I am taking some downside heat on DBLE, the second trade of the BestOnlineTrades Cheetah Trading System. I don’t intend to sell out based on today’s action for now. I have to be careful about accumulating too many trades in the early going without enough profit to work from. 10 round trip trades at my current commission rate of 7.95 would be about 16% of $1000. That is quite problematic and does show how excessive trading can really damage an account just on commissions alone.
So for now I will stand ground on DBLE as I still believe it will work into a breakout.
I will say though that I realized that I have made another mistake with regard to my entry on DBLE. I entered DBLE at the time it was appearing to break out north from the downward trending resistance line during the day. But the mistake was that at the close it was NOT an official break. In fact by the close of the day it closed right under the resistance line. So this was the type of day where waiting until 3:59PM would have been very useful as I had written about before.
In hindsight I know why I got into DBLE… I jumped in because I saw the break of the down trendline and I ASSUMMED that it would continue to evolve into a true breakout by the close of day. As you can see this was not the case.
How to remedy this type of mistake next time? On close and potentially clear trend line break setups like this, WAIT until 3.59 PM to enter the trade and VERIFY that the price is in a break out stance at that time.
So in summary the mistakes so far are:
- Do not enter any trade after a ‘record’ number of straight up days (ie. 4, 5, 6 or more)
- Do not enter a trade when the price is moving close to previous high volume swing highs
- Do not LEAVE a trade just because it is pulling back to support line. As long as it holds support line, then stay in and ride it up. Only exit on confirmed break of support up trendline.
- Do not try to PRESUME a breakout until it is confirmed at 3.59PM. Let the price break out a little and be sure it is still an official breakout by 3.59PM.
So there you have it, already 4 mistakes that must not again be repeated. Only by eliminating and completely removing mistakes such as these can trading over time become improved.