My name is Jonathan Hewson and I am a sophomore finance major at the University of Pittsburgh. I am a member of @thetradingpitt with Jake and I will be writing a few blogs about my trading to go along with his. I am mostly a day/swing trader but I wouldn’t say I have exactly found my nitch yet.
I have been working extremely hard this semester to put together a trading plan that will work logistically with all my classes while maintaining a consistent profit margin. I find it difficult sometimes to get the right intraday entry and exit points when I am only in my room at night, during the least traded hours of the day. I use a lot of indicators but one of my favorites is Pivot points (daily, weekly and monthly). These can be extremely powerful support and resistance levels but they require you to judge breakouts and bounces very efficiently. The trade that I am least successful with over the course of my career is definitely the breakout trade. I always seem to buy the highs, sell the lows and the breakouts never pan out the way I want.
One reason I see for this is my innate desire as a trader to get the best price possible. There have been too many times when I buy or sell within four or five pips of a certain level and see price immediately shoot off the opposite direction. One example of this was with USD/CAD this week (10/30/2011). Price had worked its way up to the monthly pivot point (calculated at 1.018) during the first few days of November. I wanted to enter a trade at the break/bounce of this level because I saw a lot of $USD price action in the coming weeks. I saw price break the level and retest on the 15 minute charts so I bought at the white arrow seen in the picture (around 1.01890). As you can see price moved against me, eventually hitting my tight stop at 1.0149. Soon after my stop was triggered I decided to go short, thinking that price had rejected a move above the monthly pivot level. However, price again moved against me, passed the 1.018 level and my stop was again triggered. Two losing trades in a row.
Seeing the charts now, my decisions seem incredibly stupid. The movements of the market weren’t nearly strong enough to warrant a break. So, where to go from here? I am writing this blog partly just to hammer into my own head that following the trend is far more profitable then attempting to get a perfect entry. In the future I am going to look at longer timeframes, BE PATIENT and WAIT for price to show a clear sentiment in a certain direction.
