Tuesday, October 26, 2010

Never Hold Onto Hope When Trading...

Last night's trading session proved to be a frustrating one. Just 20mins after the opening bell, I took a LONG (at 1189.75). Truth be done, I was rather hesitant in taking the LONG as it was just too closed to the news (housing sales) to be released at 10pm. But as the trade grew profitable by 1.75pts, I was quietly confident that the news, whether positive or negative, PRICE would just burst through 1193.00, seeing that the TREND had been up, since the pre-market.

As most of you, who have seen the wild gyrations when there are news releases are aware, it is a harrowing experience - more so when you are in a trade position. I had a target profit PRICE of 1193.75 but unfortunately, the spike only MATCHed 1193.00. By then, PRICE started to slip and my already +3pts (if I had gotten out fast) quickly turned to just 1pt. Not wanting to risk it any more, I moved my STOP and less than a minute later, I was out with a gain of just +0.75pts.

Decision making is very important when one is in a trade and to me, having 2 different scenarios thought ahead in my trading plan, helps me to be decisive. In other words, the "what ifs" in the worst & best case scenarios would quickly put away any doubts of whether I should, or should not hang on to the trade.

I have been indecisive before in the past, and it cost me dearly. Many trades which were positive and when they turned negative, I just held on. There were some instances where I was even wiped out by -6 to 8pts when I had no choice but to close out the trade!! It all boils down to "HOPE". Yep, it is that deadly word. To me, "HOPE" kills, when it comes to trading and believe you me, I have been "killed" many times over in the past and I'm never gonna let that happen ever again!

For the record, I was down -2.5pts last night...

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