Follow the Plan

Hi

I’m new to the forum and I’m also fairly new to trading the S&P 500 e-mini. So far my e-mini trading has been going very well.
But last Friday I didn’t follow my trading plan and got a little beat up. The lose was only small, around 4.5 points and I’m usually a very Disciplined trader but on Friday I kinder lost it and kept chasing more and more losing trades. I keep going back to the chart and looking over my mistakes I know I should just move on and let it go but I’m having trouble accepting the mistakes I made.

I traded from Australia and I usually up at around 4.30 am to catch the last couple of hours of the trading day in the US. Maybe I was just over tried on Friday and wasn’t focusing on the job. I know losses are a part of the trading game and all my other losing trades I expect without a problem because I followed my trading plan.

The biggest lesson I have learnt from my mistakes on Friday is, Follow your trading plan, no matter what the out come you always get what the market wants.

Sparkie

You seem to be way ahead of the average trader with your mature attitude to following the plan and recognition of what you did wrong.

Had you followed your plan on Friday would you have still ended up with a loss but just a smaller loss?

The first trade I got it all wrong and I was stopped out for a 2 point lose.
If I had of not tried to second guess the market after that and just sat beck a waited for the next trade setup I would have ended up at break even. But that’s all in hindsight now. I have faced the facts form Fridays trading and I made too many mistakes.

It should be a good week of trading with the FOMC meeting mid week. What's the feeling about rates in the US???
Here Australia they are talking about a rate rise.

There's a 2% probability of a rate DECREASE (FOMC Fed Day) and a 98% probability of no rate change. The rates in the US are currently 5.25% - what are they in Oz?

There's more FOMC information here: Fed Day Charts

Thanks for the info. The current cash rate is Oz is 6.25%.

The problem in the US was the out-of-control housing market that was keeping up the inflationary pressure but that stopped its bull rampage about a year ago and is a factor that is being closely watched in the determination of US rates.

Given the steady softening of economic data series, combined with the blow-off top in housing (and subsequent melt-down in the sub-prime lenders market), the market is looking for a softening of the perceived hawkish bias of the Fed. Thus the market is anticipating a change of wording in the statement released by the Fed this week to a more neutral or accommodative stance. The market is not anticipating an actual rate change this month, just a softening of the statement wording.

We have the same problems with our housing market. It's been out of control with some people seeing 200 - 300% gains in the last few years. My sister lives in Western Australia and over there they are riding on a huge boom in natural resources.

Beginning new to the futures markets is it advisable to stay out of the market on Wednesday seeing it can be a very volatile session???

I followed my trading plan today and ended up with a profitable day or should I say morning :- ))

If you've never traded a Fed Day before (i.e. this is your first) then I would definitely advise you to watch and not trade this one. If you have a charting package with simulated playback and the appropriate data for previous Fed Days then you can replay a few Fed Days and see what the market was like on that type of day.

Good Advice DT !

In general, on the day of the FOMC announcement...

We often see a decent trend off the open, then settle into a very quiet phase over lunch as the market waits for the actual Fed announcement.

After the announcement as volatility spikes, TA indicators tend lose validity, and the more basic tape reading / volatility based strategies work well.

I think that is very wise and risk averse attitude to take - i.e. trade small - 1 contract - and let the profits fund the account to allow you to trade a larger size. That way if you discover that you can't trade the loss is small and if you can trade you build up your capital slowly over time.