I am on vacation and brought my mobile setup to trade in the AM before everyone gets up. The set up has been working well. Today we had a great set up on ZN that I traded, yesterday as well, and I wanted to discuss those trades.
ZN ran big yesterday. I nailed close to a top tick short on it. Here is the chart when I stopped trading yesterday and then the end of day chart…
You will see that I covered way to soon. Now there is a good reason for this. It was holding VWAP so well for a good amount of time. It even had one decent spike where I took the rest off. I then tried again on the stuff but it kept holding again so I took it off. My first cover of 1/2 is great…nothing wrong with it, its a smart cover. However, my second cover into the spike was not a good cover. What I should have done is hold the rest risk free with a break even as my stop loss. The stock never came back to my average. Had I held the second half of my trade I would have made hundreds more on the trade. I walked away with just +$397.50.
Today was a similar story. ZN had a nice SSR pop. I shorted into that pop and almost nailed a top tick again. Just great entries yesterday and today! I was anticipating it to pop towards yesterday’s VWAP where I could scale in to about 4,000 shares. Unfortunately, it did not go higher so i got just 1000 shares. My covers were even at good spots. I covered 1/2 then 1/4 and and 1/4. However, as you can see on the chart below I again covered way to soon. I again failed to keep a piece risk free. An even better thing to do, would have been to trade around a core with my average as my risk. Once again I left hundreds on the table and made just $295 on the trade.
With great set ups like this being few and far between lately it is even more important to maximize these trades when they come around. It is frustrating to have such great entries to then squander the trade on the exits. I have been giving it some though as to why I am not trading my exits better and honestly I am not completely sure why. It could be a number of things. One, trades have been coming back on my average a lot this past month so I’m quicker to get out at the first sign of it holding. Two, I’m letting fear of missing out on the rest of the gains get me out too soon–aka letting my P&L dictate my exits vrs the price action. Three, just simply being impatient. What ever the true reason I need to focus on improving how I trade my exit strategy. I do not need to nail the bottom, but I do need to improve how I am exiting my trades. I am also not ungrateful for the profits I did make. I am simply recognizing an opportunity to improve my trading. I will make a concentrated effort for the rest of the month to try and improve this!