As I've hinted, I've moved entirely away from options and e-mini trading and am focused strictly on individual stocks and ETFs. Why the change? Several reasons:
- Reduction of risk – 2009 has been very rough, and I took on this move to radically reduce risk and volatility. Aggressive trading of leveraged instruments can wipe a person out. My main goal right now is capital preservation. Boring, but safe. That's why my big account is down 2.31% instead of some god-awful amount. No one likes loses, but I can handle a 2.31% drop.
- Focus during trading hours – Watching the /ES from 3 p.m. Sunday until 1 p.m. Friday, week after week, can get exhausting. I have other things to do. And I'd rather not get caught up in the late-night shenanigans of low-volume markets.
- Plays to strength – I'm a chartist. I tend to be good at smoking out individual charts. My portfolio is currently loaded with stocks I think are highly vulnerable. So I'm trying to play to my strengths.
Below is a case in point – Whole Foods – which I shorted at $33.38, is currently trading at $26.16 (a 21.64% drop), and has a stop at 28.94. This is my kind of trade – – – one which has a fat profit, is virtually guaranteed a profit even if stopped out, and on which I can just keep ratcheting the stop down. My goal is to have a portfolio filled with issues like this. When I saw WFMI was down even yesterday, when the market was exploding to new highs, I felt that much better about the decision.
