Charts of Note
- Thread starter darkhorse
- Start date
Thanks, and your point?
The market broke script today in that it behaved in an unexpected way - but of course the market can break script whenever it wants.
Two good rules of thumb are 1) the small loss is always the best loss, and 2) if you don't understand what's happening, step aside.
It's good to ride real trends (obviously), and it's also good to ride false trends (Soros) as long as you have a handle on what the drivers are.
When things just get weird, however, you step back and wait for some logic to recrystallize.
In this instance, I have no idea why the market would think Europe's hot air is good enough reason to push this hard, given the seriously ugly turn that U.S. earnings season has taken and what it portends. I'm inclined to think wherever this is coming from, it's not going to last. But there is no need to fight it or prematurely fade it.
We're 100% cash and prepared for whatever's next.
Some words of wisdom here except I don't think trying to understand the driving force is all that important.
Price going up makes longs real profits.
Price going down makes shorts real profits.
The rest should not matter, in fact, trying to rationalize it all makes following price even harder, just like now, you were forced to be flat due to failure to understand the driving force and were not able to participate in the long from what I gather in your thread.
I'm only a small-time retail trend trader, trying to generate monthly income through simple non-jargon cluttered trades, but I agree with FoN 100%.
IMO:
All the fundamental, technical, and emotional reasons for buying or selling (for thousands of different traders and fund managers) are constantly being combined and factored into the PRICE.
It's not necessary (or even possible?) to always understand exactly why the Market is going up or down.
Yet the Media is always trying to explain it to us. I guess to satisfy our ingrained need for cause and effect logic.
Sometimes it's obvious what the overriding factor is, like when a stock falls after a bad earnings report, or the Market rises after a good employment number, etc.
But those are mostly coin-toss trades which very few can predict.
Going to the sidelines is neutral. It prevents loses, but also misses out on gains.
Whereas the opposite extreme is to insist on "logic" and fight a Trend (like many did in 2009 for example), which I know from personal experience can become very expensive!
We can agree to disagree, because this is wrong from our perspective.
It may be correct from YOUR perspective, of course, but that is why it takes all kinds to make a market. Try saying "the rest should not matter" when your goal is to make a hundred million dollars (or a billion).
The larger the dollar amount you are trading, the more you have to consider opportunities in the context of 1) available size 2) underlying risk, and 3) overall strategic context.
It is never about what happened on any one particular day, or even one particular week or month, EXCEPT in context of how such action reverberates, positively or negatively, in terms of ultimate impact on P&L at the end of the year.
Missing Friday's upmove caused me no lack of sleep at all, because in my opinion the drivers for the upmove were fishy at best and bullshit at worst - a VERY important consideration in terms of possible positioning for what happens next.
If this move runs out of gas in the short-term, it will turn out that the Europe-bullshit drivers merely did nimble bears a favor, by setting up an even more juicy roster of attractive short entries.
If the bull move sustains itself, on the other hand - and the drivers will more fully reveal themselves if that happens, be they legitimate trend or false trend - then there will be plenty of better, safer opportunities to hop along for the ride.
There is no rationalization going on here. Our approach may simply be different than yours. "Trade what you see, not what you think" can work on certain levels -- and in the context of not fighting price action we generally agree w/ the concept -- but there are deeper levels to the game and deeper strategy requirements as capital in play expands.