Messing Up Good Trades - Move-My-Stop-Too-Soon-itis
November 29th, 2006“Whatever trades don’t ruin my account only serve to make me a better trader.”
Leave it to me to mess up a perfectly good trade. Like the other day with Trimble Navigation (Nasdaq: TRMB), I saw a decent setup in Palm, Inc. (NASDAQ: PALM). It wasn’t the best setup I’ve ever seen, but I got short below the 6th 30 minute candle. I set my stop just above that same candle.
It piddled around going a few ticks in my direction, nothing major. Lunch time was looming and I was getting hungry. This happens to me a lot - do I go ahead and take a lunch and forget about the trade for a while? Or do I take a quick one and get back to manage my trade? I compromised and “managed my trade” by lowering my stop to just above the 6th bar’s open (down from the high) and went to lunch.
You can guess what happened next. The price took out my lowered stop (almost exactly), but didn’t reach my original stop. Here’s a chart of the trade and the trade in several timeframes.
Of course, I wouldn’t have been able to retire or anything had I stayed in the trade, but this seems like something I need to get a better plan for. I’m thinking about using the Cybertrader API to automatically manage my trades for me. I think this would be the best solution.
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