Saturday, November 21, 2009

Trying To Be Perfect

This week's trading was an example of the negative aspect of seeking perfection.  Let's say your plan is to sell at 1115 on the ES.  The market goes up to 1112 and and turns down that day, going down to 1108.  The next day it only goes up to 1109.  The following day it only goes up to 1109.  The next day it crashes down to below 1090.

I missed a 20+ point move trying to be perfect with my entry.  I had ample opportunity to sell it at 6-7 points below my target sell price.  And pick up 20+ points of a downside move.  I was trying to be too perfect.  So I missed the whole 20+ point downside move.  Often times its just better to go in with a 1/3 position or 1/2 position and sell a little lower than you want to.  Especially if you have a lot of conviction about the intermediate direction.  I ended up selling at much lower prices on Friday because I didn't want to miss a further move down.

Also, trying to collect all the moves by micromanaging trades can often be more costly than just sitting tight.  You know its a trend down day, but you want to cover and reshort higher 1 hour later.  Well, if its ends up being a strong trend down day, you usually won't get much of a chance to reshort higher.  That's the fault of trying to catch every little move micromanaging to the extreme.  

Bottom line, if you have a lot of conviction about a trade set up, don't be so picky with your entry price.  But, from my many experiences, if the trades is going in your favor, do be picky about your exit price. 

3 comments:

Anonymous said...

Cut your winners short and ride your losers long. That is the name of the game.

Fear tends to be much stronger when you actually have something to lose versus when you're already getting kicked in the face.

Anonymous said...

Yo, you seen this clip right here of this soccer girl.

I enjoyed watching this clip. I think you will as well.

Turns me on kind of.

http://www.youtube.com/watch?v=X4Piuuqqs10&feature=player_embedded

Anonymous said...

Feel like watching some women's college soccer now.