I wanted to share a little epiphany I had this week. Apologies for the long post…Just skip over it if you’re a millennial. At the risk of sounding like an absolute idiot, I wanted to share this just in case there is a silent reader/s out there that are maybe making the same mistake.
I’ve been “day trading” for about 7/8 months and I had a bad week and half (not massive losses- very small actually) but very consistent. Every single trade went against me, all 100 % of them. I was wishing I could short stocks could have made a lot more money just contra – investing.
Anyway in lieu of my perfect record – I was struggling to work out what was wrong. I know a little how to read charts, and I’m pretty good at FA when required. So this has been in the back of my mind, mulling around for a few weeks now, and I couldn’t work out what was wrong. The only thing that kept coming up was a vague memory from a post perhaps from Trees….All trades are breakeven or profit…anyway it was something like that I believe. I dismissed this as a nice sentiment at the time, but I have been trying to work out what that means in practical terms or how that would work.
Then yesterday whilst waiting for my stock to go up it hit me like a rock!!!!! I normally, for the sake of example, buy at 7c wait for it all day/s for it to get to 8c then sell. In my world I would have considered that a good trade.
Buy 100,000 shares * 0.07 =$7000 then Sell 100,000 * 0.08 =$8000 therefore $1000 profit. However more often than not I had to endure ups and downs, painstaking retracements….etc etc and about 50% of the time the trade went against me anyway and I would hold on to try and get out for at least breakeven.
In essence there is nothing wrong with this strategy for STT and I feel a few on the D/T forum may do this too.
What occurred to me whilst doing my usual buy and wait strategy was that my timeframe was out of sync with the market I was trading in. Sounds simple enough and bloody obvious to you all I’m sure. I should been trading in sync with the chart.
In this case the movement was something like this (assuming a long bias)
You buy – It moves up- if it doesn’t move get out, if it drops a single pip, get out…look for a better entry.
Buy 7c – sell 7.3 - retrace buy 7.1 c – sell 7.3- retrace buy 7c – sell 7.4 then breakout at close buy at 7.5c ……..roughly how that stock was trading
In other words I should have been buying and selling within the trading window that the stock provided me with. If I had have purchased at 7c and then it ran all the way 8 great but the stock wasn’t giving that, it was giving me 1-2 pip window.
It also aligns with someone else’s signature- if you want more than the market is willing to give – good luck with that.
Either way I was trading too fast for STT and too slow for DT if that makes sense.
I guess the millennial version of all this is –you have to adapt to the market, the market wont adapt to you.
Anyway I hope that makes some sort of garbled sense and that it helps at least one person so the public embarrassment of admitting this was worth it.
