"Plan your trade and plan to trade" No, that's not right... "Plan your trade and trade in your pan" No wait, I'll get it... "Plain traders trade planes" Wait, I know... "Plains traders plan properly" Darn...
I think that the above is extremely wise advice. I would even take it a few steps further... Price doesn't care about GDP, what the fed will or won't do, or that some analyst has downgraded a stock. One cannot understand price movement by thinking of it in terms of the behavior of an individual or even a small group. It is as Mandelbrot surmises in The (Mis)Behavior of Markets (2004): "In a market there is... a spontaneous internal life... a special dynamic -- greater than, and different from, the sum of its parts... ...in substantial part, prices are determined by endogenous effects peculiar to the inner workings of the markets themselves." Even Bachelier, the father of modern finance, in his Theory of Speculation (1926) noted: "events often bear no apparent relation to price variation." The media make the news fit the movement. If the Dow rises they look for positive news items to explain it, if it falls they look for negative items to excuse it. How can anyone prove otherwise? Especially when all their smart explanations are given after the fact. The financial media are set up to herd people into corrals of opinion, to mislead them as to the true nature of price movement. That is their job! In Chaos (pg. 29) Gleick notes that when âfaced with irregularityâ most people âlook for explanations outside the system.â This is exactly what has happened with the stock market, but these explanations are now dogma rather than theory. I know it probably sounds like I'm on a soapbox here... forgive me, it IS something I feel very strongly about... Rgds, E. Allon
you know what? the bottom line is - this is not an easy market to trade. The indexes have whipsawed a lot in recent months - there are plenty of cross-currents. what you described as a reason for the trade makes sense -- so frankly I wouldn't even give it a second thought. You acted in accordance with your instincts. This time it didn't work out, next time it might. BUT if you beat yourself up TOO MUCH over it- then next time you will be trading off this time. besides it's always good to be kicked in the arse from time to time-- it keeps one humble... and very aware of the market's power to giveth and taketh away! iceman1
Read up a little on Dow Theory. It would've prevented a misread like that. The Dow Transports made another new closing high on thursday... no way in hell I would short the market the very next day.
just found this site and thot i'd post my 2 cents. my advice is to trade setups no matter which way the overall mkt is moving. this is not to say the overall mkt direction is not important, rather that focusing on the best setups is the way to go. don't trade on news or what u think might happen, just trade setups. i personally had one of my best days ever this past friday. this included both long and short positions.
Good point. There were some other indicators as well suggesting some underlying strength in the market over the past week despite the sell-off the Friday before.
Yeah, right, right. Let me have another go! You flailed in the pan; you just didn't make it pan out without a flail.
this is a great point. I did something similar to the original poster. After economic news, i got out of QQQQ and SPY (missed out on 2% there) but also wisely exited my RE short positions...but the RE didnt move very much really. I tried to catch a quick scalp which i was stopped out one etc... had a day in the red. I agree with "trading setups" and with the poster who mentioned "investing". now i hate "buy and hold" but the longer holds, with more mechanical entries and stops tend to be more profitable.