Monday, May 7, 2012

Trading your Plan

Today morning, on CNBC (as well as in this blog!), I had given our trading plan for the Nifty. We were short, and, planned to close our short positions when the market opened. The reason was an expected gap down in our favor. When markets give a favorable Range Expansion (RE) in our favor, our trading plan says that we should exit.

Now, Markets do what they want to do. Just because I close my short positions , the market will not stop going down. But, my plan is to exit, so I should exit. As luck would have it, Markets opened at the lows and then rallied to close almost a 100 points higher. They could easily have done the opposite. But, my exit in the morning would still be the correct action because I was following my plan.

2 comments:

umesh said...

Dear Sir,
I had also short position but though that market will start trendig down so had stoploss below 50 points of today's opening point & in afternoon rally ,position was swallowed by market.Always having difficuilties to exit wining positions.
You are right i have correct position but do not have plan or correct plan.
OR simply Not smart as like you.

Umesh

umesh said...

Dear Sir,
I had also short position but thought that market will now start trending down, so had a 50 point stop loss below today's opening.
but in afternoon rally, position was wiped out.Always getting difficuit to exit from wining position & when to apply trailing stoploss.
You are right,Not having a plan or wrong plan will make diffrence.

Umesh