You can't stop the music. Tue Mar 3

Once again world markets are dancing to the same old tune. HSBC and AIG both needing a massive recapitalisation provided the impetus for further falls.
Pleasingly, our market has rallied from the opening lows so I'm hoping for a series of straightforward shorts as the stocks resume the downtrend.
Bhp - early low was at 2664 close to the adr closing price and now at 2700.
Fmg - pleasingly fell through support at 242 when it opened at 234 then rallied back to 248 and now slipping again. I should get a chance to sell some soon.
Ncm - even gold is not acting as a safe haven today, this is down 4% and hasn't rallied much.
Rio - a relatively good performer compared to bhp but still the same pattern.
Sto - only down 1%, bounced hard off the open. Would be wary of shorting a resumption but not really a buy either.
Wow - in a little range, down 1.1% and consolidating.
Wpl - not so weak either on the day but the chart overall looks poor, still rallying from opening lows but with slowing momentum.

11.39 Surprisingly bought wow at 2603 on a little reversal, tight stop on this at 2595 and will move to break even if possible. Shorted fmg at 238 on resumption. Would like to short ncm here but it's too close to a clear ross hook at 3170 so doing nothing right now.

11.54 Short some ncm at 3170, it's just hovering around the break, looks like it will be pretty weak today. The market is surprisingly strong with wpl near to generating a buy on a ross hook (almost) at 3399. I'll probably try a quick trade if it happens.

12.04 Missed the wpl as it raced through my level, waited for a quick pullback to get set but it didn't come so I'm letting the trade go by. The same sort of set up came through in rio at 4336. Bought a small amount at 4347, a bit far from the level but not too bad in rio, a bigger dollar stock. Bought back a little fmg at 235 and 231 to cover costs.

12.14 Would like to sell a second lot of fmg as it's accelerating now, there was a ross hook at 231 and it's not participating in the market bounce. Ncm has gone against me but not severely, I'm using a second bar trailing stop because I think it's a high quality signal.

12.22 Out of rio at 4362 and wow, last portion at 2623 as the rally starts to stall. Haven't shorted more fmg yet as it's finding some support. Short sto at 1491 on a reversal down.

12.34 Ncm still firm and as we tick through to the next bar it's starting to form up as a bullish reversal except that I'm not convinced it's extended enough. Either way, I'm close to stopping out. The start of the downward swing which triggered the break was 3215 and I expect that to hold so I'm stretching the stop a bit. Did sell a little bit more fmg at 232 as the rally isn't progressing. Tight stop on this 2nd set.

12.39 I have to leave for lunch in about 10 minutes so I'm a bit disappointed as I suspect the rally will peter out in the next hour or so. Was too hasty to get out of wow, now at 2642.

1.43 Shorted a little bhp at 2714 and wpl at 3407 on the rally failing, slightly away from my optimal levels because of lunch. Coming back, fmg and ncm have gone well for me while sto is about the same. As with wow earlier there was never a reason to cut rio and it's now 4415. It's interesting, time and time again you're tested in this job and a common failing is to assume that just because the market is weak, certain stocks can't go up.

2.14 Was distracted by various phone calls and missed the chance to cover costs in bhp and wpl and then cut for square. They're both close to stops and the spi is looking steady to strong. Having missed them and given how thin it all is I'm hesitating for a few minutes more to see what transpires. Have bought a little fmg, ncm and sto to cover costs.

2.25 Out of bhp and half of wpl at really useless levels of 2736 and 3424 respectively so those distractions were pretty expensive.

2.33 Got a stop signal in ncm but again it's very volatile with the RBA just having announced they're keeping rates unchanged, so just bought a small amount. Reversal in wow so short at 2628 and in rio at 4420. Pretty much short everything now except bhp.

2.39 Out of wpl at 3390 as I'd got chopped around but it looks weak.

2.44 The market is reversing every 3 minutes. I'm sitting tight for the moment to see where the dust settles.

2.56 The spi is back up at its highs for the days and I'm having trouble biting the bullet with my stops. I bought back fmg at 228 to close out my second set and now the rest of the first set at 232. I've hit my stops in ncm, rio, sto and wow but haven't dealt yet in a fairly wild market.

3.18 Out of sto at 1485. I'm embarassed to write this but I've missed my stop in wow by a mile. It raced through my initial level and kept going. So I'm short at 2628, supposedly with a tight stop and it's now 2676. The only think I can say is that it's been an incredibly fast market starting with a false move down then a big short squeeze. The spi is fading now but not wow yet.

3.31 Shorted the spi at 3198, been meaning to start trading this again as I'm watching it all day. Still worriedly short in rio and wow having totally missed my stops and lost the thread. Short a little ncm still but will cut that soonish.

3.37 Out of balance of ncm at 3146, others were bought at 3139 and bought back spi for square.

3.57 Out of rio at 4428.

4.13 Ended by averaging 2680 for my wow stop which was woeful and took the day from being good to only moderately up.

So 10 trades for 5 winners, 2 losers and 3 breakeven but with one of the losers way too big. The fast market didn't help but was also a reason not to take any new trades except with a top class signal.

I'm thinking more and more about the nature of this kind of trading. When I do this work I like to think that it's my knowledge and experience that makes the difference and how well I can pick the market. Essentially, my tendency is to try to feed my ego. I have prejudices that support this such as my thoughts that you can't really follow a rules base method because otherwise everyone could do it.

What I'm realising practically is something I knew but didn't really quite believe. I now see that, yes, you can do very well following a rules based approach with good risk management but it takes a lot of training to become disciplined enough. That is the reason why so few people manage it.