Shardy's Day Trading Journey - Day 18 - Managing Risk

Welcome back from the weekend. In the news Spain is getting bailed out but uncertainty still looms in Europe creating an unsteady market. Today I want to discuss three trades that I made today.

1.       First trade was a buy at the start of the light blue line. You can see that it reached the bottom part of the Bollinger Band and steadily went up. This trade was quite profitable. Once it reached the top of the BB(Bolinger Band) I closed out looking for a good entry to sell.

2.       Trade number did not turn out so well but it was a valid trade so I can't be upset about it. I exited out of trade one and sold at the top of the BB. You will see the red line climb up and price hit my stop loss. As I have said before BB's are not completely accurate and had I gotten in later it would have been a profitable trade. Sometime it pays to be patient.

3.       Trade three was again a losing trade but I want to explain how this was still a great trade by managing risk. Repeating myself again, great traders know how to manage their losses, that is how they stay profitable! On this trade I was never really ahead. Realizing that and having every bar work against me but one I started to manage the trade with my stop loss. Once there was a green bar I moved my stop to the bottom of it. This reduces the risk of losing more. Once the next bar formed which ended up being red I moved my stop to the bottom of it. Overall, I assured myself minimal loss just in case. It was great that I did because as you can see shortly after the market dropped dramatically. Management saved me a lot of money today and actually kept me profitable on the trade. Had I not managed this trade effectively I would have had a losing a day.

Hope you are starting to learn how to manage your risk. I am still in the learning process as well but I keep getting better each and every day! See everyone tomorrow!