The most recent headlines on my website were ‘Market tone has changed‘, ‘LNG – Cheniere Energy – Chart Technicals are broken‘ and ‘Tough trading ahead – danger of rolling over.’ The market’s personality has now changed. Sellers are getting back in control and right now there is a real shortage of good looking chart set-ups out there. Additionally many stocks are breaking down. My decision to go to cash and watch the market action from the sidelines shouldn’t come as a surprise.
The typical issue traders have to fight with in these situations is the fear to sell at the lows. As I have stated numerous times, professional traders don’t fear missing out or selling lows. The reasons are manifold. Here is a short list of things to keep in mind that are much more important than those fears:
- Protect your financial capital
- Protect your mental capital
- Getting out of harm’s way
- Reduce stress
- Go with the flow and follow the tape
- Trade in a flow state of mind
My point is: Trading is a marathon. You absolutely have to manage risk so that you can live to trade another day. It really doesn’t matter how much you make if you end up giving it all back when the proverbial s*** hits the fan. How do you achieve this? Strive for emotional detachment, stay balanced, embrace uncertainty and deal with the fact making mistakes is an integral part of the trading business.
That being said, now is the time for me to take a break from trading, recharge my batteries, watch the tape and mentally prepare for new trades. Then a new cycle starts. The first new position. Testing the waters. Being cautious if things do not go my way and pushing it when trades do work well. The markets have been good to me but recently it sure didn’t feel like trading effortlessly. I now patiently wait for new trades to set up as there is never a shortage of opportunities in the markets. Discipline, patience and focusing on proper execution is key.
A trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position. – Paul Rotter
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Buenas noches!
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