Swing High

For now, enjoy my 2-cent rant about my current situation. I will write personal reflections like this periodically in the interest of developing strategies that fit my personality and precision-molding my trading style.

I cannot believe it. I really can’t. After a good performance last week (equitygrew by 3.78%) I find that I managed to shrink my equity by 4.38% this week. That erases my healthy gains of the week before and then some. COMPLETELY unacceptable.

The sad thing is, I know exactly what I am doing wrong, yet I have not successfully changed my behavior yet. I find myself making this mistake far too often. I am defending my losing position in SPXU (triple leveraged inverse ETF of the SPY) by not trading what I see, but instead trading what I think I should see. Let me open my brain up for you and give you a little insight into the battle going on inside my mind right now.

My left brain’s argument: This market fundamentally cannot sustain these levels! It is absolutely absurd  to think that the markets are trading at these heights. This entire rally is in the context of the second worst global recession of recent times. This “Bear Market Rally” has come too far, too fast. The entire run-up was technically based. The markets have to be turning around and stocks must start falling soon. It will only be a matter of days until the bulls wake up and realize the party is over! Of course companies are beating estimates; that’s very easily accomplished when expectations are so negative. Traders are taking “less bad” news as good news now? What is this?! People say the stock market prices into the future by six months, but how can investors honestly think that the economy will be all better six months from now?

I need to work on taking control of my trading away from my left brained theories. My right brain’s argument: who cares what the fundamentals say? The stock market certainly does not. You see where the market is going. All you have to do now is actually trade by what you see, and not what you think you should see because of reasons like fundamentals. You need to want what the markets want, not what you think the market should want.

One thing is for sure, I am certainly thinking like an amateur still. It is taking much effort, but I am trying to start thinking like a professional. Writing down my mistake and being honest about the sad state my trading ability is currently in is a good first step in changing my mindset.

I am ready to start thinking like a trader.

I hope you enjoyed my little rant there. Actually, I don’t really care if you enjoyed it or not because that was not written on your behalf as much as it was written for the sake of my trading development. Thanks for continuing to be a part of Swing-High.com though!

Happy Learning,

Jason

ps. I want to lead you with one of my favorite quotes. “I change not by trying to be something other than I am. I change by becoming fully aware of who I am” – Zen Theory of Existential change.

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