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    Friday, June 6, 2008

    Opinions vs. Trading decisions


    Readers know I've been taking stabs on the short side of stocks for the last few days. I truly don't care which side follows through, long or short, as long as I can get on board. There is a huge difference between being wrong and staying wrong. I have executed properly according to my plan, and my opinions have not cost me much trading capital. I reigned in my expectations and stop levels as planned in yesterday's post. Thursday showed how staying wrong could kill a trader, with stocks up over 200 points on the Dow. It's critical to remind myself what I am to do, regardless of P+L. I am well positioned to capitalize when I manage to get some traction. This is one reason I'm an advocate of focusing on less names/symbols, and instead managing my emotions and expectations. To have many different positions that are essentially related just complicates the decision making process, along with heightening risk.

    In the next few sessions I expect to get some resolution. I will trade either side comfortably, but still prefer setups on the short side for stocks as the long term moving averages are all sloping downward. If it turns out I have to get long, I will be patient and not chase stocks, but rather look for optimal risk/reward entries. Commodities, and especially grains, are showing up in my screens again. I'm already long Wheat (via etf on the LSE), and looking to add Corn, Natural gas, and Cattle, in that order. I'll most likely trade the futures, but might use the etfs in London, so keep an eye on the ticker and I'll elaborate as I take the trades. Also recall my post regarding differing timeframes on individual trades. Most of the commodity trades are much longer term, even if they show a profit early, such as the Wheat position. This is a result of my studies showing that commodities have a tendency to continue the trend more frequently than stocks, which tend to reverse more often. The operative word is tend.
    I promised to point out valuable resources, and take to task the lamest, so here goes the first round....
    The useful:
    Mind you, I have nothing against this blogger personally, as I don't even know him. Reading a blog that cheers one direction only is a waste of time, and if you visit him, ask "what did you do with the FSLR trade?" The shameless promotion HERE is of very little use. Be careful of what you pour into your mind. :)

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