Lessons:
1) Pay attention, the prices can move very fast off the start
The first trade was a small loser. I had my eye on the next trade in another stock most of the time as I expected it to move better so I exited for a loss...I was going to trade both but the prices are just a bit too high to allow me to do that. Just as well.
Back to the lesson. I entered a long position with CNQ...one of the larger movers and wasn't paying attention. To be honest I think I was talking to someone and was distracted...cost me $120 as the price dropped.
Entered long at $81.00
Gained to $81.23
Dropped to $79.80 before I got out
Reverse trade as a correction short at $79.73 10 seconds later
I was on the ball then....losing $120 tends to do that to me.
Price dropped to $78.60 over the next 20 minutes
Covered as the price rose to $79.09, up $64.00, would have sooner but again, price moved fast.
It really looked like a gap continuation rather than a fade...of course the price only went 23 cents higher and dropped like a stone....so much for the continuation.
It should have gone like this:
Entered long at $80.50 (this stock is on my early hit list now, second minute trades)
Gained to $81.23 and headed back down
Dropped to perhaps $80.60 before getting out, MACD and volume indicated $81.23 peak likely
Reverse trade as a correction short at $80.60 to $80.40 seconds later
Price dropped to $78.60
Covered as the price rose to $79.09, ($131 gain)
There were enough indicators to tell me not to enter the long trade when I did (decreasing MACD with increasing price, decreasing volume...classic "ready for the short" stuff) but I was still thinking of the indicators off the start that did say to go long.(price jump off the start after a $1 gap, worth at least a try...but would be a break even call as the price should fade)
2) Stick to the loss allowance for the day
I set a daily loss limit of $50...might be a bit low but I didn't stick to it...either day. So I am down about $300 or so after two days. That's a little much.
Seeing as I really needed to get a handle on how the order entry works I consider this a cheap lesson. Now I know. Placing an order off the start is not successful. I tried that today and it seemed like forever between hitting the order button, waiting for the order to be received, accepted then executed. It made a $50 difference on a trade that I was attempting to enter...that is not a good way to start.
New Rule
New rule will be to wait until the few three minutes after before placing a trade to miss the rush at the gate. I may even set on eto wait three minutes AFTER deciding to place a trade before actually placing it...and only if it still looks like a good trade at that point. I may go from a 1 minute chart to a 3 minute chart as a result...
Where I am now:
I can now tell what my entry price is going to be based on the bid ask quotes to within a few cents so I think I will do some fake trading now to get a better feel for how the trades fare. I was getting great results doing historical blind testing but there is a certain level of detachment that affects actually figuring where and when to place a trade. There is also the factor of doing these tests on 10 stocks at once. Seeing as there is no way to monitor that many trades at once in this timeframe with my current software I will restrict my studies to three stocks which I will select on the weekend after checking over my historical test results for the last two weeks. I will further restrict my actual trading to just one of those stocks. Once I am comfortable that I can execute consistantly profitable trades then I may pick up another.
I still see that the best time to trade for the largest possible price moves is early in the day...preferrably before 1000h or 1030h. So that is up to one hour of trading. If a trade goes longer than that it will be best to set a VTSO and let it go...once Questrade fixes the VTSO software issue as it doesn't work right now.
The next best time might be near the end of the day but only sometimes and the idea is not to let the trade go overnight as there are large gaps from the closing price to the opening price and it looks like there is no way to predict those...big possible losers.
JD.
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