Tuesday, February 2, 2010

Nat Gas Trade 2/1 (Mon) - After Action Review

NG 10min

What I did wrong:

1) Attempting to fade a more-than-10-point gap

2) Failing to get out at the start of the pit trading session - on a strong up day, trapped-out buyers are going to buy on a dip at market open. Where my profit hit USD 200 and made a U-turn - that was the perfect pullback to buy

3) Attempting to short something that's reached R1 way before the pit session started, which is really not prudent - the likelihood of price hitting R2 - R4 subsequently is high

4) Ignoring my FEELING about taking a 4% risk on a single trade (knowing that my stop was going to get hit paralyzed me - while price action clearly indicated it would be wise to scratch my trade, my fingers had not co-operated with my brain)

5) Attempting to fade a strong trending OIL simultaneously - it was clearly distraction that I didn't need

What I did right:

1) Respecting my stops - even though the stop for natural gas was PAINFULLY wide

2) Not attempting to short NG at a higher point after lunch - on days like yesterday, price is likely to go sideways after buying stops - MACD can continue to show divergence after divergence, price will simply not plunge

Additional Observation:


1) I have a tendency to short a strong uptrend on the first trading day of each month

2) NG is crazy - I realize that now (I've found some of my sanity)

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