Hey Guys,
The market took a tip downward overnight and is staying down this morning. The S&P 500 is down around 3750 at the time I'm writing this. We've had weeks of opposites lately -- two weeks ago a down week, then last week an up week, and this week so far a down week.
There are no new trades today. It's another day where EDU is the only ticker on the watch list.
Yesterday that ticker just took off and we essentially missed the flight. It's an example of something in trading that can bring up tough emotions: missed opportunities.
We knew this ticker, EDU, was setting up for our trading strategy: it had a close above the upper Keltner Channel and more than 10 days above the moving average, both of which are signs of a strong uptrend. We were simply waiting for a pullback. It definitely pulled back, but not quite to the Potential Entry Price we had on the watch list, and then it shot upward. So we missed the ride that we knew this ticker might take.
That can sometimes bring up emotions that are just as intense as any others we might get when we trade. We missed out, even though we had it in our sights. For some, including me at times, that can bring emotions like anger or frustration.
There are a couple things I think of that can keep me grounded in cases like this:
1) I can't catch every single trade. There is simply no way to be certain what will happen next and no way to tell in advance when is the truly perfect time to buy any given stock.
2) I'm not using discretion. I'm using a back-tested, algorithmic strategy that has 20+ years of back-tested support. This means that situations like this are already accounted for when considering the potential results of following this trading strategy. There were tons of times throughout history where a stock did exactly what EDU did (meaning that in the back test it didn't trigger a trade or record a profit), and the long term back test results are still inspiring even so. The price path that EDU took is totally normal statistically and a natural part of the trading experience.
And side note: it still might dip back down in the next few days and qualify for a trade after all...
If you have any questions or feedback, I'd love to hear from you.