Lesson For The Day

I will be posting not just my trading results, but also lessons I learned during the day. I hope to correct my mistakes by publicly acknowledging them, and hopefully this will keep me accountable from that point on.

Today I go back to a lesson that cost me money in the sense that I left it on the table. I TOOK MY PROFITS TOO SOON. Thinking about the holiday approaching and that today is the Friday before that holiday, plus it looked like a divergence was forming, I placed my profit target closer because I wanted to get it before it reversed.

Well, the major flaw in that kind of thinking is that... I don't know what the market is going to do next (a belief in 'uncertainty', as espoused by Mark Douglas in The Trading Zone). It would be nice and dandy if I had a crystal ball into the futures market, then I would know precisely where it's headed, where it's ending, where it's going to turn, etc., but I don't.

So all I can do is read the roadmaps and follow it. That's what indicators are: they are mere roadmaps. They tell what may happen next, but they're not really saying it's happening right now. The divergence that I saw forming was just a warning that the trend may end soon; it doesn't really say it's ending NOW. You never really know the divergence is correct until the market has reversed anyway. It is a warning for those who may be wanting to get into a new position that "hey, this thing may be over soon", but for those already in the position, it can't tell them "it's ending now" until the market actually reverses.

So when the indicators are green, go long and stay long until it goes red. When it turns red, go short and stay short until it goes green.



As for it being a Friday before a holiday, well I just don't know for sure if traders all over the place have really gone for the day (or for the week) and called it a holiday. I JUST DON'T KNOW THAT. Therefore, I have no other recourse but to rely on the only thing I know - the indicators. This is the complete roadmap, the only guideline I have as I trade day in, day out.

"TRADE WHAT YOU SEE, NOT WHAT YOU THINK."