Wednesday, April 14, 2010

Back on track!

I feel like I am back on track. Although I believe that there is a very good chance that SVN will drop hard from here I did not risk more than my maximum R size of $100.00 + commission.

It is hard not to take on more risk than your trading plan stipulates when you see an idea that gets you really excited. There are setups that do merit taking on double or even triple times stipulated R but conditions have to line up perfectly for those types of trades.

I have to admit that the trades that I took 2R and 3R risk on recently were not the A+ types of trades that warrant this amount of exposure. Holding positions that are too large affects your ability to hold onto a position even if it has not violated your stop loss. For example, SVN never traded above the $11.40 stop loss I had set when I was short 300 shares of it. Yet I exited early just because the loss it was printing was getting to large and was punsished badly. If I had held on I would be in profit now. The same thing happend with RINO and similarly with RUE. In fact, I lossed close to $500.00 ( 5R ) on the SVN and RUE positions alone and I am down about $185.00 for the month.

Although I am not down by much. I am now playing catch up for the month. What I have decided to do is to go back to my disciplined approach and the rules of my trading plan. When you deviate from your plan it pains you. Even worst is when you deviate and lose money.

So from here on I will make a concerted effort to stick to my plan and you should too!

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