I took a trade in ES this morning based on what I thought was an imminent breakdown of a channel boundary. I stayed out until after 10:00 ET for the new home sales to come out. I was watching a 1600 tick chart and a real-time plot of the Advance-Decline of the S&P from my CAT tool. We touched the lower channel boundary and stalled. The A-D chart was pressing towards a new low, so I went short, expecting a quick move out of the channel towards the daily pivot. Here’s the charts:
Bada bing, bada boom. Quick 2 point loss. On this one I was just wrong. This highlights the fact that you can’t know for sure what will happen in advance. You always take a risk when you put on a trade. If I would have gone long instead of short, I would have won. And then about 10 minutes later, a channel breakout was the right trade.
I still struggle at my entries. I have discipline to stop trading, ability to accept a loss and be wrong, and discipline to stick to the pre-trade plan. My entry timing is just plain wrong. That adds up to net losses.