Noel Campbell
Noel Campbell 		One of the toughest challenges for a new trader is to be able to walk away from a losing trade without getting rattled. I’m sure a number of readers can relate to what I’m talking about. This was always one of the abilities that David Bowden knew he had acquired. It can be in that period of time that you are feeling rattled that you miss the next opportunity.

There was a recent ABC trade on the SPI200 futures contract that I will review in detail this week. It is a perfect opportunity to highlight the importance of being able to shrug off a losing trade and just gear up for the next opportunity. It may be just around the corner.

Chart 1 shows the swing chart and bar chart for the trade in question using the Training Mode feature. Point A for the trade was June 15 (3461), Point B was June 21 (3565) and the 'initial' Point C was June 28 (3519). As you can see by studying this first chart closely, the market managed to get us in and out on the same day, after forming an outside day. We refer to this technically as the 'bad' outside day. However being an outside day, the swing chart was not able to be swung up officially. When it comes to an outside day, we must wait an extra day before moving the swing chart. As you can see, the swing chart had not been turned up, hence Point C had not been confirmed.

Chart 1

click chart for more detail

Now for a more advanced perspective. The estimate Point C for this trade was 3513 and the market was managing to hold above this estimated Point C or 50% retracement. The volume was very low, especially for an outside day. The market only traded just over 7,000 contracts on that day that got us in and out. If the market is ever going to make a false break, it will generally occur under low volume. This was the first hint to consider standing your ground and having another go at this trade.

Chart 2 shows the more recent market action on the SPI200. The place to re-enter the market was when the high of the outside day was broken. This gave the first suggestion that we had a reversal pattern on the swing chart, following the outside day. This is the signal to turn the swing chart up, confirming Point C. The milestones for the trade needed to be recalculated, using the low of the outside day.


Chart 2

click chart for more detail

As you can see this revised trade has kicked on just nicely. For those who are currently paper trading the market, I suggest following this trade from here. The plan will be to use the Currency Style Stop Movement strategy. Which means now the market has reached 50%, stops are at entry + commission. When the market reaches 75% that will be the trigger to move stops to 10 points below the 50% and profits are to be taken at 100%. Here we have turned the situation around and look in a strong position to take a nice profit. But you needed to be able to get back on the horse, the very next day.

Until next week......

Noel Campbell