watching my screens in the last few minutes, so I missed the fact the LCOS went down to 112 from 116 and was willing to give me another shot at the 114 entry...which again would have been good for two points if I got filled. If the LCOS gap plays were the only trades I had made, I still would have had a two point day.
You do the math, I'm embarrassed by the difference between what my plan would have made for me, and what I actually put in the bank.
I'm not advocating that people only trade gaps. Rather I'm saying if you've got a plan, trade it. Don't second guess it.
Jay
If I get a squid message after all this I'm really gonna be pissed! |
