March 22nd 2018
If you trading for a living as I and my online chatroom friends (Pete, Ilja, Caleb, Vinny) do, what do you expect to gain on a day like today? Certainly, as daytraders were all busy finding bottoms from the technical breaks, taking small wins in a seemingly endless sea of red ticker. But, what do you do if you are a swing trader? This was asked of me by my good friend Pete from UK, since I had many years of trading experience in equities and options. The simple answer is, it depends on your situation. Are you protecting your YTD gains? If so, don’t let one bad day ruin your whole year, sell if you must and find another day to continue the battle, and the old adage, “Keep your powder dry!” But honestly, these catchall phrases are great to simply gloss over the ugly day we had. I want to drill down to the true emotions of what a swing trader feels like, and maybe you can relate.
So, early in the morning, you wake up and drink your coffee and power up your phone or computer. You see, that the futures are flashing red, and you think to yourself, it’ll rebound, it always does. In fact, majority of 2017 was exactly that. However, in 2018, we are seeing a seismic shift that the BTFD mentality is fading. So, back to your swing portfolio if you were long, and the red tape at the market open. Any experienced trader will simply ask, why are we dropping? What is causing this negative sentiment? Will this persist long enough for me to exit my position at a decent price? What are the support prices and if breached I will exit without emotion? All good questions to ask yourself and your fellow chat room trading friends. If you can’t answer any of these questions by yourself, then you are doing it all wrong. Emotions will kill your profits (if any), it will kill your relationships, and it will kill your confidence. Meanwhile, during the course of the day, your heart is pulsing while staring at the monitor for some kind of positive catalyst. The morning “rush” is always the worst time to sell your position because the Algo’s are cranking away, siphoning money away from any panic sellers. So, as a swing trader you wait a bit, then comes the lunch time lull and you wait some more to see if your position makes any meaningful progress. After the “lunch time ” lull, activity picks up and it starts to rebound a bit and stocks moving higher and higher, do you now sell or hold longer. Your heart is racing faster and faster, not from the coffee but from the thought of FOMO if sold, or the pending market crash causing the stock or option to go lower, if held. This is where seasoned traders excel at, and the newer traders struggle with and this leads me to the next segment.
Ilja, showed me a great YouTube video showing the Power of 2, and not 1. Trading alone is the Power of 1, but you can’t do everything alone. Even the great Michael Jordan didn’t do it alone, he had Scottie Pippen, and same goes for Kobe Bryant, he had Shaq Attack. The winning mentality needs someone else to hold yourself accountable. That’s why if you are a trader, looking for an honest chatroom with season traders or even an honest mentor, can help you progress from an average trader to a great trader. Another pair of eyes to oversea your strategy and why you went in on the initial trade. I am talking about trading, not investing. I’ll talk about investing in another post. So, if you are trading alone, there’s help out there, you just have to be honest with yourself.
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