Coffee closes for a good profit. Anglo-American closes for a loss
My coffee spreadbet trade finally got closed out by its trailing stop! I made £1900 on this trade, which is great, but nothing like the £5000 it would have made me if I had closed it at maximum profit:
My plan is always to have a trailing stop that closes my trade, never to take profits and limit my profitability (how do I know how far it will go?). The challenge therefore is deciding where to place the stop loss. With a trade that moves up quickly and steeply, it makes sense to have a stop-loss that moves in the same manner. With the benefit of hindsight I should have used a tighter stop than the one that did employ. You can see where my trade got stopped out (right arrow).
I now feel cheated, and will feel even more cheated, because the price of coffee will now almost certainly rise! I will feel the temptation to make a 'revenge' trade and buy back in to the position. Coffee would then fall in price again and I would lose all the profit that I have made! If anyone tells me that trading is unemotional I very much disagree, but add that I would like to be more unemotional about it. However, I have a little trick up my sleeve: I bought the ETF Coffee and hold this in my share trading account too. This trade has a much looser stop and still has plenty of leeway. I think that the price of coffee could rise a lot over the next yr or two, and this trade may make me money yet.
My long trade in Anglo-American was been stopped out for a loss of £551. You can see on the graph where I bought it (left arrow).
This would not qualify as a buy under my new rules. Essentially with this trade, I felt that the price had bottomed out and was reversing. This was not really, therefore, a trend trade. I still think that the price will probably rise, but my stop-loss has taken me out of the trade for a loss. I anticipate that my new rules will help to prevent this type of occurrence too often in the past. My trading account has been hit too badly by this style of trading.
My plan is always to have a trailing stop that closes my trade, never to take profits and limit my profitability (how do I know how far it will go?). The challenge therefore is deciding where to place the stop loss. With a trade that moves up quickly and steeply, it makes sense to have a stop-loss that moves in the same manner. With the benefit of hindsight I should have used a tighter stop than the one that did employ. You can see where my trade got stopped out (right arrow).
I now feel cheated, and will feel even more cheated, because the price of coffee will now almost certainly rise! I will feel the temptation to make a 'revenge' trade and buy back in to the position. Coffee would then fall in price again and I would lose all the profit that I have made! If anyone tells me that trading is unemotional I very much disagree, but add that I would like to be more unemotional about it. However, I have a little trick up my sleeve: I bought the ETF Coffee and hold this in my share trading account too. This trade has a much looser stop and still has plenty of leeway. I think that the price of coffee could rise a lot over the next yr or two, and this trade may make me money yet.
My long trade in Anglo-American was been stopped out for a loss of £551. You can see on the graph where I bought it (left arrow).
This would not qualify as a buy under my new rules. Essentially with this trade, I felt that the price had bottomed out and was reversing. This was not really, therefore, a trend trade. I still think that the price will probably rise, but my stop-loss has taken me out of the trade for a loss. I anticipate that my new rules will help to prevent this type of occurrence too often in the past. My trading account has been hit too badly by this style of trading.
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