I have a very good trading system. When I follow it religiously, I seldom lose much money – and more often than not I will make money on most trades.

The reason is pretty simple – after many years of technical analysis training and many years of honing my trading method I have a system that works for me. The only thing I have to do is follow the system and obey the trading rules. Should be pretty easy to do – after all I created the system and established the trading rules.

However, on occasion – probably thinking that I am really smarter at the moment than when I wrote the rules – I do something really dumb.

If today was my day pre-ordained day to do something really dumb I managed to fulfill the mandate to perfection!

I knew that today was FOMC day at the FED. I have a rule about being out of the markets on such days – waiting for the market to digest the reports and get over its reaction. Well last night I got short the S&P at what I thought was a pretty good entry – set a stop and held the position over night.

Early this morning I awoke to a small profit in the short S\& P trade. What I should have done is take that profit. A doctor’s appointment was scheduled for later that morning and I knew full well that the FOMC announcement was coming at 1:00 pm my time.

So in a moment of arrogant stupidity I decided that I was in the market at a point that had already priced in the best possible report from the FOMC – that the most likely thing would be that the report would disappoint the market and send the S&P down.

I paid dearly for my mistake – and all afternoon I had to perform the mental equivalent of writing on the blackboard 1000 times – “I will not break the rules again!”

I have a great system for short term trading. When I follow it I do very well – and when I do not follow it – I often pay dearly.

A system must be followed to be effective.

If you have a system – follow it. If you do not have a system, set a good one at

www.tradingbetweenthelines.com.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments Protected by WP-SpamShield Spam Blocker

See the Music of the Market

The unique trading method that is Trading Between the Lines