As a small child, my father took my two brothers and me on deep-sea fishing trips. The thing I remember most about those trips is the seasickness, the queasy feeling in my stomach as the boat first rose up and then came suddenly down over and over again. The month of May and the beginning of June in the market has rekindled that not-so-pleasant childhood memory. The boat climbs up and then it comes crashing down …
Frankly, I am a bit sick of the up and down in the markets. Perhaps, if I were a better trader, or if I possessed “seek and destroy” software, I could be making a bundle, but the truth is that the swift and sudden turns in the market make my style of trading difficult to impossible. I am forced to either sit out (which I mostly do), or, if I enter a trade, be prepared to ride that trade up and down until I have an opportunity to exit with a profit or exit via my stop. This type of market movement forces me to widen my stops, which means I run the risk of bigger losses. This is not good risk-management, so I enter few trades with small dollars. In fact, as I write this, I have one trade going on and I have had it now for five days. Currently, it is down 1.6%.
Patience and optimism are my keys to not feeling too ill in these up and down days. I am optimistic that the global economic recovery is still on track, and I am patient because I know the market needs time to digest all of the uncertainty. The one issue out there that causes me just a bit of fear though is the sharks circling the boat, snapping their jaws at every market. These sharks would be the big-money hedge funds with their unregulated ability to bid up or bid down a market with unprecedented speed and power (lots of dollars). You all know my feelings about this, so I won’t belabor the point. Suffice it to say, if the government would get its act together and provide some regulation, this would go long way to both slowing the shark frenzy and calming the waters.
Until then, I will watch, listen, and learn. You see, even though my trading skill set is no match for the sharks, I do have one advantage, and that is that I can learn. Because no matter how scary those sharks are, they are mindless and greedy beasts simply in search of food, and they are willing to bypass thought in order to “take’ what they want. This type of behavior is predictable, if one learns the patterns associated with it. My new goal is to figure out the pattern of behavior that I am watching closely each and every day. When I do, I will quickly throw my line in just after or just before a snapping jaw opens or shuts, and in that split moment, I will take my fish.
Trade in the day; invest in your life …
