Why Trading Rules Do Not Work 100% of the Time

Monday I went long CL on a full position entered from a CM Patterns sequence confirm. Price action rose roughly 20+ cents in favor of entry, it was above the open range, I made the trade-management decision to move my initial stop up from -10 cents to entry point for 0 cents risked.

Price action paused, pulled back to hit my stop at the exact low tick of that swing, and soon spiked straight upwards to the CM RoadMap #1 and then #2 values above. Matter of fact, that trade went 100+ cents in favor beyond my entry point.

As it turned out, it was also the lone price move for that entire session. There wasn’t any other trade opportunities to exploit… nothing.

Tuesday I went short CL in two stages 10 cents apart via CM Patterns sequence confirms as always. Price action soon moved +48 cents in favor with unrealized gains and snapped back upwards. I was looking for +50 cents or greater, had stepped away from the screens for a moment while price dipped and then popped after I returned to my seat.

From there price rose nearly to my adjusted stop but stalled just below, turned and dove thru the prior low which enabled me to chase it lower with trailed stops until the subsequent pop closed for gains.

After that, price continued to rise back into the open range from whence it came.

Lessons to be learned here? The fact that sometimes your trade decisions work out, and other times they don’t. The difference between Monday’s lone CL trade versus Tuesday’s lone CL trade was nothing more than random chance on both counts.

Had price action held merely one (1) cent higher above its last low swing yesterday, I’d have booked somewhere between +60 and 100+ cents (depending on timing of trailed stops) instead of 0 cents realized.

Had price action lifted just a few cents more today, I’d have realized 0 cents instead of +70 resulted.

In the past I would have studied those results from every direction including upside down and inside out, hoping to find some sort of “rule” that would assure I didn’t get stopped short of favorable trades ever again. Ever.

But ya know what? I discovered the same thing you have or will, same as everyone else has or will. There is no way to curve-fit trade management “rules” for favorable results every time. Sometimes, random stuff happens.

Meanwhile, all we really need to do is average +200 cents or more per CL contract each calendar month for +$2,000 per CL contract gains. Strive for more, settle for that, add multiple contracts for methodically increased trade size.

For more daily updates from Austin, visit his blog at Coiled Markets.