When you don't know what to do...

So since the complexion change in the market I have bought and sold out of SPY, making very small profits. I can't seem to find the holding power for the short trade. I am not sure where the market is going to go, it feels like there is still more downside, but I can not convince myself to take on any shorts with much conviction. It may also be the fact that I feel like I am late to the party. What if this is only a 5-6% correction and not a 10% correction. I do not want to panic out of my long positions, just because I see a little red.

I really wished I would had kept the 108 puts that I sold yesterday as they would had been good for better than a double. But like I said I can't seem to hold the short side. Tomorrow the all anticipated jobs number comes out and because of the fragile market conditions a bad number could be just the catalyst for the next push lower. But then again a good number could be the catalyst to continue up. Or it could be a non-event. Damn, I wish I had a crystal ball.

I really do not know what to do. I am kind of getting some analysis paralysis. I am also trying to figure out the best time to lift my hedges on my longs. But not knowing or having a thesis of how far down this market could really go before it starts going up again scares me. I know on the charts the next important support level is in the 1030-1040 range, but I am not willing to make any bets on it. I like the idea of selling call spreads, but I should had done that on the bounce to collect the higher premium.

So with that said, I am going to take a step back and for now I am not going to add any new positions going into the jobs number tomorrow. I will wait and see what happens. I will sit on my hands so to speak. I will just try to work through some of my positions as we have 15 days left until Feb expiration and I have a few positions that will expire.

Comments

WOW! I think that sums it up

Many of you have been reading this blog may have noticed that my blogging frequency has increased over the past few weeks as I got short the market. As you can imagine I am down money since getting short the market, this is the time when most people pull away from posting. But my goal is to stay active and involved and show you that trading is not always rainbows and butterflies. It is times like these that the things I have been sharing over the past couple of weeks are so important. You need to trade small relative to your account. I have a decent short position in the market and my portfolios are set up to make some awesome returns if we finally turn lower. But something I would like to point out is that my account is 70% Cash. I learned a long time ago how important it is to live by the rules you preach. Because of my discipline I am able to continue to hold my positions, I have time and capital on my side. I can't stress enough how important it is not to get to big....

Stay Small, Stay Out of Trouble

To expand on my post from yesterday about patience. I want to talk about a very important element that allows patience in a position, and that is staying small. If you trade too big RELATIVE to your personal account size, you are likely to be forced to exit the trade before the trade works in your favor. Many trades myself included have all experienced the pains of trading a position way too large given our account size. There is this predisposition out there that the only way you are going to make money in the financial markets is if you are trading 10 lots of options and 1000 shares of stock at the time. This is not the case, and if this is your mentality you will likely ensure yourself trouble. We have all read the stories of traders blowing up their account. I personally think a good rule of thumb is to not risk more than 5% of your account value on any one position. Good Luck Trading! In The Money Trades And 1 favor that we ask: If you like the hard work w...

more good news from FXStreet : Tom Fitzpatrick, senior technical analyst at Citibank in New York. Monday, July 15, 2002 "Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar." Julian Jessop, chief European economist at Standard Chartered Bank. Monday, July 15, 2002 "The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to wor...

Forex Is Crazy

Search This Blog