Gap up stops the short trade

Another gap up this morning on SPY jumping over the stop loss signal line and this time managing to close above it stopping the short trade with a loss of 0.96 points, and continuing upwards to make an all time new high. The rest of the day was just a sideways shuffle that should result in another high tomorrow. Currently there are no signals on the 60 min interval but the system remains with a short signal on the 120 min which I believe will be triggered sometime next week. For more details please see the daily battle plan below.

In the last couple of months I have been considering how to best describe the philosophy behind my trading system (yes there is one, don’t look so surprised), trying to summarize it into short understandable mantra like rules, and I think I finally have an idea of how to articulate it, so in each of the following entries (hopefully) I am going to cover one of the principles and you are more than welcome to comment or ask questions.

Mantra #1 – Don’t be Greedy 

When considering a trade assume you are going to lose, and ask yourself how much can you afford to lose. Most traders look at the potential profit instead of the risk, they succumb to their own greed making trades without fully considering what happens if they are wrong and when that happens they lose more than they can afford.

Battle Plan for the 7/19/2013

2013-07-18-End of day

120 min interval Short Entry below 167.56 on SPY

* Stop loss lines should be triggered if there is an interval close above them (i.e. 60 min or 120 min ), they are published in the daily blog and updated during trading hours on twitter.

* Take profit lines should be triggered immediately when crossed, they are usually issued during the trading day on twitter.

* Entry signals should be triggered when crossed, but take into account that until there is a confirmation (i.e. close of the interval across the entry signal) , the signal can become a reversal signal.

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