Many Trading Mistakes Today

Trading mistakes are part of the business. Netflix and DAX errors cost me today.

A very good evening to you traders.  DAX did a little bit of follow through on the next day. We talked about this in the last video – if you get a big move from high to low, the next day you’re very, very, very likely statistically high probability of retesting that day’s low, which I’ve got marked down here, which was about, I don’t know, 10 150, something like that. So there’s a couple of trades off that. We didn’t talk specifically about the short trade, in fact, I didn’t even touch the DAX today, which is kind of a bit silly really, because it’s one of the most, one of my favourite setups, but sometimes when you’re not feeling it, you’re not feeling it. This is the strategy you employ when you have a big down day, the retest of that low is very likely, so you’re looking for that. I think, to be honest with you guys, it was the immediate drive off the open and it didn’t go that high, I didn’t like it that much and by the time it was really looking like it was going to get going, there wasn’t much meat left in the trade.

But the trade that we talked about yesterday in the video was the one last flush through and then maybe we get a counter trend move and that actually was the better trade of the two, but again, it didn’t take any trade on the DAX at all, unfortunately, but it was it was a nice trade. When you get the flush through and it can’t hold and it comes back above, then there’s your long there, with a stop here looking for some sort of counter trend move back up. I think, you know reality probably looked to take some off as we push through the high, especially when it rejected. But if you’re looking for a swing position, keeping a stop around the View app isn’t such a bad thing. I thought we might get up to here, I looked in the afternoon and thought, I’ve been looking for some cells around here, if we poked up through as that was the prior day’s resistance, but we didn’t even get there. It was a good level, but we didn’t quite make it, we just sort of got to this resistance level here and stalled. But it did close the day positive, it did act fairly nicely. The trouble is now, what happens from here? Do we go another leg lower? I’m not going to be too keen on pressing the short, I’m not going to be too keen on looking for the long. So I’ll probably let it run for the next couple of days and just see what’s going on and obviously Bank of England tomorrow so that’s going to be key for the FTSE. Let’s take a look at the FTSE.

So DAX disappointing from my perspective, but there was some nice set ups there statistically, good sound set up of shorting any dip up higher, for retest of low, the likelihood of retesting lows high, then the flush that doesn’t hold and then in the morning after a big heavy down day and the counter trend moves. So pretty nice trading going on there for those who got involved in it.  The FTSE, I have not really been in tune with the FTSE at the moment,  I’m just not feeling the… we’re down to that  20 period moving average as we are in the US, but it’s going to be based a lot on what happens with news, it’s a lot news driven. I do tend to prefer the DAX as a primary trading vehicle for Europe, just because the volatility is a little bit higher. The daily range is a little bit higher on the DAX as well, which is preferable to me and then if I moving over to the US I do prefer the DOW. So it’s just a personal preference, but coming back to that 20 period moving average as we are on Mr DOW Jones and again we tagged it, we talked about, will we get a little bit of a rally, the video came out yesterday about 7pm and one of the things it said is, do we get a little push back up into the close, just to alleviate some of the pressure and then tomorrow maybe a bit of a move, do we get another move lower? But we haven’t done either of that. We didn’t get a push up to the close, but we’ve been sitting there doing nothing, so I’ve really not been interested in that.

I wanted to point out, it was a bit of a mistake I’ve made on Netflix. It’s good to look at all these things. As you recall from the video a while ago, if you watched it, the recap is, when the earnings came out Netflix a gap lower to 85, one of the things it said was this a buying opportunity. If we frame the trade, the high of the earnings day and the low of the earnings day, that’s a pretty classical text move, you’ve got to excuse my drawing pen there, but you get the idea, the high of the day and the low of the day and you buy a break from there and you use a stop under the low. That’s just the theory and then you hold it for a swing and one of the things that it said was, listen we’re right at the bottom here, if you want to bracket it with a Keltner or a Bollinger band, we’re right at the bottom  of the band too, looking for a move back up to the top of the band. We’ve been in this 85 to 100 range for a while, it’s probably a good trade.

Anyway, cut a long story short, took the trade, it sat there for days and days and days and then eventually it gapped up and I felt a bit relieved that it gapped up and then I ended up taking the trade out. But in reality I should have stayed with it because you know it’s holding quite nicely and we could ultimately push back on that, but obviously it’s too late now to get involved – the risk reward has changed, but it’s one of those things that I think that when you get a trade that perhaps doesn’t go your way straight away, it wasn’t low enough to stop me out, but it was close and by day three came along. I was looking at it and thinking, I’m down on this, not by much, because I bought it just above the high, so it’s not a lot but it’s enough for you to look at, especially when you see it going up then down and you just get that feeling whether you’ve done the right thing and ultimately it’s about sticking to your plan, so a little bit of a mistake by me there. Profitable trade, but definitely one for the journal to remind myself to hold them, even after fifteen years or so in the markets, these things do happen, I just felt a bit uncomfortable with it, but never mind, plenty more opportunities to come. 

So have a great evening guys and we will see you again tomorrow.