Trading Position + £500
I've held long and short open positions on Dow this week (a forced open short to lock in breakeven yesterday) which I have now closed. I think the only reason for the use of 'force open' trading should be to lock in profit or as a last ditch attempt to buy time whilst looking for additional funding to hold open a position.
At open today the Dow took off like an Olympic sprinter, this after finding good support yesterday at around 15520. After a frenetic opening 30 minutes the index peaked at 15730, I'd already closed my long position for a small profit so was exposed £23 a point short. I added £7 so I'm now playing £30 a point. I had the RSI showing overbought on both 5 min and 30 min candles and price had also punctured my next level of resistance at 15720 so I felt comfortable that such a strong upward move would be followed by a fade as people cashed in early profit. I think also some short stop losses would have been triggered which would have added further fuel to the sharp rise.
I decided not to watch my screen and go for a walk around my local nature reserve. I popped my wellies on, pulled on my coat and walked 50 yards to the top of my road. I checked my positions on my phone app and was thrilled to see a loss of £200 was now a profit of £500, a swing of £700 inside 5 minutes.
Discipline is crucial to trading success and my daily profit target is £500 so I happily closed my short position even though it was showing £1500 down. I mean who cares what happens to the bloody index when my daily target is achieved? It could move 1000 points either way, it's simply not my concern. I'm not wedded to any long term position, I'm neither a bull nor bear. I can make money long or short, that's it.
My daily profit target is £500, I achieved that so why would I leave a position open? I know I'm most comfortable as a day trader so tonight I can relax, have a curry with my son and watch The Arsenal hopefully achieve a result in Germany.
Will I trade tomorrow? I'll certainly watch the charts......I have entry levels and unless they're hit AND I feel right I won't make the trade.
I've taken today's trading profit from my account and it feels so good.
Hi, interesting blog.
ReplyDeleteWhat are these 'forced' trades you keep referring to ?
Thanks
Thanks for the comment.
DeleteThe 'force open' trade is taking a trade in the opposite direction on the instrument you are currently trading whilst keeping the original trade alive.
With me I was long Dow so when I got back to break even I force opened a short trade on Dow. I use IG platform and by ticking the force open button it means it keeps my original trade alive.
Hope this helps!
oh I see, so if it hits your stops you hedge via a go 'force open' that puts you into a $ neutral position and then if it comes back good, if not then you are no worse off.
ReplyDeleteIs this an IG special ?
I've not heard of it before
A force open position does put you in a neutral position and also frees up margin. It has nothing to do with hitting your stop as once that's hit your position is closed.
ReplyDeleteSay for example you're long FTSE and it's dropped 20 points, you see you're close to margining out so you 'force open' a short position. The idea is it's a hedge against your own position and allows you to stay in your original trade. You will need to close it though as soon as you see the index climb or else you'll find yourself back at your long entry point but with a short position which is now 20 points underwater.
Hope this helps, feel free to comment if you're not sure and I'll have another bash at explaining it!