Hey Guys,
Well the market had a booming positive response to Fed's policy statement update yesterday. That hasn't been the trend so far this year, and it seems to underscore that you can never be completely sure of where the market is going next.
I don't have any new trades yet today. It's been a very light week of trading. I'm used to more trading action, but I'm just going to stay cool and wait for my bread and butter trades to set up.
For any of you following the RMBS trade with me, you may have noticed that today's price bar shows the price started above our profit target and then came crashing down. I don't know about you, but my sell order didn't get filled. It's possible that there was a funky order that got filled off-market at a really high price, but that the actual bid and ask market activity was not at any point in that vicinity. That could create a tall red bar like the one I'm seeing on RMBS today. So the price bar this morning might be misleading. Ultimately I'm still in the trade until there is a buyer who takes me out, so regardless of what the price bar shows I still have the position open until it fills.
I have two options trades that reached their time limits today: HD and MU. I'll be closing both of those right before the market closes today unless either hits its profit target first. When the market opened this morning my HD options squeaked above the breakeven mark after being down all week, but then they promptly went downhill all morning and have lost most of their value as of the time I'm writing this. But the trade isn't over until it's over...
For me personally, I sometimes get a spurt of frustration when a stock or option I own is down when the rest of the market is up. Like in the case of HD, the stock price is almost back down where it was to start the day yesterday as of the time I'm writing this, even though the market as a whole is almost 100 points higher during the same period of time. But as always, when I get an emotional charge like that, I like to step back and look at the big picture and remind myself that this sort of thing happened in back tests all the time. It's not abnormal and remembering that often helps me. The back test doesn't contend with emotions and simply robotically keeps following the trades. Since back test results suggest that this may be a lucrative approach over time, it means that finding a way to manage our emotions might be critical to our trading success. If we are aware of that, and can step back and remind ourselves of it in times of frustration or fear, then maybe it can improve our odds of success.
If you have any questions or feedback, I'd love to hear from you.