I spent ten years of my career trading at a couple really top tier Chicago proprietary trading firms. Stupid size. Mostly flat at the end of the day - but I sometimes traded around a biased core position because I had earned the right. I was David Ellis' biggest MF spread trader EVAH. I always found that I was best on my game when I reacted to the market. Let me explain what I mean by that. Scenario 1: The market is selling off, I think that the market has sold off enough and I load up on the buy side, and I sit with it taking the pain. I stopped doing this very early in my career. Scenario 2: The market is selling off, the downward momentum stops, the market trades up two tics - and I step out and take the entire offer. In this scenario, I am reacting to the market. If the market reverses again and makes fresh lows I am going to quickly reach well into the bid side of the order book to puke. In Scenario 1, I am telling the market what I think it should do. In Scenario 2, I am letting the market tell me what it wants to do. I had a personal rule that I would never give away more than a Week. On two occasions in my career I gave away a Month - circumstances pretty much beyond my control in terms of liquidity gaps. If you've got on two thousand cars and there's a scared super thin market there's not much you can do. I think what helped me was the earner/grinder mentality. I was married with three kids, the house on the North Shore, mortgage, cars, private schools, the whole enchilada. I supported the family with my trading. So I had to grind out income. After splitting it with David Ellis and getting taxed on a W-2. The best analogy to this "react to the market" statement I can make is like an ambush predator. Think Nile Crocodile on the banks of a river. Very successful species - been around for hundreds of millions of years. Expends minimal energy for massive meals.
Scenario 1 did cost me great money. Definitely follow price action. Build your position over the trend. Allow some room for the market to develop. Never ever give up a position until proven wrong. Don’t risk more than the worthiness of the position. If I had to choose btw a TP and a SL. I’ll take the SL any day. Remove the left tail. Don’t anticipate PA. “It’s going to ..” Don’t pick up pennies in front of a steamroller. You better lose a good bet than to earn a bad one. Even though money saved is money earn. But losing a good bet is money earned in the long run.
Just saw last night on PBS/Nature program crocs waiting for the midday sun to heat up the muddy river water which depletes the already low oxygen levels causing catfish to rise to the surface to breath. And there they wait.
That's the holy grail gotcha moment. 90 percent of the traders out there refuse to equate a position marking down with the term "wrong". There is a 'fight or flight' response that can result in either 1. paralysis, or 2. a hard headed refusal to believe and accept what the P&L column is telling them. How much pain are you willing to endure before you're proven "wrong"? The week? The month? Your year? Your remaining account equity?
This is going to sound corny and silly and really OG - but keep a personal journal. Not here on ET, but on MS Word or in a spiral notebook. The more brutally accountable you are with yourself the better. I tell my own clients that not repeating mistakes >>> positive account equity.
Agree. Even though we know we’re wrong. But we’re not able to make the rational decision. And now the loss is too big to fail so it’s too late to close it. Personally. If I am short and the trend turn upwards then I am out.
@MrScalper, one of my all time favorite posters, told me in another thread when I asked for trading advice: Trading is like a cheetah hunting its prey. It completely changed my thinking.
Thank you KCalhoun for being open about your losses...today 30th of April is National Honesty Day after all.
The title of the thread is a bit misleading as your were bottom fishing inverse ETFs. If you were bottom fishing in the traditional sense of the term, you would be up quite nicely.
BINGO BINGO . perfect example. Soxs(3x sox bear fund was $16 in feb when the sox was at its ath's) Sox still 10% of its ath's yet soxs was down 50% from feb. The erosion in those are incredible . You can only buy those when the rising nicely . Its not different than playing options