Undecided. Thu Mar 12

The overnight leads were non-commital with European and North American indices pretty flat and at noon the xjo, asx 200 index, is up 2 points. My impression is that the rally we've experienced over the last few days has hit a short term peak. We've sold off from some marginal new highs this morning and if we bounce back for a few bars we could well sell off more strongly later in the afternoon.

I've been undecided about the value of continuing with this short term trading approach but I've decided to persist because I don't think I've learned my lessons yet. I can see where I fall down and I recognise that the approach is intrinsically sound so I'm going to continue to try to make it work for me. The wins and losses are small at present which is just as well because in the last 2 weeks I've lost more than I've won. My aim is to get a robust technique which will allow me to make money most days. Once I'm confident that I can do that then I'm ready to increase my trade size with this approach and later to move back to trading in a longer time frame, which is typically where I've done best.
Part of me is resisting elements of this approach and I'm not sure if it's just the normal human response to try to avoid work sometimes or whether it's something I need to pay attention to. I'm trying to respect my own misgivings and work within my own strengths and weaknesses because I don't think it's workable to expect a trader to be machinelike. I used to manage a team of traders and it was interesting that all of them approached their job differently and yet they all traded quite successfully. I'm not trying to suggest that self-improvement is impossible just that it might need to be an evolution rather than a revolution. I've been pushing hard for a revolution and I think I need to ease off a bit and allow time to take in the changes.

Trying to integrate some financials over the last few days left me looking at too many stocks for such an intense method. So my new list is bhp, ncm, wow, wpl, cba, mqg and qbe. I've ditched fmg because it's a bit too choppy and rio because it usually moves in parallel with bhp but is less liquid. I've added cba, the most liquid of the banks, mqg, volatile and reasonably liquid as a good representative of trading banks/infrastructure, and qbe as the largest, best run insurer. The difficulty with these last 3 is that I can't short them. Ultimately I'd like to build a core position in them and then it will be a bit easier.

12.51 I'm short the spi at 3239. There's a fairly close cut at 3254 which, if triggered, would indicate a more complex correction or even new highs.

12.57 Scanning through my list of stocks I can see 2 opportunities. Bhp is consolidating after an early fall and I might get a chance to short a resumption. Ncm is strong with no trade possibility for now. Wow, I've just shorted at 2504 as it makes new lows on the day. Wpl is driving down and may offer a shorting opportunity later. Cba, mqg and qbe are all weak but I can't short them. I had an overnight long in mqg which opened strong then failed so I cut it at 1816. Qbe could at least turn around.

1.06 Bhp has cracked through the previous low at 3060. It's gone a bit sharpish so I might get a short position in place on a little rally.

1.16 Short bhp at 3059.

2.01 Still short bhp, wow and the spi as the market has tracked sideways over lunch. The spi is a few points from confirming a break down. Bhp rallied back into the low 3070s, not enough to cut the position and I'm hoping for a second time through bit of momentum.

2.30 Bought a little wow at 2493 to cover costs.

2.34 Short some more spi at 3234 as it seems to have made up its mind to fall now, and a few more bhp at 3054 for the same reason.

2.39 Bought some spi back at 3224, I just want a quick move for the second contract set.

2.48 Closed out wow at 2502 as it rallied back through my trailing stop to 2509. Closed out the last of the second set of spi at 3232.

3.37 I'm still short bhp and the spi and I've been on the verge of stopping out of one or both a few times as they've rallied back but failed to swing through the previous high.

3.46 Bought back the second short in bhp for a small loss at 3063 as it gets near the finish.

3.48 Just too soon...bought back half of the first set for 3050 as bhp is crumbling into the close.

4.10 Bought the final bhp at 3035 on the match, still short the spi.

4.15 Bought half the spi at 3231.

4.22 Stopped out of the balance of spi at 3237.

A better day. Having reaffirmed my aim to persist with this I felt much clearer and calmer. After getting out of the overnight long in mqg for a little loss on last night's close I did a further 3 stock trades for 2 winners, 1 loser and had two profitable spi trades. I needed a lot of patience today and didn't really get a mover.