It is just as important to review winners as losers. So I will go through my recent losing trade with gold.
Gold appeared to be forming a H&S bottom which corresponded to a channel breakout.
After years of watching this market, I realized it was going to break higher. I did that with my post, Golds is Going to Breakout. The next two trading days, it slowly edged higher. I added more longs to this position.
Then on Sunday night, it did a break away gap on high volume.
This was another bullish indicator. My analysis appeared correct. However, gold began to act funny around the 1960 level. I made a post about it here. First, it had a huge up day with its break out. Then it stalled. The candle formation was suspicious to me. So I unloaded half of my long position right at 1949. Within hours gold dumped hard on very high volume. This was a sign that it was not going to follow through. At this point, I should have immediately moved up my stops at 1865 to the 1890 level with all my other stops. I should have been aggressive with my stops. But I sat there. Had I moved up my stops to 1890, I would have gotten stopped out and my P/L for this trade would have been a break even trade. In other words, I would not have lost money nor won any money on this trade.
Friday was carnage day.
The gold market ran my stops at the 1865 level.
This trade fit my plan perfectly. I would take it again and again. Losing trades will come. This is part of the business. All I can do is trade my plan. What the market does after that is out of my control. My only failure was the inability to be more aggressive with my stops. Any trading below 1890 invalided the pattern. I knew this. But there my stops sat at 1865.
The most important lesson to be learned about trading futures is risk management. If you ever read a book about futures trading and it does not dedicate a chapter to risk management, toss it. Above all else, preserve your capital. There are some lessons I have to relearn again and again.