I sit here on the (US) morning of Inauguration Friday. I’m recording the markets and watching Bloomberg, I wont be trading today but to say it marks the start of an interesting few years is an understatement. While I watch I thought I’d put my first trade report from earlier in the week.
On Tuesday 17th I sat down to trade my first Treasury session since going live. My objective was primarily to watch the market and get some screen time, I’d decided that I was not going to trade unless I saw something specific at a pre defined price and if I did trade it was best to limit myself to one trade. The market was coming off the back of a three day weekend and I figured that due to the auctions scheduled for later in the day and a few FOMC Members speaking it was probably going to be a low volume range bound market.
On logging into Ninja I saw that the market was indeed stretched out in all three markets from the overnight session which confirmed my theory that we might see low volume. As expected nothing much happened for the first hour or so until we started to see some action at about 10am.
As price started to grind up I noticed there was an potential spoof order resting above the market. As price neared the action confirmed that it was indeed a spoof and I suspected someone was trying to run the price up a few ticks. This suited me as I had selected a point just a bit higher where i thought could be a good point to buy the market and hopefully see it run a little higher to break the high.
I happened to look away from the screen (foolishly) as price got to my entry point. Buyers quickly stepped in and took it higher before I could get my order off, it hit the high and then dropped back down to my price. Not wanting to miss out I placed a buy order for one lot and was filled pretty quickly. Price immediately went against me for a tick and as I had pre defined my risk as 1-2 ticks I decided that I should get out, the market looked weak so after a short period of time I hit the market to get out of the trade.
After I exited the trade price hung around by my entry and then didn’t really do much. It eventually fell back in a bit and I decided to take my loss for the day, go over the trade and pack up for the day. I resisted the urge to get back in to win back the 2 ticks for that I felt good about the result.
Having gone over the recording it was clear I was wrong. The initial trade idea I think was sound however the fact that price broke through my entry point but failed to take the high was a red flag. The fact it then fell back to my target entry price was another reg flag. At this point, when I was getting in the Sellers who faded the top were getting out and I was left holding the bag in a sense. These factors along with the pace of the day should have told me that there wasn’t much momentum on the buy side and therefore should not have taken the second bite of the cherry, after it went through my price without me the first time I should have accepted I missed the trade.
I lost 2 ticks on this trade however I’m happy with my exit. I did not see what I wanted to see immediately and thus was on the defensive, it was clear that I wasn’t going to get my profit and so on price falling against me I got out quick limiting my loss. I felt much better being out of the market annoyed at my loss than in the market stressed out trying to get back the 2 ticks.
Watching the trade back from my screen recording proved really valuable in identifying these lessons. My main credo right now is just to survive the market to the next day. The psychological aspects that affected me today were that I had itchy fingers about an hour in and I feel did well to sit back in the chair and not act on the impulse to trade. Also I found that as soon as I had taken the loss I lost my read on the market, I felt foggy and was thinking more about the loss than the market action.
My overall feeling for the day is that yes, I would have loved the day to have been a positive result for my first day of trading but overall I’m happy with what I learned. This is going to take time and I managed to take a small loss rather than a big loss and still made some good calls about what was happening in the market.
Onwards and upwards!