Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Betraying Myself

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It's a very rare day that I don't wish I had done some things better in my trading. I wish I had a little more of this, or a little less of that; I wish I hadn't set a stop quite so tight; I wish I had anticipated a broad direction better. But on the whole, I generally can give myself a "B" – sometimes a B-, sometimes a B+, but usually I'm pretty happy with how I handled myself.

Today isn't one of those days. I think a D+ is about the kindest grade I could offer. What happened? Did I lose money? Yes, about half a percent. Nothing horrible, certainly, but a loss nonetheless. But that isn't the reason I'm upset – – I've had plenty of occasions where I've lost more than that and didn't feel the way I feel right now.

The reason for my present self-loathing is that I acted in haste out of fear, and that rarely is wise in trading. Simply stated:

+ I was about 63% committed in my portfolio, entirely to short positions;

+ I was quite concerned that we would have a very strong up-move today, which would merely be the kick-off to a substantial countertrend rally that may have lasted weeks;

+ Since I'm profitable for this month as well as last, and profitable for the quarter in general, I am jealously guarding those profits and don't want them threatened.

Given the above mindset, I wanted to get out of my shorts and get into either cash or some long positions. The market opened a little strong, and it got a little stronger, and I fell all over myself closing out all my positions. I breathed a sigh of relief. And then the market started weakening.

If you read my Measuring post – which is quite important –  you'll recall that I keep a spreadsheet available which shows what my P/L would be if I had done nothing on a given day. In this instance, now that I was entirely in cash, I watched the day's loss get smaller……..and smaller……..and smaller…..

And then I watched it turn into a profit and get bigger…….and bigger……..and bigger.

You can imagine how I felt. Here I am, the bear of bears, and I had covered what turned out to be brilliantly-crafted positions that were doing precisely what they were supposed to do. I had, out of an abundance of fear and caution, covered at pretty much the high prices of the day and watched my former positions flourish.

It was really tortuous.

I did wind up re-entering a portion of these shorts (at worse prices, naturally), but the psychology behind these positions is wholly different now. The risk profile is different, and my attitude toward them is different. None of this is good.

Well, what if the market did blast off higher, and my covering positions preserved profits that I would have otherwise lost? Well, yeah, what if? While we're playing games, what if the Dow flash-crashed a thousand points today? Anything is possible. It's pointless to play these endless what-if games. The fact is that I need to work within the confines of a logical, rules-based framework, and my desire to protect profits, ironically, made me lose money.

So what to do now? I think having a poisoned mindset when trading is awful, and I am clearing my mind of these thoughts of regret and anger. Tomorrow is a new day, and I can simply re-commit myself to a more steadfast rules-based discipline and remember the pain of today. Pain can be instructive, and I must take value out of today to inform my decisions in the years to come.

I likewise hope that, as I hopefully learn from my own experience, you likewise can take something away from it. Everyone has their own style. My style is very focused on large quantities of individual equities. Those equities have to stand or fall on their own merits, and keeping their stops up to date is the only task I need to manage well. Making sweeping conjectures about market direction can be a fool's game, and in my style of trading, I can't let macro speculations ruin individual decisions.


POTW: the Cell Phone Barrier

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I like to eat out, and one of the best parts of dining is having good conversation with one's companions. Lately, though, I've been seeing a lot of this kind of thing shown below (I've blotted out the faces): that is, one person completely absorbed in their mobile phone and another either doing the same thing or – more pathetically – just staring at them, getting no attention (in this instance, I think it was a daughter and father).


I mean, why do they even call this "social" networking? It seems to me that the entire phenomenon of everyone being equipped with the ability to stay in touch is, in fact, dividing people? I find scenes like this poignant, and I wish we'd all just put our iPhones down and talk with each other again.

Exxon Under Pressure (by Mike Paulenoff)

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The big kahuna of integrated oils is looking very toppy and very heavy. As we speak, Exxon Mobil (XOM) is under pressure that is probing key support between 80.00 and 78.80, which if violated should trigger downside continuation towards a test of its sharply rising 200 DMA, now at 75.54. In that XOM represents about 12% of the ProShares UltraShort Oil & Gas ETF (DUG), a break of important Mar-Jun support should spike the DUG towards 32.00 quickly.

At this juncture, only a climb that sustains above 81.90 will neutralize my near-term negative outlook.

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