March 12 2010 Overlay, Trades, and Commentary

Nice grind today. I had just 2 options for trades. Either a long off 1043.00 or a short if 1043.00 breaks.

I bid into the initial test of 1043.00 looking for a continuation of the trend up but the market congested for the rest of the day.

I took a 1.25 point discretionary scalp exit about an hour and a half later.

It was the correct exit. My plan lately has been to incorporate feel with my premise.

The interesting thing about today is that this long was the type of trade the I usually take because I felt it "had" to be taken and not necessarily because I liked it.

It looked great structurally but did not feel right to me after I observed the action as I managed the trade.

These trades have historically not worked out for me. There is a difference between this exit and the early exits of the 4 or 5 previous trades.

This may not make much sense to some but the previous early exits were taken mostly because I believed in the trade but did not like my position.

The thought process on the previous trades was that I thought the trades would work but was unsure if my risk tolerance would allow me to have a successful outcome if the market started pushing against my entry point.

The thought process on this trade was that I just did not believe the market would move up off the area today and had a chance of selling off from around my entry point.

As recently as a few weeks ago, I would force myself to stay in the trade even though I did not like it.

I exited on feel and was right today. Staying in would have been forced.

I exited on feel and was wrong on my previous exits earlier this week and last week. Those exits were forced.

The concept is that when I have to force an outcome, it is usually wrong.