Candlestick Trade - High Risk Game !
Time and again, I hurt myself in the same fashion. Despite that I have a view of the market and my own trading plan. I could not resist the temptation when I receive the daily SMS buy alert from my technical broker cum trainer. I have filtered off two such prior alerts but not sure why I didn't do the same for the 3rd call which was for Wilmar.
I entered the trade at $6.28 two days ago based on a SMS buy alert. There was a candlestick setup called STS. The result, few hundred dollars have flushed down the toilet soon after I took the position in the morning where the stop loss at $6.16 was triggered the same afternoon !
I am fully convinced by now that the so called "Professional Trading Tactics - Using Candlestick" is a high risk game. I may have made a little bid of money out of a few trades but more often ended up with larger losses. The problem is that these setup ( STS, CTC, Bullish Gap, Bearish Gap, Tired Bear, Tired Bull, Exhausted Bear, Exhausted Bull... etc. ) required that you enter the position after a large decline of 3 ~ 5 days when prices push back to above the previous day low. The trigger for the setup often turn out to be a bull trap. The fact that we can only enter when prices push back to higher than previous day low versus a layman who simply grab it at the low price is making us more vulnerable when we realized we are tripped by a bull trap. Moreover, the setup pays no attention to the current trend. & broad market sentiment. Even if the current trend is bearish, it is still a buy based on the setup since this is a guerrilla trade.
This is not an isolated incident ! On June 10, I entered a trade for Kepland at $ 2.6 based on exactly the same SMS alert & setup. Guess what, when Kepland nose dived to $ 2.05. My paper loss was $5,500 ! I did not practice cut loss for that trade. I bite the bullet and eventually ride it through to see the sky....
I write this to remind myself, I should refrain from candlestick & counter-trend trade..... no more buying on impulse based on SMS alert too ! If I stick on to my belief consistent with my blog here, I won't be a few hundred dollars poorer this week ! Well, if someone hurt me once, it is not my fault. When someone hurt me twice, it is my fault !
I entered the trade at $6.28 two days ago based on a SMS buy alert. There was a candlestick setup called STS. The result, few hundred dollars have flushed down the toilet soon after I took the position in the morning where the stop loss at $6.16 was triggered the same afternoon !
I am fully convinced by now that the so called "Professional Trading Tactics - Using Candlestick" is a high risk game. I may have made a little bid of money out of a few trades but more often ended up with larger losses. The problem is that these setup ( STS, CTC, Bullish Gap, Bearish Gap, Tired Bear, Tired Bull, Exhausted Bear, Exhausted Bull... etc. ) required that you enter the position after a large decline of 3 ~ 5 days when prices push back to above the previous day low. The trigger for the setup often turn out to be a bull trap. The fact that we can only enter when prices push back to higher than previous day low versus a layman who simply grab it at the low price is making us more vulnerable when we realized we are tripped by a bull trap. Moreover, the setup pays no attention to the current trend. & broad market sentiment. Even if the current trend is bearish, it is still a buy based on the setup since this is a guerrilla trade.
This is not an isolated incident ! On June 10, I entered a trade for Kepland at $ 2.6 based on exactly the same SMS alert & setup. Guess what, when Kepland nose dived to $ 2.05. My paper loss was $5,500 ! I did not practice cut loss for that trade. I bite the bullet and eventually ride it through to see the sky....
I write this to remind myself, I should refrain from candlestick & counter-trend trade..... no more buying on impulse based on SMS alert too ! If I stick on to my belief consistent with my blog here, I won't be a few hundred dollars poorer this week ! Well, if someone hurt me once, it is not my fault. When someone hurt me twice, it is my fault !
Labels: Trading Digest
posted by Market Wizards @ August 20, 2009
Comments: 6
