Hey Guys,
The market is down again this morning, and so are my positions.
And I have lived through this exact sort of thing before. Many times.
In the moment, it can evoke some strong emotions and uncomfortable thoughts. Fear and anger might be predominant. And it might seem like everything is just "all bad".
But sometimes a storm comes before sunshine. You might not know how long the storm will last or how intense it will get. But when the sun comes out, a very different set of emotions might be predominant.
If you look back at your trading experience, does it seem to be the case that your emotions are like a pendulum, swinging to extremes based on the condition of your portfolio?
For me, having an awareness of that tendency helps me step back a little and have more of a choice in how I respond to the situation. Do I want to go on an emotional roller coaster? Or am I able to see that each market condition is temporary, and therefore that I don't need to be so deeply attached to any given moment? When I can look at things from the bigger picture like that, it tends to help smooth out my emotional experience. It makes market conditions like this more tolerable and less painful.
As far as back tests of these trading strategies, there were tons of times where there were strings of losses. So we know that what we're going through now is not abnormal and is still in line with the back test. It's fully expected that this will happen from time to time. And speaking for myself, this has happened to me a number of times just in the time that I've been running Mindful Trader. I've gone from a situation like this (where all my positions are down) to the next day seeing all my positions up (some of you have been through that with me). There's just no telling what tomorrow holds, and that's the risk we take by making trades in the stock market.
I want to mention that I didn't pick up an options trade today because every single options trade I looked at did not meet the "max premium" requirement that I teach. At times when the market has a lot of downward pressure like this, it can cause implied volatility to go up noticeably, which can have an upward effect on options prices. This makes them too expensive for my approach. I have not been able to find a single one yet today that I can trade. So I'll keep waiting and monitoring.
As far as positions, STE hit the stoploss today. I picked up HD and DHI this morning.