Well, I got this sector on lock down for now. Yes, “for now”, because according to the law of large numbers after being right on solars too many times, my next call on solars will be wrong. I called a fade on solars Monday night ahead of the elections (http://ibankcoin.com/gioblog/?p=2217) based on the fact that you should “buy the rumor, and sell the news.” I warned yah… “take profits in solars!” Obama Green stocks = red stocks [[spwra]] , Suntech Power Holdings Co., Ltd. (ADR) [[stp]] , First Solar, Inc. [[fslr]] , JA Solar Holdings Co., Ltd. (ADR) [[jaso]] , Energy Conversion Devices, Inc. [[ener]] , Yingli Green Energy Hold. Co. Ltd. (ADR) [[yge]] , ReneSola Ltd. (ADR) [[sol]] , LDK Solar Co., Ltd. [[ldk]] .
I also got the Vix readings down, which is my personal Da Vinci-S that I use to dissect this market (what? you don’t know what aDa Vinci-S is? Shame on you). Its easy to get caught up in the “market is going to rally because some woman is not going to be vice president” justification (no offense to vice presidents), I mean, that’s probably what 90% of bloggers out there thought. But the Vix double spike theory shut that down saying to NOT buy that nonsense rally yesterday (oh yeah, and Wood’s Big Bamboo was wrong six times in a row, so the LLN theorem suggested that the Bamboo’s next call would be right. heh).
Trader Psychology
So, after being right on solars for quite some time, that got me thinking a lot like Fly, that I should try and “trick” myself and the market by making another bold call, but quietly investing like 1/20th of a normal position since that call will be wrong. Haha. Does that stuff really work? I know what a lot of you do that! And here’s why… its all about trader psychology (a topic I enjoy, that’s why I’m a Vix chaser). The more and more you get a call right, then the more nervous you get about your next call. Your mind starts over-thinking things like, “What’s going on? Surely my next call will be wrong because I can’t be right all the time.” And so you go and sell your longs prematurely, either that or you try to “trick the market” by publishing some random call, believing that the market has ears or that your audience’s attention dictates your skill, so that you can hurry up and get that wrong call out of the way.
… you know what, sometimes that works! And it all goes back to the law of large numbers. Just look at the New England Patriots. But there’s a better way to “trick” the system. Basically its this: when you’re on a win streak, just keep trading! When you’re on a losing streak lighten up your trades, either in size or in frequency. Don’t over think things. Just set some rules to maximize returns and go by them. Treat your trading like a business. When times are good, you hire workers, buy more products etc. But when business is slow, you layoff people, keep your inventory low. You can’t think, “well, I’ve been selling so much toys during holiday season, surely tomorrow no one will shop here so let’s shut down the store,” nor should you think “Wow, ski sales have been really slow here in Hawaii. Maybe I should try adding snowboards to my inventory to get sales up.” That’s not going to increase your sales, and neither does that improve your trading.
So, when you’re hot, take advantage of it! We all get those streaks, and when it comes, make sure you get aggressive on it.
Oh yeah, my next call, for the sake of the law of large numbers, is to buy this solar dip. (actually I’m trying to trick the market. I’m secretly still shorting solars on a fade, but I’m trying to get a wrong call in first.)
…this is annoying.
Nice coin.
I like your style…you certainly have a good eye for sets. Choosing the right wave in a set is all the difference on the water…
Okay enough metaphorical jargon…nice call….
don’t overthink – now you said a mouthful there!
I am doing coal the same way you are doing the solars..I just find coal does not have so many components as the solars. Obama can’t control what the solars are doing in China or Germany or Spain anyway-and it’s too premature to trade off any energy on his election.
as for coal – he’s actually bullish on clean coal via cap and trade policy….
you’re getting a bit goofy gio. 😀
Gio,
I was just remembering- reading post from yesterday that you and Pinoy were on same page sell rumor and buy solars on the dip. Is that still position?
Appreciate all of your effort.
bein myself scum. a goof.
BullPreacher, it was “buy the rumor, sell the fact.” Too early to buy this dip in solars, especially since SPWRA adjusted guidance on the lower end. If you’re in it for a trade, then right now the play is to fade the solars. If you’re in it for an investment, then buy when the Vix is a little higher for your next position. too early to buy here. if you’re more conservative, wait for FSLR to get above 200ma. And finally, if you’re into Pinoy’s position trading style, then you can buy this dip ONLY if you have a lower cost basis (ie, you bought solars about a week and half ago).
Hope this helps!
-Gio
mrs buttons… short coal as long as FXP stays in the high 80s. China owns coal. Obama likes clean energy, so any spike on Obama’s comments in energy should be faded.
how do i ride a stock down ? options? could you explain the basics to me on buying options im not sure ..if you have to pay the full amt as soon as you buy the option or when you exercise the option
arch… options are good for leverage. you can technically control a large amount of stock per option contract. you can’t exercise your option contracts until they are called on expiration day, and they have to be “in the money.”
… options is very similar to stocks when it comes to bids/asks, except there usually is a bigger spread. also, you have to consider things like time decay. i would suggest you buy a book on options trading, or at least google some tutorials.
for now, i am simply shorting solar stocks.
thanks