The Market // WEDNESDAY 2-22-23
Today we’re going to discuss what you’re missing.
Stocks got clobbered yesterday and broke below the psychological $400 level.
The VIX spiked four consecutive days and the advance / decline shows bearish readings the last two weeks.
Feeling the pain?
You shouldn’t be. Stocks are allowed to go down, and they frequently do.
You have choices:
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Keep buying,
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Take your loss, and move to the next trade.
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Stay in cash or,
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Learn to hedge.
Keep buying does not mean buying more of a bad trade. Although that’s what many do, amplifying the loss. Making things worse and showing they have no plan, discipline or respect for risk.
Keep buying means find stocks with relative strength to the market. For example, #PBF yesterday. Strong moves higher, lazy moves sideways.
The easiest way to make this happen is to have your trading platform organized so that it tells you where order flow is stacked. Spend some time after hours getting your platform right.
Take your loss. The next best answer, and one that many have a problem with. The desire to be right has drained more trading accounts than you can imagine.
Luckily our community does not have this affliction. We understand that trading is a business and to run a business, you will have expenses.
Have you heard this small voice? “Hey, maybe this would be better as an investment, let’s hold this losing trade longer!” That voice is not your friend.
There’s no such thing as a business without expenses. A trading loss is a business expense. Remember that and you’ll sleep like a baby.
Stay in cash. Believe it or not, this is the smart choice for many. We have a motto, “Patience Pays.” When you trade poor ideas, ideas without an edge, you dig yourself an unnecessary hole. Seems common, but it’s sloppy trading.
It’s easy to make money when it’s obvious. And I’m sure that you’ve proven that many times. But for some reason you can’t get profitable. This is the main culprit. Those trades you forget. // Watch this video to fix this problem.
Learn to hedge. Advance stuff here right? Hedge funds know stuff that we don’t right?
No. It’s as simple as doing a little extra research to find stocks with relative weakness when stocks are going up. That’s right, being prepared with weak stocks just in case.
That’s called planning.
You’re simply noticing stuff when you do your nightly research. I give this to our members every day.
Here’s how: “When the market goes up, which stocks did not go up, or even went down?” These are the stocks with relative weakness.
Perhaps you take a small position. A starter position. Perhaps you wait, you post the information in your tracking journal. When stocks reverse, and they will, you’ll be ready.
Ready to make some money on the way down. Ready to protect your gains. You short sell the weak stocks. Don’t like to short sell? That’s okay. You can buy a put. You can buy inverse ETF’s. You have choices.
Now you know what hedge funds do. They hedge. They do not expose themselves to unlimited risk. And neither should you.
But getting back to the first sentence of today’s Daily Ticker.
These steps will help, even make you some money. But they aren’t the real problem. Let’s assume you follow those four steps. You will lose less.
But that’s not the goal. You want to make more, and make it consistently.
That’s a different process. What you’re missing is a system for bigger winners. Stop focusing on not losing money and set your sights on making more when it’s obvious.
We call this the profit maximizer. Work to build a process for winning trades and everything changes. When the market and most stocks rallied hard for six weeks, ask yourself did you make enough?
If not, why? That’s where you should start. Stop blaming a few expected losses.
Check out Pete’s Boot Camp here: https://checkout.stocktradingpro.com/products/ny-method-14-day-boot-camp/
