I have a stinging feeling in my gut that I made a mistake by selling FAZ and TZA. Because of the rapid movements and the nature of the 3x instruments, I give them very little air to ‘breathe’ for fear of digging myself a deep hole. When they turn lower by 5-7%, I like to sell them and limit my loss. At 5% of my overall trading account, that drawdown is manageable.
However serious you are about trading, at some point you’ll need to inject some bias into your trades, else fall victim to the blades as they swing to and fro. As I type this, markets are on the cusp of making me look ridiculous, as they slide and become increasingly bearish. If I were to react to this now, I’d have to sell the stuff I just bought, maybe even short something to hedge or trade, and then be stuck watching the box all day like a god damned idiot.
This is no way to lead a life.
One can manage the intra-day risk by merely buying or selling near the close of trade. As a matter of fact, many of my trading mishaps have come via intra-day gambits, some out of impulse, others from boredom, frankly. This is another side effect of trading for a living, certainly one of blogging for a living and running a trading room for a living, and being a god damned recluse — hiding out in the cabinets of an oversized house that requires too much money to maintain. I’d prefer to live out the rest of my days like a vagabond, drinking gin in a green field naked.
But I can’t — thanks to my responsibilities. So I sit here and I toil. After I toil, I sit down and toil some more.
I’m trading poorly because I’m scared of risking too much at the top of the trading range, and also fearful of missing out on a potential V shaped recovery. We’re already seeing the signs of reflation, the rumors that the other rumors of recession were bullshit, the calm normality and elegance of robo-advisors taking charge and jimmy-rigging stocks higher. This is a hard job, and a difficult task. I do not pretend to know everything and never assume that my position is 100% perfect. But I do know that if I muddle through the difficult tapes and limit my losses, I’ll eventually land a monster winner or string of double digit winners to make up the difference, AND MORE.
Number one rule in trading, and doing so successfully: stay in the game.