Today was my son’s 1st birthday. We celebrated with a bit of a tea party with friends and family that started at about 5.30pm. But, before I could properly get into the mood, I had to check my sums for the day.
I’d had a pretty good day on Friday, making £110.00 profit for the day and was feeling good. I had spotted what looked like a good entry point to Spot Gold on Friday afternoon at 1622.2, which was in the area of a resistance level, so I opened a short position for £20 a point.
At the time, I didn’t realise the markets closed over the weekend (because unlike UK equities, Spot Gold can be traded throughout the evenings on IG Index. I guess that’s because the other world markets remain open throughout that time), so opened my position with no thought about the weekend.
When I checked prices on Saturday morning, I noticed I was sitting on a paper profit £35 with my gold position but couldn’t do anything about it because the markets were closed. That’s when I realised I was in for a nervous weekend. If any bad news or rumours happened over the weekend, I felt like I would be opening up in a bad way this morning.
As it happens, I never came across any bad news over the weekend, but I did open up with a paper loss. After about an hour, prices hit my stop loss and I started the day down by £36.
Speaking of news, one of my other positions last week that I closed prematurely was Barclays. It had had some positive news over the weekend in reaction to the appointment of a new chief executive. I wasconfident this share was going up in value last week, so I was even more confident now and opened along position at 183.183 for £20 a point.
I closed the position out a couple of hours later for a small profit of £15.66.
You might also remember that on Thursday, I opened ashort position on RBS after it recently had a little rally. I was confident the trend was generally going down, so decided to short this under my ‘rule of least resistance’ and put the rally down to a daily market reaction. The position opened this morning with a small profit of £6.00.
After an hour or so, I reacted rashly for no apparent reason when I saw the price tick up a point or two and sold out for a tiny profit of £2.80.
I did the same thing for Spot Gold twice more throughout the day, completely convinced that 1622 was a resistance level and that prices were going to fall without the aid of positive market news. I tried to short gold twice throughout the day but got caught out on VERY TIGHT stops (2 points) both times for a toal loss of £76.00
In all of these trades, you’ll notice I’ve reacted badly and not stuck to my convictions and certainyl not traded with any measurable system in place.
I was aware of this at the time, but couldn’t stop myself from reacting to the ‘ticker’ as prices clicked up and down.
It is clear that there is a major psychological battle that takes place during trading, and I am determined to overcome it.
With new found conviction, I decided to try Spot Gold once more, this time applying a little more Jesse Livermore wisdom to the trade.
I wanted to open my position when the market had clearly dropped away from the resistance level I imagined there was. This meant that I wanted to be sure the price was in a slide so instead of opening at the current market price, I placed an ‘Order to Open’ at a set price, which in this case, was 1617 (5 points below currentprice). I believed that if it fell to this mark, then it would indicate a further fall was due to my original belief of around 1610. I described this theory last week.
Spread Bet Longs:
- Barclays (BARC) : 183.183 @ £20 p/point with STOP LOSS at 180.
Spread Bet Shorts:
- Spot Gold : 1620 @ £25 p/point with STOP LOSS at 1623
- Spot Gold : 1617.16 @ £20 p/point with Stop Loss at 1620
- Barclays (BARC) : 183.183 @ £20 p/point with STOP LOSS at 180 – Closed at 183.966 = +£15.66
- RBS : 223.58 @ £5 p/point with STOP LOSS at 229.58 – Closed at 223.02 = +£2.80
- Spot Gold : 1620 @ £25 p/point with STOP LOSS at 1623 – Reached stop loss = -£75
- Spot Gold : 1617.16 @ £20 p/point with Stop Loss at 1620 – Closed at 1611 = +£123.20
Profit/Loss for Day