More tinkering

I've been continuing to think about my trading and to play around with different approaches. After I posted on Friday, FXJ began to peel back despite the overall market being strong and I was tempted to sell out on the close. I decided to use Friday's low as a stop instead and after seeing some overnight weakness from Europe and Wall Street, I assumed that I'd be selling pretty early this morning. I allowed a few minutes to see if there was the possibility of a decent buyer turning up but there was no sign of that so I cut at 93.5 for a loss of $300. It got me thinking about my entry and it occurred to me that I was swinging too far towards wanting certainty at the expense of profit. For example, in relation to the FXJ chart, below, I could have bought one day earlier on the close at 90.5 because the strength of the day implied a short term rejection of a new low and the probability of another rally attempt. In the end, it would have resolved into a swing which didn't go very far and I would have been left with the same decision of selling on Friday's close or today's open but I would have seen a profit of $600 rather than a loss of $300. I don't see that the act of waiting an extra day created a better risk profile. It would have done if there was a lot more room to the recent highs but in this case, with the highs near at hand and the support from a nearby low at 84.5 and last Thursday's intraday low of 86.5, it made more sense to anticipate.

I bought into PXS at 131.5 on Friday's close and this was an example of the gap to the recent high being enough to warrant waiting for a buy on a strong day. It's a reversal pattern that I am willing to take because despite there being no potential higher low to provide support, the simple a-b-c correction after a strong move is quite common and the reversal is in the direction of the dominant trend. It's going well so far today despite a pullback in the broad market.