April 15th, the AM crunch

Seeing as I did OK the last two days I figured I should be alright today if I follow my rules closely.

Rules are fine as long as the playing field is still following the same action as when the rules were setup, or more importantly, knowing when the rules need to be bent, changed or just not to trade.

I need to do some backtesting for today's setups as the 200sma and the primary pivot point were close and the price seemed to range using these two points as a fulcrum. The end result is that the largest trade based on a 200 sma crossing is only half of the move and the move seemed to be restricted to between the R1 and the 1/2 S1. Invariably the trades did not fair so well as rather than taking the small profit each time I chose to hold the position to see if it would continue.

4 trades, 0, -4, +2 and -3 cents per share. All four were at a profit point when I wavered about exiting.

All four were good ideas, basically, but not necessarily for today's range activity.

True to form, in not following my rules or observations, here is a clip from my blog before I started any trades as I decided to wait for confirmation of any move first, let it shake out a bit.

Range Day?

Three things should have happened here.

1) watched the activity to see if my rules applied

2) set trades off the initial range high and low to fade to the pivot point or the 200sma (close today).

3) trading existing rules, use targets and set stops in the money...continuation unlikely

I considered #2 but was not comfortable with it as I have not done those style of trades before, which led me to trying my normal stuff...which is not a great plan.

Recognizing when particular trading methods will be good and when to change to another set is tough. I should probably consider sticking to targets for now completely as it encompasses most of the trades and allows me to keep my win loss ratio higher, which leads me to increasing my position sizing and increasing my net returns which leads to allowing me the flexibility to observe a larger loss allowance on those days when the price looks to be trending.

This strategy worked well enough this week so far as I took profits in the 12 to 15 cent range a few times and kept my losers tight...but I strayed.

Trying to bag the larger moves invariably can cost more as the big moves are less likely than the smaller moves and the loss allowance must be observed to give them room to get wound up.

I still need to consider the US markets to get the proper stop loss orders back into my plan. That alone will bring my comfort level up and let me set these automatically to remove my last moment thinking from the equation.

Charts to follow.

Jeff.