Wednesday, July 11, 2007

Analysis of a 1 Tick trade

I got 1 tick out of a 90 tick range...I'm drained and angry at myself for this stupidity

I knew it better, I was impatient and jumped the gun. I exited out of fear to be forced to hold through the loss again, even if I told myself, it's with the rules, when you exit the trade where I did.

But let's look at it right after I closed the trade, while I'm still looking to find my balance again.

I traded Natural Gas (NG Q7)

Natural Gas / 120 Tick

NG had made an impressive 150 tick move up and was coming down. Yesterday the retrace was 90 ticks from a 160 tick move, which would give a target for this downmove at 6.760. Seeing support by the 34ema there, it was my initial longentry.

But NG bounced from the lower 13ema band to the upside and I took the trade at 6.790. See the blue arrow.

NG rejected 6.794 and meandered further down to finally make a double bottom at 6.753 confirming my initial longentry. Not only was my initial entry at the 34ema confirmed, I also have marked a nice divergence seen on the chart, which further confirmed the long signal. NG traded up, with some 8 tick bounces and was again rejected at 6.794, which now was a double top. The selloff was very fast downto 6.781, so some fear entered my thinking and when NG traded up again with only 1 or 2 contract orders crossing the tape I placed an exit order at 6.791.

It was hit in the next spike which took NG first to 6.820 then 6.840, making my 45 tick target easily.

As I wrote in my last post I couldn't reenter after my exit order was hit, I was just stunned for a few seconds and that was all it took NG to trade upto 6.820.

Then I refused to enter as I did not want to chase the trade.

From -37 to +53 and I took 1 tick. That leaves huge room for refinement:-)

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