This morning was a perfect example of being flexible on a trading plan. If you look at my first blog this morning, I was very bullish…That was warning sign number one. By nature I am always bearish, and for me to flip and get all bulled up should have been an early indication…As to why I am a perma bear, its because as a day trader/scalper, which is what my M.O. was for over a decade, being short always gives the quickest reward when you are correct. All markets move lower about 3 times as fast as they rally, unless its a rally off of an unexpected move. For example, back in the late nineties, the fed had some unexpected unannounced rate cuts which came after the bonds closed at 2pm…In that situation, if you had been caught short the Dow, for instance, it was an instant 100 to 200 point smack down, with no way to get out… A move like that cost between 1K and 2K for every contract a trader might have had on at that time.. I regularly had 3 to 6 on, but I knew traders in the pit that always had 20 to 50 contracts on and sometimes 100 to 200…
That is a scary scenario to find yourself in.
Be that as it may, the point of this story is one has to be flexible…
I wasn’t this morning, and it cost me money.. If I had been trading mechanically, which is the best long term strategy for profitability, I would have been a seller at 986 in SF, uncomfortable, but a seller…The overnight move and news was so bullish, instead I allowed my trading opinion to be slanted by that news… Sometimes it works, but one is generally better off trading the numbers and leaving the news to the talking heads… They don’t trade… They talk…
So, even after years of experience, I still make errors. The key is adjusting and having no ego for your opinion. Its more important to make money than to be right, and at the end of the day, no one really cares about your opinions, because opinions don’t buy groceries.
Good Trading