Knowing where a trade is wrong is something you need to decide before executing a position. Setting this up, clearly, before you use your mouse to click into a position is important to the process. Once you have committed to a trade and you money is on the line your limbic system is likely to kick in, and it is powerful. At this point you are managing strong emotions and if you have not made your plan before this happens, your judgment is likely to blur.
This is any trade, short or long duration. Have a plan before you enter. Even if you do an OKAY job of this, you will benefit immensely from the process. If you are following someone else into THEIR trade, then it is even more important that you formulate your own plan. Your plan will be your boulder to lean on, not some HOPE in a stranger on the internet.
I think we emphasize this extensively on this blog. And it’s worth being reminded of consistently. If we want to achieve success in trading we need to carry the right mentality, the right area of focus, and improve our execution.
A few of my positions made nice moves into the weekend. Today felt like a trend day down through lunch in the Nasdaq and the SPX with the Russell leading. We found our first buyer response fairly deep into yesterday’s Nasdaq range. However, when they did strike, they did so with a reasonable amount of tenacity. The morning was about feeling the revision burn, and the afternoon kept us up in the upper quad of intermediate term balance.
In short, this was a long week, and the third quarter is nearly complete. If you have not already done so, it is time to tighten your game up and stack some wins up into quarter end.
Regarding BABA, this is a 1/2 position based upon sentiment. This think opened high, ripped, pulled back to the open, tested lower, and then returned back to the open. My plan is to give the trade 10% risk to from my entry. Targeting a $100 roll to $120, do I think it’s possible? Yes, and I am willing to accept being wrong. Trading is much simpler when you don’t convince yourself you are right.
Look for some fun theory over the weekend on the ole’ blog. Have a great weekend while it is still officially summer.