We all face risk as traders. No one knows what a day is going to bring (unless you are one of the big banks, in which case your profits are assured by government fiat). But for us little guys, we have to do the best we can with the tools and skills available to us.
The week ahead brings more risk than most weeks. I won't even go over what the risk events are; you've heard them all countless times. Suffice it to say that it's going to be wild, dangerous, and – at times – scary.
I've mentioned in the hallowed halls of Slope that I'm inclined to going completely flat ahead of next week. But I've thought long and hard about this, and although I'm not going to have a single large position, I have decided not to shut down all my shorts simply because we have an especially risky week ahead.
In the words of Captain Kirk: "Risk………risk is our business!" And, as usual, Tiberius is correct. I have worked very, very hard analyzing charts and crafting a portfolio of positions which I believe offer me and my partners a superior risk-to-reward ratio.
I have selected these positions with the utmost care, and to blithely throw all of them under the proverbial bus just because I'm scared of what might happen with events that are totally out of my control is illogical. The trades were based on logic. Killing the trades would be based on emotion. That's incongruent.
And, setting aside all the bad things that could happen, what if things completely fall my way?What if, for whatever reason(s), the markets head south – – and do so with gusto – – thus fattening up all my positions? How would I feel in that circumstance if I was entirely in cash, just so I couldn't worry. To put it bluntly, I'd feel like a real asshole. I'd have let myself down, as well as those who count on me to seek profit opportunity.
So I choose to expose myself to the risk. I may take on losses, but I will not regret it, because this is a choice I make with eyes wide open. At the same time, I remain prudent in the face of an especially large docket of uncertain outcomes, thus I shall keep at least 50% of my holdings in cash.