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    Monday, August 11, 2008

    Week of August 11, 2008

    Account equity has been bouncing around, from a new high on Thursday, to a decent size pullback on Friday. The give and take in my trading continues, but I've managed some gains through proper position sizing and relative weakness plays (financial stocks). All in all, I've executed my plan well, except for exiting the IYF etf on Friday at a small profit. I still hold SKF, but in review of my trades this weekend, I see that IYF was an "early" exit and not a legitimate exit signal. I'll look for the best window to put that trade back on, and can only attribute the mistake to Friday's volatile action (against me), right before the weekend. Naturally, I'm glad to see that the markets didn't crash without me being max short!

    This week offers several potential setups, so I should be quite active. The following ideas will most likely signal sometime after Monday, but I'll look to short Treasury bond futures (ZB), and add IYR and IYF short after a rally. I might get long Japanese equities (possibly even a financial company or two) on a signal. Lastly, commodities have taken a beating due to the strong $USD. If this relationship can stabilize, there could be a play in either asset class, but importantly, I would expect gains to be limited in commodities, once they start up again. The signal came, and I took the bet, which turned out to be wrong. It's critical that traders don't lose much when they are wrong, and this is accomplished primarily through position sizing.

    Notice how "wrong" the trade in Gold was, yet I lost less than 2% total equity when gold got hammered and stocks screamed higher (I was long gold and short stocks a few days before). I stand by the trade as not only a good plan, but executed well. I am much more concerned about the IYF exited early, even though profitable, as it was in violation of my rules. This week my focus is on staying disciplined within my system. Let's see what the markets offer!

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