This morning looks like another stable day in the markets so far. It's like a whole different world than what we saw through most of May.
I bought TD and NXPI this morning. With my position sizing approach, that TD stock ends up being pretty heavy as far as how much purchasing power it uses. But on the plus side, that one has a strong history of success in back tests for this trading strategy.
IP sure is giving us a ride (both the stock in my main account and the option in my extra options account). The price almost completely deflated over the last couple days after a meteoric rise out of the gate. It can be challenging to watch a stock get that close to victory and then turn around and go way back down. Here are a few things to keep in mind:
1) These types of situations happened all the time in back tests. They're accounted for and aren't something new.
2) Looking at the back test results from a bird's eye view doesn't tell the full story of the ups and downs that someone might go through on a day-to-day basis by taking these trades. Living through them can be challenging. I like to try to keep in mind what the bird's eye view shows though, which is that if I can get through the day-to-day ups and downs, there might be a nice reward. That means being ok with the fact that IP got close to my profit target and then turned around and went down. Rather than lamenting the lost profits, I can be patting myself on the back for sticking to the rules that correspond with this back-tested trading approach.
3) You can always adapt my approach at any given time to make it suit your needs. Keep in mind that back tests show this trading approach might have raw edge. So if you want to cut the cord on a position early, that's completely up to you and I support you regardless. For me, I find that introducing discretion can be a slippery slope, and I tend to have more intense emotions when I use discretion than when I follow trading rules. So I like to stick to the rules through thick and thin. But that doesn't mean that you can't lock in a profit at a different time than me if you want. It's totally up to you when to make trades.
And if it weren't challenging enough to see IP go back down, we also have CRWD exhibiting similar characteristics. It got so close to the profit target this morning and then came back down some. But for both those stocks, the trade isn't over yet! Until I exit the trade, I'll just give them space and see where they take me.