iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
19,230 Blog Posts

Eventually, You’ll Need Some Conviction

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.

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8 comments

  1. bronze28

    well put FLY.

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  2. ferd

    Do they want to continue to kick the can down the road? …Probably.
    What will they do to kick the can? Will it continue to work? …I’ve no clue, so I subscribe to the version of Fly that advocates following mo and price.

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  3. edge

    No conviction. That’s SPY and UVXY are both up today.

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  4. dollargoal

    Dr. Fly, we’re in an expanding pattern so it’s normal to see non stop reversals. Imo, market is not safe on the long side until a b/o of d-t resistance currently at NDX 6750 on volume. https://www.tradingview.com/x/b3Hlig7f/ My 2 cents. G/L.

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  5. Po Pimp

    I bought XIV about 5 minutes before the close on the day it blew up. Made 5% in those 5 minutes then watched it get poleaxed AH. That was not fun.

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    • Theon Nodick

      I bought it in the a/h in the 60’s and again in the 40’s. “Look at me, I’m going to be rich! Hahaha! Success meme!”

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  6. Dr. Fly

    Not fun, very sad.

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  7. tjnyt

    Look Doc, you have a mind too sophisticated for trading. You know the consolidation in banking since 2008. These megaliths are a brute money machines, now armed with AI and Indian coders. But the achilles heel of these giants is speed, they can not move fast like us. So stop moving like a j…; because that’s what they want you to do. Let them finish one move before you make yours.
    I used to be scared jerk, now I am cool like a cuc. I found the bottom in energy around christmas (as well the rest) and traded with calm and confidence. I made money again today but a little mad at myself for selling GS 185 call at open, yes they try to jerk us around. I have lightened my positions and holding a few sp 256 puts, labd and faz.

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