Given all the insanity of this day, I was reminded of this post that I wrote a year and a half ago about why I have so many positions. The quantity of my positions have been the butt of a lot of jokes by my detractors (most regularly by erstwhile vistor The Hun), but I have my reasons for holding on to such a wide variety of positions.
A day like today, in which I've definitely caused myself a bit of self-harm by chasing a rally, was largely saved by the fact that the vast majority of my shorts were left in place because, frankly, it was too much time and trouble to close them out in the first place. Here's how I explained my style in the aforementioned post:
But why so many positions? Is it some kind of pathetic, male My Watchlist Is Longer Than Yours mind-trip? No; there's nothing Holmesian about my desire for a lot of positions. I've thought a lot about this, and there are probably two good reasons behind this.
The first is that, in the spirit of Will Rogers, I've never met a short I didn't like. In a market like this, which recently has become very friendly to technical analysis, there are such a glorious variety of shortable patterns, and I want to take advantage of as many of them as possible. For the move higher, I'm keeping it as simple as can be, with the likes of IWM. For the subsequent move down, I'm instead going to spread my bets very thin and very wide. On a down day, what I want to see out of this wide variety of positions is to be up more than the market is down.
The second reason may surprise you, but it's probably the more important reason for me: having this many positions slows me down. It gums up the works. It makes me less nimble as a trader. And that is often a good thing!
If, for instance, I decided to just trade the SPY and nothing else, I'd try to capture every squiggle and wiggle that happened, and that would probably benefit one party more than anyone else: my broker. We all know that, The Squid excepted, no one can take advantage of every little wiggle in the market. Having an unwieldly number of positions kind of forces a person to "sit tight" since, believe me, it is time-consuming to exit a couple of hundred positions. You might get out of 50 choice ones, and then throw up your hands and just decide to tighten the stops up on the rest. More often than not, that decision has been a profitable one.
