The market went down a lot yesterday, and it's showing initial signs of turmoil again today. It's at times like this that I'm glad I have a rules-based plan. I don't have to guess where the market is going to go from here; I just stick to the plan that's supported by a 20-year back-tested history.
I scooped up a couple of stocks first thing this morning. I also closed out a couple that hit their expirations. HSBC sure was crazy. It was down early, then it came really close to hitting the profit target yesterday, and then by this morning it was just below breakeven when I closed it out. All that price movement to end up back where I started.
It's amazing because when you look at the back tests and their results, there can be this feeling of excitement about the power and potential of this trading approach, and justifiably so. But with a much closer look at the detail of each trade in the back tests, you'd be able to see that there are all sorts of twists and turns along the way. In other words, if we're taking a trading approach that's intended for powerful long term results, we have to be prepared for the fact that every day these prices are going to move, sometimes up and sometimes down. And it's up to us if we want to jump on the short-term emotional roller coaster associated with the day-to-day stock price movements or if we want keep the long term lens on and just allow the short-term movements to be, wherever they may go.
If you have any questions or feedback, I'd love to hear from you.