Sunday, September 15, 2013

09/16/13: Up into Tuesday, tomorrow is going to suck (for bears)

After a dismal weekly performance, I went back to the drawing board to revise the system.  A system that fails to identify these strong trends is worthless in my opinion, so given the fact that my system missed this rally (and was on the opposite side) it was time to review.

I reviewed quite a bit over the weekend and was looking forward to starting anew, but today when I looked at futures, Eminis are rallying 1+%.  Holy cow, that's going to suck tomorrow.  Thought there might be a reprieve to cover the shorts at a better price so now I'm pissed I'm going to cover at worse prices.

There were a couple problems with my system
1.  In the v2, I would take positions at the start of the timing window.  Initially I thought this was ok, but instead I really ought to take action at the close of the timing window.

The reason is there have been a few instances in this rally (and others) where it seems the Aroon 3 flips from positive to negative (or vice versa) by the time the hourly bar is done.  If the Aroon 3 turns negative, then I want to be taking the opposite position (if Aroon is negative, go long and conversely if Aroon is positive, go short).

A recent example is the hourly close on September 6th.  The hourly bar flipped Aroon to negative but at the start it was positive.  Hence why I took a short position at the start.  What should have been done was taking a long position at the close.

If I had taken the long, then I wouldn't have been entering the next leg of the wave short.

2.  the other problem was holding onto these shorts far too long.  I violated one of the basic tenets in not honoring my stops.  Really bad sequence of events this past week and a half.

Anyway, here's looking forward to the next several months.

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