My trades on the ES today, good, bad and stupid

The good, the bad and the stupid

Mostly today was a loser for me.  It was mainly because I has two absolutely goofy trades.  I think I need more sleep, these were horrible decisions.

The first one began during the evening short on the 10th.  It was a great trade.  Solid setup, correct analysis and reasonable target profits.  The problem with the trade is that I didn’t take into account the support line that was running up.  It had been a nice little bounce point from the lows on Friday.

Given that this was an overnight trade, this support line should have been a trigger point for a stop, trailing stop or possibly just a get out and take down some profits. As a result of this trade, I’m going to spend a little more time working the TOS platform to maximize the program trading capabilities of the platform.  There must be a way to enter a complex series of orders that cancel each other out when/if conditions are hit. I’m not talking about a simple OCO; rather, a sequence of events that would include multiple OCO orders that work together as a complex multi order trade.

I don’t know how reasonable that is, but I’m sure there is some sort of solution.

Ah, the stupid trades

Now that I’m steaming about my busted profitable trade that turned into a big loser, I had a moment at the office to take a look at the markets.  Not a great entry point, but I was still steaming and just put in a market order to get long.  Why long, no reason, I just felt like it.  Well, that isn’t completely true, a few indicators were pointing up, but the important ones said down.

Obviously, that is a stupid reason to get into juiced up /ES futures contracts.  Thankfully, cooler heads prevailed, I took a few moments to actually do some quick analysis and decided to flip things over and get short.  That worked out nicely as the /ES moved down towards my exit at 716.  This was based a quick analysis after a lunch meeting where noticed that we were bumping up against a retracement level and things appeared to be pointing higher. As a result, I closed out for a profit.  Solid trade, solid analysis, solid (much needed) profit.

Then I got really stupid.  After deciding that the market looked strong, and that the trend line on my chart would serve as resistance, I decided to go short again.  Exactly what I was thinking, I’m not sure.  There was a good entry on the chart already setup for a short, I was just way early.

To make matters worse, my completely arbitrary, useless, foolish, borderline retarded stop was at 725.  Why, I don’t know, it was 5 points away.  I mean come on, its only an iPod Touch w/tax per contract, that feels about right, I have a few of those in the house so lets throw a few more away.  Needless to say, my second, moronic, no technical analysis trade resulted in a stop out.  Who needs another iPod Touch anyhow.

Lets try this again… Another trade?!?

Yup.  Tonight, I’m short again, based on what apperas to be solid analysis that should result in a nice profit. I’m still a bit bitter that I should have been short from 727, rather than 717 – you see that on the chart right? … oh well.

So, before going to sleep, I will be double checking all the charts to ensure that my stops and exists are in the right place. I’m not playing this game again if I don’t need to.

Trading in this market is extremely difficult.  I’ve been fortunate enough to make a nice return so far, however I’ve made more mistakes than I care to admit.

For example, just this morning I committed a super blunder… Over the weekend, Citigroup received a huge bailout package and the market responded this morning.  I figured this was a situation that could be scalped, and decided to go ahead and do that. 

To scalp this move, I did two things… 1 purchase a bunch of Calls on the DJX, and a bunch of Calls on C.  First move, smart, second move stupid.

Why was buying calls on the DJX smart… Well, because I trade indexes… I tend to have a MUCH better feel for the overall market disposition, and I do much better when trading indexes or larger sectors.  I tend to lose lots of money when playing a single stock.  So, back to C… I bought those calls at about the high of C for the day, so I’m long a ton of C 7.5 Dec Calls that will be worth next to nothing soon enough…

Now, for the stupid part of the DJX trade.  Rather than setup a contingent stop on the trade and allow it to ride the market movement up, I simply set the trade to close out as soon as the SPY hit a daily retracement level.  This was just silly.  If the market retraces, fine, that is what a stop order is for.  Instead of properly using a stop to close it out, I simply put in an automatic order based on the price action of SPY and closed it out WAY early.  If I’d have simply kept it open, there was another 1.5 on EACH contract during the day.  This wasn’t exactly a small position, so $150 X a bunch = a lot of money left on the table.

Now, to get really, really stupid.  I’m still long a truck load of C calls, and now a bunch of DJX PUTS! So, I’m betting against myself…. you might make a case for hedged, but it seems like a bet against myself to me… And better yet, I’M ON A PLANE ALL DAY TOMORROW!

So, what to do… Well, I’m going to properly set up some Contigent Stops on each of these positions before the open tomorrow.  I will set these up as One Cancel’s Other orders on the TOS platform.  The Stop will be contingent on the price action of the underlying equities, they will drop in based on price action.  Then, I’ll have contigent Trailing Stops that will drop in based upon price action as well.  If the prices move in my favor, the trailing stop will drop in to protect my earnings, while the initial stop will protect my downside exposure.

If things work out nicely, I’ll capture quite a bit of premium… However, it all depends on the price action.