The link between not using stop losses and Peter Sellers in "THE PARTY" $study

Sometimes (many times!) I go into trades and don’t immediately insert a stop loss order. I then find myself looking at a small loss then a large loss and then a very large loss. I realized that the emotions I feel as this happens are perfectly depicted by the scene in "The Party" where Peter Sellers destroys the bathroom.


He should just have walked away when the water did not stop running; that would be his stop loss order. Instead a disaster ensues. The inability to act and take your losses is perfectly depicted by his bewildered look as the toilet roll doesn’t stop rolling (1minute 55 secs.).

$DE The trade I should have made. $study

$DE had been trading aboove 69.22 for the last couple days. This was a clear resistance and now support level. On Friday the agricultural products gapped up, again, as represented, for example by $JJG. The sp500 opened with some weakness but $DE gapped up and during the initial morning weakness never went below $69.72  which was still positive for the day. Best of all a clear double bottom was established at 9:58 . Nothing is certain in trading, but all of the above indicated a possible breakout and best of all a clear stop ($69.60 for instance) was established.

Easy Trade I Screwed Up $ORCL $study

$ORCL had good results and many houses were lifting price targets in the morning. Its not expensive , the SP500 was stable enough so I gave it around three minutes at the open, liked what I saw and bought at 26.69. Soon after I sold at 26.99 and it could be argued I should have held on longer with a stop 10 cents below my entry. Either way it was a good trade.

The problem is what happened afterwards. I started shorting around 26.85 and throughout all the area shown by the rectangle in the graph. What was I thinking!! Well I was thinking it would range trade and I would make a few pips...but then it crossed 27.00 and never broke it again. On the re-test at 12:10 I should have covered...Basic Trading 101.

So what have I learnt ?(and I should know this by now!!!). Follow the logic (cover at 27.10ish after support did not brake) and more importantly do not throw logic out of the window (what was the basis for keeping shorting at 27.20 27.20 27.35 ? None!! It was just stupid...failure to acknowledge a small loss led to a big loss. Ended up covering at the end of day for a nice loss.