Saturday, September 08, 2007

A Reader Criticizes My Non-Technical Impulsive Trading


A reader seemed disappointed with Friday's "not-so-technical" trades. In that post, I said I was annoyed and pissed off by a market making non-sensical knee jerk moves. To take advantage of an emerging pattern (market is up one day and down the next), I went long the indexes on extreme weakness. I noted that I was taking emotion out of my trade decision, ditching my normal setups in favor of the short term pattern. The trade is short-term in nature with very tight stops. A reader responded:

Annoyed? Pissed off? Then you go ahead and you say you won't let the emotions get in way.

Judging by these non-technical trades, I would say you are trading on "tilt" here.

These are the worst trades I have seen you put up yet, totally against your strategy and many other sound trading principles.

While you may get lucky and these may turn out profitable for you, there is nothing more dangerous to a trader's account/career than starting to do impulsive, on-the-whim trades.


Let me address the two main points from this commentary:

1) I am letting my emotions get in the way of my trading by making impulsive trades

I don't know how to get rid of my emotions. I am a passionate person. It would be unhealthy to deny what I'm feeling. While I acknowledged my feelings, I did not let them cloud my trading decision. I based my trade on a current pattern, not emotions. I waited for the sentiment readings I watch to turn in my favor before entering. I placed a tight stop and used half the position size I normally use. This makes for a low risk trade.

2) I have ditched my strategy in favor of "on the whim" trades

I showed above that this trade, while unconventional compared to most of my trades, was not impulsive.

I don't have *a* strategy. I have many strategies in my arsenal, and employ them as market conditions dictate. I do not have one rigid form. Rather, I strive to be like water. As Bruce Lee would say, water is formless. It adapts to it's surroundings.

Be like water.

Note: The blog is experiencing an uptrend in commentary, both positive and negative. I enjoy constructive criticism and differing opinions, so don't be shy if you are in disagreement with my analysis.

2 comments:

Anonymous said...

Yes, definitely be like water.

To me this means: go with the flow and don't trade on emotions.

Good luck.


The Critic

chris said...

Please take your critic's comments with a grain of salt. You are one of the few blogs out there that ACTIVELY trades stocks. All of the other trading blogs have turned into new related linkfests... keep up the good work.


The Critic - Where is your blog detailing your recent trades so we can review your performance?