FCPO July 2006 – Bearish Divergence Trade 2 – Closed with net loss of RM310

What I have done best:
a. I follow the bearish reversal and bearish divergence trade signal.
b. I executed the trade as plan with all the market information leading to the reversal.
c. I did my best to putting my stop away from the price.

What I need to improve:
a. I must less monitor the price.
b. I should not monitor the price in the 1st hour after the market starts.
c. I should paper-trade more my potential strategy before testing with real money.

What I have learned:
a. I have to wait for the trade to come. Waiting is part of trading.
b. The following findings happened again:
i. If the trend is up, there is a tendency for it to continue until something changes.
ii. Initial correction of a trend is healthy. This allows price to move higher.
iii. Initial correction to the up-trend line with low volume will see price rebound and make new high or low. If there is a gap against the trend, trade with the trend with Oops! for new position or adding new contract.
iv. I need to trade on each fractal breakout. I need to go against my emotion on this. I know that I will get it right as the price moves lower and lower or higher and higher.
v. The historical chart pattern may repeat. I will study the historical chart to find any trading opportunity.

c. If you have a short position and opened gapped-up,
i. Wait until 11:30am to check whether there is higher than prior day’s high:
1. If yes and you are not stopped out, close the position at the market. You are wrong.
2. If no and you are not stopped out, you can keep your position.
ii. Wait until 12:25pm to check whether there is higher than prior day’s high:
1. If yes and you are not stopped out, close the position at the market. You are wrong.
2. If no and you are not stopped out, you can keep your position.