I have failed to get into both cocoa and live cattle as they were breaking out to the upside. They were both breakouts that I had been expecting. I may yet get into either or both on a re-test of the breakout, but that is not the point. I wish that I was in already. Why did I fail to take the opportunities when I saw them?
- The ability to spot breakouts as they happen is new — Tradestation has allowed me to do it. I have not yet adjusted my trading style to make use of this new ability.
- I am more sceptical of longs than of shorts. If something breaks out to the downside and then pulls back, I am likely to short it, but if something breaks out to the upside I am more likely to wait for a re-test. This doesn’t make sense.
- I have learned implicitly that waiting for a re-test of a breakout is a good strategy, which means that I feel uncomfortable doing otherwise — but I have learned it from currencies and equities, which are fuzzier than commodities. When a commodity breaks out, and especially an agricultural commodity, there is a strong danger of missing good trades if you always wait for a re-test.
- Anchoring. Because I can see breakouts as they happen, I can also think about getting in on pullbacks on the same day; these are often very good entry points. Consequently, when I get another chance to get in at a higher price, I tend not to take it because it is fixed in my mind that a good pullback would be to the first, lower, level. When I only saw a breakout the day after it had happened, this was not a problem — I would come to the market fresh.