Daily P/L: -$50
Account Net Value: $300
Account Net ROI: -14%
Trade Rating: BAD
I took 2 trades today, ending with a daily p/l of -$50. This was a bad trade today because I did not stick to my trading plan. I did not execute on my mental stop loss. Here's the trade:
I entered this trade on an charting analysis of a Bear Flag Pattern.
As soon as the candle broke the bear flag pattern, assuming it was going to continue in it's bearish downtrend, I entered my PUT option position.
PUT Options play the downside of a stock. Thus, if you believe that a stock is going to decline and push down, you would play PUTS.
As you can see, I entered right at the break:
This was the first mistake I made in this trade. Why? Well because I should have waited for the break AND the close below the pattern. As you can see in the image above, the candle broke but quickly pushed back up leaving a longer wick, which shows buying pressure. Then the candle closed above my pattern, indicating a reversal and that my trade was incorrect.
My mental stop loss was the 166 level. Meaning, if this stock pushed and closed above this level, I would execute my mental stop loss and exit my trade. Looking at the image above, you can clearly see that the candle pushed above 166 and CLOSED above this level. This is when I should have exited my trade. This was my second, and most crucial mistake.
Mental stop losses should always be executed, because they were placed for a reason. Right?
This was my exit.