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.

Edge and Edginess

By -

How do I feel about being flat now? Both relaxed and nervous. Relaxed in the sense that the minute-by-minute hijinx of Euro/Bernanke insanity can't zap me, and nervous that I'm going to miss out. But one thing I've read repeatedly from great traders is that the fear of "missing out" is one of the hallmarks of amateurs, and the desire to be in the market 100% of the time is folly.

I am comfortable with risk. If I weren't, I wouldn't be doing this. But when there's a huge roulette wheel spinning, and we all know it's going to stop on some unknown outcome at 11:15 PST Wednesday morning, and we know for a fact that market is going to react in some large, unpredictable way, I'd rather not subject myself to that degree of risk. It is an instance in which, to put it lightly, I'll have no edge.

What is my edge? What am I good at? Well, I'd say:

+ going through large quantities of charts quickly;
+ spotting pattern-based opportunities in those charts;
+ handling large numbers of diverse positions;
+ setting logical, responsible stop prices;
+ executing a broad plan with respect to where I think the market is heading

Where I definitely don't have an edge is having any idea what the Fed is going to do and how the market is going to react. Once that massive uncertainty is out of the way, I think I'll be in a better position to re-enter a market with a more sensible risk/reward ratio.

The risk, as I've mentioned, is that I wake up to a market down 25 points on the ES and I'm not in it. But you know as well as I do that we've basically woken up to six mornings in a row of the market being down 25 points, and by the end of the day, the loss is either trimmed substantially or has flopped into a huge gain.


Even as I'm sitting here typing this, I read that S&P downgraded Italy, and both the Euro and the ES fell instantly and fell hard. But they are already clawing their way back from the depths. With all the Greek-related nonsense going on (a bailout each and every day, it seems), who knows, the ES might even be green in the morning.

So, I've sort of had enough of this. I am defending my quarterly profit with a broadsword and a fire-breathing dragon at my side, and I'm not going to let some bald dude with a greying beard take it away from me. Not this time, pal. The markets will always be there, and if I miss one big drop, so be it. My aim is to be a successful trader, not a lucky gambler.

Standing Down the Missiles

By -

About an hour ago, I made a big decision – – to go ahead and cover all my positions for at least the next few days.

This is something I hardly ever, ever do. But there are a couple of realities:

(1) Until the FOMC announcement on Wednesday, there is way too much uncertainty about what Bernanke is going to say. Will it send the market up 500 points? Down 500 points? Nobody knows. I have worked too hard for my profits this quarter to put them up against that kind of uncertainty and risk. I may miss profits on the move, but I'd rather have a sure thing.

(2) This entire Euro/Greek thing is becoming a daily struggle with insanity. At any given moment, if a central banker picks up a telephone, it can send the market flying in either direction. It certainly appears that every morning's big drop is swiftly erased. I'm already glad that I covered my shorts, as I glance at the screen and see the ES is nearly 20 points off its low already.

The quarter ends next Friday. I intend to keep things very, very calm until then, which means either totally in cash or, occasionally, relatively small day-trades.

I may elect to re-enter positions after FOMC, but I'm inclined to wait a little while after the initial spasm before doing so. Today was profitable, the month was profitable, and the quarter was profitable, and I intend to keep it all in this manner.

Bottom line – – my blood pressure is going to be really placid for the forseeable future!