Today's Ideas:

    IMPORTANT : Below is what we're looking at currently, but pay attention to our UPDATES on the side of each page for actual entry/exit times and prices. Refresh pages often! You will witness our winners AND losers; something that is rare in our business.    TO VERIFY ACTUAL PRICES AND TIMES, PLEASE CLICK ON  A TICKER ENTRY TO THE RIGHT.  ALL TRADES, WHEN THEY OCCURED, ARE VIEWABLE.  Whenever possible, we have included the ETF symbol for those who are not experienced trading futures, etc.

    Wednesday, July 23, 2008

    Bent, but not broken

    It feels like my last 40 trades have been losers. Of course I'm kidding, but sequences like this will definitely test your mettle. The thing that's kept me level headed, and my focus in the game, is simply position sizing. Rather than being ready to "pack it up", I'm eager to get a hold on the next opportunity. Keep in mind that sharp moves will take time to settle, and more time to turn back in any meaningful way. Applying this experience to my current situation, I'll look to trade strongly in the direction of my signals, once new opportunities present themselves. This means I'm not going to force the trades I already have on my plate, but rather keep a clear head for another high percentage setup. I'll wait for the next round of signals, most likely, but at a minimum, I won't add to a sour trade. Lose gracefully and stay in the game. I'm reminded of an article on Bloomberg about a month ago, where Goldman Sachs reported losing on a third of all trading days, while still being the best firm on Wall Street. One "trick" is to think in terms of percentages, rather in actual dollar terms. 1% sounds much more manageable than $46,000 lost in a day, doesn't it?

    My specific ideas over the next few days remain the same (except EWZ, which I clipped yesterday). Because bear market rallies are so strong, it takes patience to let the excitement die down. For example, today or tomorrow Congress will most likely approve a Fed bailout of Fannie and Freddie. Perhaps this latest rally is in response to the perceived catalyst? Regardless of the reason, this environment calls for scaling into positions.

    I intend to short IYR and/or IWM, as a starting point, and will get much heavier as the trade gains traction. In addition, I continue to look for entries in various commodities including corn and natural gas (although I might get stopped out of these today), gold, and soybeans. Keep an eye on the ticker and the positions page to see the specific vehicles, but I'm mainly in futures, with the occasional etf.

    In summary, we always need to mind our position sizes. These adverse moves hurt, but the best medicine is to come screaming back. Just don't try to get it all back today, as great opportunities will continue to present themselves for the rest of your career.


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