Tuesday, February 7, 2012
Trading in the fog
Total gross profits: $-87.50 -1.75 ES points
Total trades: 3 [1 scratch]
Execution score: 83.3%
Opportunity cost: $75.00 1.50 ES points
I'm still a little under the weather, with not enough sleep, while being in single parent mode, as well as starting the day a bit late, so I should have used my discretion and just watched.
But the lure of the markets was a bit too strong even from deep within the fog, especially since I sat out of the markets yesterday. I could have ended the day with nearly a scratch, but greed took over and I tried to let my single contract go for much more than a +2 so that I could have ended the day with a profit.
Which brings up another point -- the power of scaling out. Renato has talked about it often in conjunction with the DS system, and he also mentions from time to time how it's more difficult trading an all-in/all-out style vs. scaling out, unless you're scalping.
I recently opened up an account with VanKar Trading, using their version of OEC's platform called VK Trader LT. It's supported by FT71 and he has had various presentations regarding the use of their proprietary trade analysis software, called VK Trade Analyzer. So far, they have been great from the service and value add perspective. One recent presentation on the VK Trade Analyzer module showed how using a scaling out methodology helps to reduce the overall risk on your trade, and seeing that take place in real time and why it helped to reduce risk was an eye opener.
So my next goal will be to ramp up to 2 contracts so that I can scale out of one contract quickly to reduce risk, and to then enable me to have a runner that could go for a big run. Holding onto winners and letting them ride is a strength of mine, so I believe this should enable me to comply better with my overall trading plan and personality.
But first, I'll take things easy, get my health/schedule back, so that I can approach the markets from a position of strength instead of trying to make sense of things from within the fog...