I sold SPOT for a 3% gain and ZUO for a 10.5% loss. Over the past few weeks, I’ve taken a bunch of losses, all lines in the sand that had to be drawn in order to minimize losses. Over time, if I continue on this ruinous path, I’d end up in the poorhouse. However, this process is typical of me finding the market in real time, sterilized by losses and trading mishaps. Some are more patient and wait for breakouts; I chase them hoping for more.
When markets revert or churn, this stratagem looks like the very worst idea in the world. But when the momo flows, I look like a fucking God. Managing risk is of extreme importance, the difference between success and failure. I know a lot of great traders, but most of them are shitty risk managers and are unable to deal with losses. They start to see mirages in their charts and, before you know it, their -10% losses are -30%.
When trading high valuation/high growth stocks, you have to be cognizant of the fact that these stocks can trade lower by 50% before bouncing. It’s not a problem.
Until I find out what the market is trying to do, I’ll keep vacillating, so bear with me. Right now I’m heavily leaning towards oil, with a lot of cash. I have one or two tech stocks on my kill list that will need to be culled, should the downside continue. Best case scenario, tech and small caps surge again and I can live happily ever after.
But nothing worthwhile ever came easy, so of course I am preparing for the worst, while trying to anticipate the next leg up in the market.If you enjoy the content at iBankCoin, please follow us on Twitter