Monday, October 17, 2011

A good fishing trip... but could have been better

It seemed to me today that I spent most of my time fishing for either higher or lower prices through the use of buy/sell limit orders. Market orders were not on the menu du jour so to speak. That was that kind of day (for the instruments I trade at least) where markets lack conviction and do not commit to a specific direction or trend (see here for an example of a normal day distribution on crude). I found a long time ago that when in an environment like this, one is better off using well calibrated limit orders than to respond to trend following signals with market orders. But, from time to time, you miss good trades waiting for a specific price with a limit order, like the one that passed under my nose on t-notes by 2 ticks and, as it turned out, would have been a huge winner. Better luck next time. Today's net result (using 1 contract): +$417. Details below.

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