Despite Missing Today’s Excellent Move

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May 20, 2010

Is it disheartening to have been heavily short since Friday taking in great gains, but then only to miss the largest move of the entire week (10% RUT)? Yes. My index fund account is at a yearly high, but today would have given that great boost for the year. I was especially angry considering there was no reason to take gains off yesterday. Being happy with profits is not an excuse to take profits. Not if you are a system trader. If you are discretionary fine I can roll with that.

I came into today 100% cash. I tried to go short near the open with SPXU and TYP, but I just wasn’t comfortable with entering short there despite it being a good trade into the 10:20 lows had I held on and despite my intraday charts saying to be there.

After basically being disgusted and writing off the day I went to watch TV. Played some guitar, while watching the charts. I decided to give my 5 minute chart setup a try again as my annoyance with myself waned. I was trading it yesterday and it did ok, but I noticed how to trade it better while sitting there just watching. Funny thing is I made money on the long side today. I just didn’t take that last short signal which was a really good one.

The chart shows the signals. You need at least 3 to long or short on any particular bar – same concept as my hourly chart. With the heightened volatility and the fast moves the 5min is getting me in at the beginning. The hourly still works, but you have to sit through ups and downs to reach the profits. The other screenshot shows I’m not full of shit because based on today’s trading action I would have a hard time believing it myself.

There are plenty of stocks though that are setting up as oversold bounces. Alot of talk tonight on the stream about oversold not really being actionable and what not. Its actionable, but you have to know when to use it. Not saying I’m an expert on the subject, but I’m definitely above average in the experience department when it comes to oversold/overbought as I’ve been studying it for 9 years.


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  • Jim

    I did the same thing. Got out of TZA before today's crash.

    Yeah, some people don't like to catch a falling knife. But I don't know, sometimes you do have to anticipate a little bit before everything is lined up right. Otherwise, you would be too late!

  • http://www.stockrake.com StockRake

    I've come to the conclusion that I need to add a delay to my brain and realize “joe public” is not as quick as I and keep that trade on a little longer. With the past few swings, the biggest move has come on the tail end of the “usual trade.”