# winning trades (CG/ER) : 2/1

# losing trades (CG/ER) : 0/0

CG Return: 30.6%

Hedge Return: 1.6%

Current Allocation (CG/ER): 79% / 21%

Total Return Month to Date: 23.4% 

Despite the fact that I only executed one trade this week, there is a lot to talk about.  I just put a new volatility filter on the Cable Glider that instructs it to only take one contract when the average true range is persistently high and rising.  My research indicated that this situation is one of the most dangerous for the Cable Glider’s results.  So, I went live with the change and the filter was immediately triggered on the one and only trade of the week, which happened to catch nearly 300 pips.  I believe that is the biggest single pip capture for the Cable Glider this year…so my system change caused me to gain only around $1400 instead of $15000 on that trade.  At this point, I need to look back at the previous post about “pain of not participating” and “the new system underperforms the old system” in order to keep my head on straight.  I’m not sure I really like my new volatility filter, but for now I will stick with it, as it will undeniably perform its intended purpose of lowering risk.

Also, when I woke up on Friday morning, my Tradestation data feed had gotten knocked offline, and I missed taking a short trade on the pound and 2 long trades on the Euro.  The net effect of these trades would have been a loss.  While I’m certainly happy that I didn’t lose money that I *should* have, I realize that this episode exposes a gap in my trading plan…namely, what to do when this situation (a missed trade) happens.

I’ve thought about it, and I’ve decided to add the following to my trading plan:

1)  If, for whatever reason, I am in a trade that the system says I should not be in, I will exit immediately regardless of the current position’s profit or loss.

2)  If I am not in a trade that the system says I should be in AND the trade is currently showing a loss, place a stop market order to enter the market at the originally intended entry price.  This way, if the trade reverses to my original stop loss point (this is what happened yesterday), then I will completely avoid the loss.  If the trade reverses to my original entry point, I will be no worse off than I would have been if the system had triggered the entry as planned.

3) If I am not in a trade that the system says I should be in AND the trade is currently showing a gain, enter the trade immediately, but reduce the number of contracts such that if the trade reverses to the original stop loss point, the loss will be no worse than what it would have been if the system had triggered the entry as planned.  If the trade approaches the original entry point, it is okay to add contracts, only so long as the total amount risked is never more than what the system intended.

Situation #2 creates a feeling of “found money”, but it’s probably best to just feel lucky and ignore it. 

Situation #3 will undoubtedly be frustrating, so it’s important to improve the reliability of my execution in order to minimize the number of times that this occurs.  Mental preparation and rehearsal of situation #3 is key, so that I will not chase the trade when I’m emotionally hot about missing out on a gain.