Wednesday, May 16, 2012

Failure is an Option

Today I waited all day for a chance to go long.

Unfortunately, everyone has a bias and despite trying to remain always neutral, I tend, like most beginners, to want to trade long.

So knowing the trend was down in the afternoon, I waited for my favorite support pattern to emerge and it did.  And I went long.  And I lost money.  I had a lot of reasons to think the market would bounce.  But it doesn't matter.  Had I held on instead of taking the 8 tick loss, I'd be down 26 ticks as of this post.

Now, the next question is: What did I learn?

If I have to lose $100 or any amount of money, I should at least learn a little something for my money.

We are in a bear market.  Duh.

The market is very kind to shorts.  Even if you enter late, you win.  It doesn't require fear, just lack of buyers.  So it's important to shift one's bias to shorting in bear markets.

 The market is very sloppy and news driven, too, which makes patterns less likely to work. 

But mainly, I learned you gotta be a bear in a bear market.  The markets screamed higher in the morning... /cl had a huge move along with /es.  But instead of waiting to get long at the end of the day, I should have been waiting for the markets to hit resistance and short /tf.  It would have been an easy time -- even had I waited for the Moving Averages to all flop over and gotten in late.

Follow the predominant trend... I think that's the right thing to do.  So if you've got a long bias like I do, acknowledge it, and overcome it and trade with the general conditions as much as possible.

 And always honor your stops.

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