The Cash Trade Didn’t Last Long

On November 8, I was 100% in cash. The market was lacking direction; my set-ups were not working, I couldn’t find an identifiable trend to trade, and the world was borderline psychotic about who should be the next U.S. President. This added up to uncertainty. Markets do not like uncertainty which was confirmed by my observations that breakouts were immediately retreating and not following through. Hence, I went to cash.

The truth is, I should have gone to cash much sooner. My set-ups had not been working for weeks due to the market chop. I even wrote an open letter to trading psychologist Dr. Brett Steenbarger about my inability to stay inactive. And he responded.

Continue reading “The Cash Trade Didn’t Last Long”

Why I’m in cash right now

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.

Continue reading “Why I’m in cash right now”

Why is it so hard to be inactive?

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.

Continue reading “Why is it so hard to be inactive?”

Forget About That Spinning Top Doji, Learn to Size Positions and Manage Risk

The other day I saw the below tweet from fellow trader @LTentarelli

Continue reading “Forget About That Spinning Top Doji, Learn to Size Positions and Manage Risk”

Notes & Quotes from #Stocktoberfest 2016

#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”

Losers Average Losers – $Study, Discipline, Plan, Process & Passion Win

One of my favorite trading books is Trend Following by Michael Covel. In that book Covel describes a hand written note hanging on the wall behind the desk of legendary trader Paul Tudor Jones. The note read, “Losers Average Losers.”

jones

The note was a reminder to Jones not to add to a losing position. I have come to embrace this philosophy as my experience with averaging down has rarely led to profit and almost always had negative impacts on opportunity cost. I have found that when a trade goes against me, the best thing to do is to sell it for a small loss and move on to another idea. Adding to positions that are in a downtrend turn small losses into large losses. With trading, keeping the losses small is key to Risk Management and leads to survival and profitability.

Continue reading “Losers Average Losers – $Study, Discipline, Plan, Process & Passion Win”

Stock Trading 101: It’s All About the Process

I’ve come to learn that stock trading is all about process. That is: you must have a process, you must stick to your process, and, most importantly, you must have a passion for your process. If you view trading as a continuous process, it becomes much easier to recognize what the market is telling you.

Best selling stock market books with titles like Beating the Street imply that the stock market is a game to be won. But what they don’t tell you is this: your lifelong understanding of games prevents you from intuitively understanding the stock market. Continue reading “Stock Trading 101: It’s All About the Process”