Hey Guys, the market is down this morning. It feels almost like a replay of last week where the market went down like a rock early in the week. In the case of last week, the market came back up. It's yet to be seen if the same will happen this week.
When the market goes down, my positions normally go down in value. My Visa position hit its stoploss this morning, and my unrealized account value is down a good 5% from where it was on Monday morning.
There's something that's important to be aware of: this is normal. Drawdowns of 5% happen all the time. Losses happen all the time. Having a bad day does not mean everything is ruined. In fact, living through a down day is a necessary toll you'll need to pay over and over to be able to access the long term potential of these back-tested trades.
I also want to point out that what we're going through now is extremely similar to what we went through back in early March. Tech was dragging the market down, and there would be a couple of big down days, followed by big up days. It was volatile. At some point a fair amount of "fear" appeared to creep into the market. Through it all, I stuck to the game plan and took the back-tested trades that set up, and ultimately the market went back up and my account grew noticeably.
I'm not at all saying that's what we should expect to happen here. I have no way of knowing exactly where the market is headed. But I am saying that I love having a game plan at times like this. It gives me an academic, well-informed "anchor" to hold on to. It doesn't make us invincible to losses. But it keeps our focus on the big picture by using a trading approach that has solid back test results across decades of history.