Oct22 – “DAX-Overtrading & being too tight with managing stops”

Interesting trading session today.  The only things that are really trending over recent trading sessions – in other words – financial instruments that I am allowed to consider for setups – are the indices (and for these I tend to default to the DAX, S&P and Dow) – and a small number of currency pairs – Cable being the lead contender.

I ended up taking an entire SEVEN trades on the DAX – which is most likely a tad many.  Late in the evening, after watching Liverpool lose 3-0 to Real Madrid, and some WSOP (World Series of Poker) clips, I had another good look over those DAX trades.  Here’s a chart of my day’s DAX activity which led me to shed 3.4R – quite a losing session!


And here are the key insights I drew from my reviews (big thanks also to Mr.C for his valued input via a phone-call)

  • Be less tight/more loose with the mgmt of stops on my DAX trades – this should result in less trades, and probably better results.
  • Consider taking money off when the trade goes in my direction, and then add it on again if it retraces. That might be the best approach.
  • Take the setups that look good – e.g. Cable setups early in the morning, DAX above the 100 numbers (same with Dow)
  • Try to avoid entering trades on the indices between 11am and 1pm, as prices don’t tend to move much during this period of time.
  • Do the visualization in the morning – in particular visualize myself managing the positions really well . Accept the fact that as a result of doing the visualization I will end up looking at the markets a little bit later than I normally would. However completing the visualization should lead to better performance in the session.

FEELING GOOD: Thus, I am looking forward to tomorrow to give me a chance to apply what I have learned today.  It is amazing how you can really learn more from every single trading session.  I guess this is one of the attractions of trading.  The analysis and contemplation is potentially endless – and most of it is purely in the mind and concepts – there is nothing real going on here.  As long as the insights can be converted into real action and lead to better trading results, then we are good.

MONEY MATTERS: The key is to protect your capital whilst you are learning.  I have lost 4.4R over the last 8 sessions – in money terms that equates £390 (4.4R x£89) but I also gained £258 in the week prior (3.8R x £67.50) and £232 in the week before that (4.6R x £50).  So all in all I have made a net profit of £100 in three a half weeks of trading.  But just think that I am learning from week to week and am slowly in improving in my results in terms of R.  The key is to learn all my lessons (and be prepared to lose in gaining that experience) whilst keeping my R small.  All this is going to matter less when my unit value of R is £500, £1,000, £2,000 etc.

JUST FOR FUN: Here’s an extract of my documentation I keep during the day.  Just to give you an idea of what it all looks like and feels like.

working doc

Signing off now.

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2 Responses to Oct22 – “DAX-Overtrading & being too tight with managing stops”

  1. James says:

    DAX hugging the 9,000 level. looks classic asecending triangle and even the daily chart has a very nice inverse head + shoulders. Technically this proceeds a move to around 9,500 over the next month. EUR weakness last month might still help the equity bulls, especially as volatility drops off (Russia quiet, Ebola quiet etc)


  2. Pingback: Oct23 – Profitable DAX trade thanks to looser position management | George's FX trading blog

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