The Market // Wednesday 3-8-23
We counted down the seconds to chaos. We knew exactly the minute it would start.
Stocks spiked down, then spiked up, then down again for good. I commented I could feel the pain of those without a clue. Like a Jedi master I sensed their loss.
Gone was their money, their confidence and their belief in trading success.
“This is impossible!” As they got bounced around like a pinata.
Jerome Powell’s speech ignited the chaos, and left many rookie traders in the dust. Many participated because that’s what traders do. “The volatility is great!” Yeah but do you have an edge?
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I commented, “My first two years in trading I chased this stuff, and got clobbered.” I was on the wrong side of every trade. It was not a fond memory. I could feel the frustration welling up in my stomach reliving the experience.
Every word out of Powell’s mouth got a reaction. Algorithms reacting to key words with a fast spike up or down crushing the hearts of wanna be traders.
So that begs the question. Has the stock market become a video game?
If these reactions are programmed, is the market rigged against you? Is it possible to beat the game? Are you doomed to chase your dreams for the next five years only to realize that you could never win?
It’s a sobering thought, but it’s also not true. So let’s cancel the pity party.
If you had a tough day yesterday, you haven’t learned the core concept of our community. Only trade when you have an edge. A strong reason, or better yet, multiple reasons to believe your stock will hit your profit target versus your stop loss.
We call this building an argument.
While the “whackadoodle”(official trading lingo by HH) price action unfolded, our community stayed calm and waited for a better edge. A BIG part of our community is PPC, preserving precious capital. Something I say often because we’re not getting paid by the hour.
I’m the first to tell everyone that I’ve reduced my position size, if I was trading at all. I’m giving everyone my insight into the current conditions. When you don’t dig a needless hole, you don’t need to climb out of it.
I’ll make a bold statement here. It’s not hard to make money when it’s obvious. The problem is too many aspiring traders don’t know what that means. So everything that moves looks good.
So they lose, and lose and lose, and don’t know why.
I’ll tell you why. It’s because they began trading looking to make money from day one. Instead of learning how the market works. Instead of focusing on skill development.
Instead of asking questions about their results, they simply complained about them.
So they never achieve a profitable track record which also grows your confidence. Simply put, yesterday morning was reactionary, and not a good moment to trade. If you didn’t see it, you need to up your skills.
Specifically your tape reading skills.
It wasn’t hard. It was obvious. But you didn’t see it. And you traded anyway.
Not us. Our community was patient. Because that’s what winners do.
PS: You need to do the same when conditions are great. An often missed part of trading. Sure it’s easy to get angry at losses. But here’s an advanced concept. It’s critical that you also have a plan, a strategy, and tactics to spot and HOLD the big winners.
I have shocking news for you. Something you might not believe at the moment. It’s not your losing trades that are holding you back. It’s your winners.
Or better said, your lack of them.
