Let this be a lesson to you - Don’t remove your stops...
Here is a picture of one of the charts I actually look at during the course of a day. I woke up this morning to find out that the /ES has taken a nice hike upwards into the 765 zone, and I remained short through the entire hike.
Now, don’t get me wrong here. I’m still in the /ES short play, and I’ll remain in this play for a while. However, I removed my stops at 655 last night, because I was afraid of getting “stopped out” by the little bots that seem to sweep the /ES overnight.
That was just foolish.
It was foolish because the charts clearly show that the 664 range would be another point of consolidation if we break out. The highs from this past week were right around the 655 range and that was a nice easy stop. Rather than having another 9 points or so to knock down gains on the /ES, I’ll instead be recovering from the overnight swing throughout the day.
Overall, it isn’t a big deal. I was just an example of poor position management. I foolishly pulled my stops, and now rather than enjoy a profitable short position during the trading day today, I’ll watch the losses shrink.
Of course, this all depends on your time frame as well. There are plenty of folks out there with very, very wide stops. A particular blogger comes to mind who holds positiions into losses that I simply will not tolerate. My futures trades are pretty much short term swing plays. A day or two at the most, infact most are closed in a matter of hours lately. As a result, my stop mangement must be appropraite for my style.
