Yesterday I posted my watch list with a note that I was risking only .25%. That post led to the following question:
Losses are part of trading. In fact losing positions make up the majority of many winning trading systems. That is, many winning trading systems have a winning percentage that is less than 50%. It seems counter intuitive that you can be wrong more than you are right and still make significant money in markets. But that truth has been proven by many well known traders.
I’m not sure who created the below cheat sheet but it is worth sharing. If you spend some time studying it, these patterns will begin to jump out at you when you are looking for stocks to add to your watch list.
Since proper risk management can be the difference between a profitable trader and one who goes bust, knowing the area in which to set your stop is critically important and this cheat sheet does a great job of identifying stop areas for you.
The market is lacking direction. Set-ups that have worked for me in the past are no longer working (long or short). There is no identifiable trend to trade. Yesterday’s big move to the upside lacked volume and could have simply been short-covering as traders exited positions ahead of the election.
This post will be therapeutic for me. I hope you enjoy it.
There are times in the market when my system just doesn’t work. These are the times that I am supposed to stay in cash and wait for a trend to appear. I know this to be an absolute fact. Hell, I even know which type of market I need to avoid. Any guesses? Yes, the market we are in right now: constant chop with no identifiable trend. This type of market eats my capital alive if I let it.
I know this. Yet, I still find myself fiddling: running scans and adjusting my risk to take smaller positions only to witness repeated bounces and reversals leading to a string of small losses. Why the hell do I do this? Death by 1,000 cuts is still death and it’s pretty damn painful.
The other day I saw the below tweet from fellow trader @LTentarelli
#Stocktoberfest 2016 is in the books. If you are a trader, investor, or fintech start-up founder, you couldn’t ask for a better venue or a more gracious host; and I challenge you to find a more genuine group of finance professionals (and market enthusiasts) than the @stocktwits community. It was an honor and a privilege to be included. I met smart people, heard stimulating ideas, and received personal advise from those that have taken all the lumps the market can deliver and stepped out of the ring winners. It was truly a great time!
Ok, without any further nostalgia, here are my notes & quotes from #Stocktoberfest 2016: Continue reading “Notes & Quotes from #Stocktoberfest 2016”