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Monday, July 20, 2009

All About Exit

First, thanks for those who responded. As long as someone finds this useful, then I am glad to be of service.

There are those who advocates to never look back at your trades.

If that is the case, then I would have to ask, How will you know your mistakes?

The objective is to identify the mistakes and try to avoid making the same mistakes twice.

I purchased BTU on 7/8/2009 at 28.15 and stopped out on 7/14/2009 at 29.9.

Take a closer look at the chart (hand).
Even though BTU close down that day, the EMA crossed over.

10d30m Chart

10d60m Chart

The bottom line, I should have never placed the stop or the stop was too tight.

If you take a look at the 30m and 60m chart, it was all green for 07/14.

If there was a time when I should have sold, it should have been on the 07/10 or 07/13 based on the 30m chart (no green).

As the result, I made a 6% profit versus 24%. I know what you are thinking. A profit is a profit. But do you want to under-perform or over-perform?

Do you know that is a 400% difference in return?

When comparing performance, you cannot use subtraction but must use ratio.

24/6 = 4/1 = 400%.

Imagine for every trade I make, you make 2x as much.
Think about how much better your account would be and think about compounding.

Just a provoking thought.

Today, I sold UNG based on 10d30m. However, the 10d60m is still green.

You need to determine the time frame that works best for you and you're most comfortable with.

I know I have not been very discipline with my trades and will attempt to be more discipline in the future.