Being Right & Poor - June 12, 2007

It sucks being right and poor.

I had a good call yesterday. I was short the July 1560 calls and long the 1480 puts. When the market rallied from 1510 to 1516, I freaked and covered.

I couldn't stand the pain of not getting on a perfect trade. I've been spoiled by lucky trading.

And today, I was short in Sep 1518, the market at first dipped, and then ran up and I was stopped out at 1517.50. I tried to reestablish my short at 1517 and was forced out at 1520.

Again I was playing super tight.

Even if I had a wider stop, when it hiney spiked up to 1527, I would've been taken out anyway.

The bottom line is that I had my horizons all confused and so my stops were not right for the trade that I was planning.

LESSON: Long-term trades need wider stops, and bigger profit-taking levels.

We now have five straight S2s. Playing tomorrow will be very difficult cuz shorting here requires a break of the lows. Hineys will also get very painful.

One strategy could be to wait for the hiney to short. This is always profitable play in these markets.