Entered two paper trades on Thursday at 3.30pm. The Dow and ftse were fairly bullish.
A hammer had formed above support, followed by a green candle. I figured the market would perform well in the last hour, so entered at 1379. I bought as prices were rising. A protective stop was placed at 1360, 1 point under the low. As you can see, price fell 6 points by the close, and I decided to hold. My stop would have been hit at the open the next morning.
The other trade was with Aviva.
A hammer had also formed at support, followed by a green candle, so I bought at 390. A protective stop was placed one point under the low at 385. My stop would again have been taken out the next morning.
In Hindsight:
I might have waited to enter on a pullback, or waited to see where we were at the close. Or I could have waited till the next morning. My buy impulse was somewhat emotional. It is clear to me now how everyone is looking at the same page, and they all know where the stops are. Both my stops were taken out by one point. The Standard Chartered candles were some way off support levels, so I was perhaps too hasty.
Possible solutions:
1 Set wider stops, perhaps 3 points below the low. Reward to risk ratio would suffer.
2 Wait till the next morning and time my entry better. The problem here is that I am at work until 8.30am UK time, and I can’t really get away with placing trades at work (although it has been known on occasion). By the time I would have got home and placed a trade, much of the gains would have already been made.
Aviva finished the day at 410, which would have been a 20 point gain.
Standard Chartered finished at 1409, a 49 point gain.
Final thoughts.
I feel more confident that I know what I'm doing. I just need experience. I’m also grateful for the advice to trade with a longer timeframe than 3 minutes as I was doing. I feel much more comfortable using a 1 hour timeframe and taking it down to a 10 minutes timeframe for a closer look.