After taking some time off to reflect on where we are, what we have been doing wrong and where we may be going, I've come to the conclusion that the primary problems were twofold. The first I mentioned a week or two ago regarding the tradeoff between success in trades and drawdowns. To keep the overall success rating higher, you have to be willing to hold a bit longer when trades are not working your way.
Secondly, we should typically try to trade in the direction of the trend and not anticipate the turn as much. When we do anticipate the countertrend trade, we have to have some evidence that a turn is upon us and some clear cut parameters of where we bail if wrong. We have to have something more concrete than just the belief.
Last week, we had the setup for the turn and we were right in taking the position for a turn but once we didn't get the followthrough on that gap down Wednesday, we had to pull our positions a bit quicker and run with the crowd. That's the sort of thing we have to do better.
What's most important is where are we now. We have bullish short term and intermediate term indicators with a sideways longer term. I still can't shake the thought that we are running on fumes though despite all the bullish indicators. As a result, I have to say that I believe that buying/chasing this market continues to carry more risk than reward. If you are nimble, then maybe it's ok, but it sure looks risky to me.
My desire is to see the thesis that we posted a couple weeks back play out. My timing had me thinking we would top last week. Maybe it's this week, maybe next. I suspect it's just around the corner though but rather than anticipate with no evidence, I'll continue to wait for a bit more evidence to occur. ACe points out some reasons to be careful up here and I'll not recount them. This morning we are starting out flat which is what you would want as a bull. Let's get back to determining a bias for our intraday trades and stay mostly in cash until we get a better setup to deploy our monies into.
Secondly, we should typically try to trade in the direction of the trend and not anticipate the turn as much. When we do anticipate the countertrend trade, we have to have some evidence that a turn is upon us and some clear cut parameters of where we bail if wrong. We have to have something more concrete than just the belief.
Last week, we had the setup for the turn and we were right in taking the position for a turn but once we didn't get the followthrough on that gap down Wednesday, we had to pull our positions a bit quicker and run with the crowd. That's the sort of thing we have to do better.
What's most important is where are we now. We have bullish short term and intermediate term indicators with a sideways longer term. I still can't shake the thought that we are running on fumes though despite all the bullish indicators. As a result, I have to say that I believe that buying/chasing this market continues to carry more risk than reward. If you are nimble, then maybe it's ok, but it sure looks risky to me.
My desire is to see the thesis that we posted a couple weeks back play out. My timing had me thinking we would top last week. Maybe it's this week, maybe next. I suspect it's just around the corner though but rather than anticipate with no evidence, I'll continue to wait for a bit more evidence to occur. ACe points out some reasons to be careful up here and I'll not recount them. This morning we are starting out flat which is what you would want as a bull. Let's get back to determining a bias for our intraday trades and stay mostly in cash until we get a better setup to deploy our monies into.
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