Daily: MACD-H is ticking up. Effectively, UNG has been in a trading range since late October 2010, and Slow Stochastics indicates we are at or near the bottom of the current swing.
Target: I expect UNG to reach its 22-day MA in the next rally.
Stop: calculated at 5.10
Entry: 5.31
Sold at 5.10 on 2/24/11. This is where I had put my stop and the price dipped today to reach it barely, but just enough for me to make this the worst case loss.
Lessons learned are:
1. Arrogance does not make money. I thought I could catch the bottom of UNG before a major rally, so I went long against a decreasing moving average and all signs pointing bearish. Do not trade against the trend.
2. Ignorance doesn't make money. I should have checked UNG:$NATGAS to see that UNG does not track the price of natural gas accurately, but it continuosly slides down. I had even read something about this in the past, but pig-headedly decided to ignore it. Stubborn ignorance results in a loss. Know what you are buying. Research, read and make informed decisions.
3. I could have made break even on this trade if I had moved my stop UP after the first $0.10 gain on day 1. Instead I left it where it was and lost the whole 2%. When long and the price moves up, move the stop UP.
4. Yesterday UNG was 5.25 and I could have sold then and limit my loss, but instead decided to keep hope alive and waited. If a swing trade doesn't work out in 3-5 days, cut your losses and move on.
2/25/11 UPDATE: To add insult to injury, so to speak, today UNG closed at 5.36. The lowest point it touched yesterday was 5.10, exactly where I had put my stop. I don't know if this is just bad luck or something else. Maybe the 5.10 level was obvious and many others had done the same, and we all got taken in by a bottom fishing expedition of bears with insight into pending sell orders? Who knows. Volume in the 5 minutes when 5.10 was reached was about 2 million shares.
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