It was an interesting trade. The last trade I did before this one was probably in early 2010. I completely stopped trading once I started building my house.
About 1.5-year after, I almost forgot what it's like to trade. The first problem I had was that I had a very very hard time pulling the trigger. Even if my brain tells me there'll be drawdowns, stopouts, risks etc, but I was still afraid to lose money. Am I overtrading? No, I don't think so. When I was trading nat gas, I was okay with 10K swing under 150K portfolio.
I figured I think I just have to pull the trigger. Setups were good. When the spread was +20, it was a good price, but I thought I should wait longer until it becomes 0 and I waited very patiently. I knew I'd likely get profits when gold starts heading down, and lose money if gold keeps going higher and the spread gets wider in inverse. I was prepared to add more if the spread becomes -50 (-$5000) although I wanted to work this trading out as soon as possible. Don't we all traders want markets to come to get filled in, but as soon as we're filled, we want it to turn and goes into our favor? Wait, a few seconds ago, you want it to come one way, but now you suddenly want it to go to a completely different direction? We, traders, are so demanding. ha
The very first day, I was -$1000. Oh great, it's going to be another natural gas trade, which took about 11 months. But the next day, gold tanked as I was hoping, which gave me, at one point, $2K profit. On that day, I was just checking a delayed quote since this is a long term trade, but I thought I should hold it until $5-10K profit, where greed kicked in. I should have realized that was the first exit sign.
The next day, all the profits were wiped out and I'm sitting at about b/e. I was kicking myself thinking 'What have I done'. 2K is good money. You probably guessed what's coming. Gold started rallying and the spread went into -20 which means I'm -$2000 instead of +$2000. I really started thinking shoulda, coulda, woulda....
What was interesting was gold did make a new high, but quickly turned around. At this point, I was thinking, hmmm this maybe a typical top pattern (invereted V). It runs stops and let's head down until all the novice bull traders give up, so I thought I'd have a good chance still and it indeed started heading down. However what was frustrating was even if gold went down, the spread didn't go down as much as I expected (platinum was going down as much as gold instead of holding the value), which probably means there are still a lot of people buying gold, but not platinum.
The spread came back to break even around 9/12, and I was just so attempted to exit everything. We've all felt that if trades go against us and come back to break-even, we want to exit! Now if gold starts heading to 2000, it won't be pretty. At this point, I decided to change my plan a bit. I didn't exit because I keep telling myself, I just risked this much money and I'm not here to exit at b/e. Anyway, the new plan is I'm going to take out profits at about +10 ($1000) and enter again if it goes to -20 or so. I figured if I can do this a few times, it'd be a lot better than trying to catch a big move.
On 9/15, Gold went below a recent swing low, which triggered some stops and it started bouncing off the low, so I figured that was my exit signal.
All in all, after all the commissions, it was $885.18 trade, but it taught a lot about trading again. In my next blog, I'll talk about what I'm looking at.
