Stock Trading Experts: Stick To Your Trading Strategy
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In 1998 when I was fairly new to trading, I managed to perfectly pick the first lower top in what turned out to be a complete market rout. Unfortunately my inexperience caused me to leave a small fortune on the table.
Here’s what happened…
The Australian Share Price Index Futures contract had made a significant high, and had pulled back sharply. After looking at the time cycles at the high, I was pretty confident we were in for a correction, or even a change in trend.
My plan was to trade the market into the first lower top (where Gann said it was the safest place to sell), stop and reverse, and then ride it down.
Good plan. Bad execution.
I bought the market at the open on the day if the potential lower top (a 50% retracement in time and price), and rode it up to the price area where I thought it would end. But instead of placing an order to stop and reverse, I only sold ONE contract, not two.
The market made it’s high right there, and started falling. I stood by and watched it fall like a deer in the headlights, until finally I couldn’t take it any longer. I called the Broker and told him to sell me a contract at market.
He came back after what seemed like an eternity, and said the market had closed for lunch before he could place the order, but it would be filled on the open after lunch.
I went to work and though nothing more of it.
That was until the Broker called me in a panic to say the market had tanked (the Hang Seng Index was down around 600 points) and I had been filled 100 points or more below where we’d closed for lunch.
Of course the market was rallying trying to close the gap, and I was going backwards at a rate of knots.
On his ‘advice’ I closed out the position for a big loss, and sat back to lick my wounds.
When I got home that night, I found out that the market had collapsed all afternoon, and I would have had a small profit if I had hung in there.
Then overnight, all hell broke loose as one after the other, Asian countries devalued their currencies, and the Asian Crisis took hold.
Had I stayed in that trade, and trailed my stop loss orders below the swing highs, there was thousands of dollars there just waiting to be picked up.
These days I rarely make those kinds of rookie mistakes, because we have a SYSTEM that gives us a clear set of trading rules – our rules of engagement – that keeps us safe most of the time.
So what’s the point of this story?
- When your proven trading system says to trade, then take the damn trade
- Don’t place trades when the market is closed and has the potential to gap wildly against you
- And don’t let your Broker pull you out of trades – make your own decisions and stick to them (see point 1)
Of course you need a proven system that gives you high probability trades. If you need help to do that, grab our free Stock Trading Experts video series on finding, entering and profiting from fast moving trends by putting your name and email address into the form below, and we’ll send them all to you.
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