Update from yesterday. I didn't pay attention to the pre-market price on the TIF trade. I was working but that isn't an excuse I saw that it was going up at one point pre-market then finished the stock down. So I traded the down as a sell and unfortunately, I lost.
Now I want to explain something about trading systems. My trading system says that a stock must not change direction pre-market. I didn't follow my trading system and worse COTY I ignored and COTY went the way that the indicators said it was going to go. YIKES! HUGE MISTAKE!
It gets worse actually. There is something called SLIPPAGE meaning that the broker's platform doesn't close your trade on time. Yep, you guessed it!
From the broker " We have checked your case with our technical department and found that your Sell position ID 485692440 for Tiffany & Co closed on 28/08/19 at 13:31:54 GMT due to Stop Loss rate being triggered at the rate of 83.0700.
Your stop loss rate (82.6600) was not traded in the market and caught the next available rate (83.0700), which was beyond the stop loss that you set. "
No big deal right? Well, when you add in leverage that number... Ok never mind.
Some Brokers guarantee your stop and have a low slippage policy. And some Brokers don't. Make sure you know which policy your broker uses.
From the broker "Stop Loss (SL) and Take Profit (TP) orders are not guaranteed and over volatile periods where spikes, gaps and slippage can occur due to market conditions, if your requested SL or TP rate is not traded in the market, the close order will be triggered at the next available rate. Just as one would benefit from the trade closing beyond the set TP rate and we would not deduct money gained from the positive slippage, the same logic applies when a trade closes beyond the set SL."
In no way is this the broker's fault! That is policy.
Even though it seems the broker is making an excuse, the policy is there. It does suck when it happens and it seems to happen at the worst possible time for you. My wife was watching and now she is complaining that trading is so risky. Of course, it is risky but the reward outweighs the risk.
How do we make it less risky? By having a trading plan, sticking to the trading plan and not ignoring things in the trading plan for whatever reason. If I had paid attention to the fact that Tiffany went up during pre-market I would have traded COTY and made a profit rather than a loss. Why did I do that? Who knows? So the lesson here is when you lose, you lost for a reason. You lost because you didn't do something you should have done. It isn't the broker's fault, it isn't the market's fault.
IT IS YOUR FAULT! Fix the problem and move on! If you have a flaw in your system or in you as in you are not sticking to your trading plan then go back to a demo account. Real money is not the place to practice!
Thanks for reading.
Paul Davids
