Since this forum is about sharing information and experiences, and although most of you know already how to manage your positions, I thought I would like to offer a timely reminder how a series of wins can make you cocky and confident of market trends.
I'm not hurt by the move yesterday, only because I took a fair bit off the table. But if I hadn't I would have woken up to a rude shock at the "hour of power".
I only had a 5 sets of SPX and 1 set of XJO (I work on sets - I won't disclose what number lots each set is, but 1 set means I'm unsure and 5 sets is full conviction).
Going through the trades (as I always do when things don't go my way), I have absolutely no excuse for not closing out my shorts from 1150 down to 1100. NONE. Even half would have been acceptable. And I had no reason to hang on to the XJO, I wasn't convinced on the trade and I hate the market.
But because things happened to go my way immediately in the start of the European session (I got big wins on DAX, HK and Footsie), and being almost as perma bear as Albert Edwards I was - I assumed the market would have just waffled around and plunged after Bernanke could offer no comfort. Maybe a repeat of 1987 but on a Tuesday instead of Monday. With no stops too, as I expected Bernanke's speech to whipsaw the market and gradually settle down to a concerted dumpasaurus.
Kinda worked until the last hour. That final hour of power was my Black Swan.
I guess its just a reminder, seasoned and novice traders alike, always remember the market can and will move against you in logic defying manner. There was no reason for the surge in the last hour other than some nincompoop (Art Cashin) flagging the importance of 1168. Market just felt like taking it to the extremes. As the result - from Monday opening and Tuesday close, we had a 15% move in the markets with zero results. Fund managers must be TEARING their hair out.
I hate losing money. But there's one thing I hate more - thats losing profits that are there for the taking(still thinking with the bonus mentality).
Sorry if anyone's offended. Wasn't directed at anyone in particular - just a timely reminder that ego and trading do not mix and no matter how high your conviction is, there's always the curveball from left field.
(20min delay)